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September 16, 2017

Where Does $100 to The Boys and Girls Club of America Go?

by Anne Paddock

The Boys and Girls Club of America, Inc. (“The Boys and Girls Club“) is a non-profit 501 (c) (3) that offers programs – primarily after school – for young people. Based in Atlanta, the national office of The Boys and Girls Club also has regional offices in Atlanta, New York City, Chicago, Dallas, and Los Angeles. In addition there are more than a thousand local chartered offices throughout the country targeting disadvantaged youths to help them “reach their full potential as productive, caring, responsible citizens.” Funding for the organization is primarily from both the public and the government.

The national organization (there are separate 990’s for each of the local chapters) generally raises about $150 million annually but in 2015, The Boys and Girls Club reported the receipt of $134 million in revenue (which is attributable to significantly lower investment income). Revenue came primarily from 5 sources:

  • $96 million (72% of revenue):  Contributions
  • $23 million (17% of revenue) :  Government Grants
  • $ 7 million (5% of revenue) :  Fundraising Events
  • $ 7 million (5% of revenue) :  Membership Dues
  • $ 1 million (1% of revenue):   Other Revenue (Investment Income, Sale of Assets, Rents, and Supply Services)

Expenses in 2015 totaled $142 million (not including depreciation) – about $8 million more than revenue. Because the organization had $437 million in net fund assets at the beginning of the year, they used these assets to cover the shortfall, ending the year with $429 million in net fund assets.

Expenses can be looked at two ways:  by looking at the four broad categories (program, management, fundraising, and grants) or by specific line item, which gives more detailed information. Note the expenses as a percentage of revenue adds up to more than 100% because expenses exceeded revenue by $8 million or by about 5%.

Expenses by Category (Program, Management, Fundraising, and Grants)

  • $56 million (41% of revenue):  Program Service Expenses
  • $19 million (14% of revenue):  Management Expenses
  • $10 million (8% of revenue):  Fundraising Expenses
  • $57 million (42% of revenue):  Grants (to 812 Boys and Girls Clubs)

A $100 revenue contribution was spent as follows:

$100:  Revenue

-$ 41:  Program Service Expenses

-$ 14:  Management Expenses

-$  8:   Fundraising Expenses

-$ 63:  Subtotal Program, Management and Fundraising Expenses

 $ 37:  Amount Remaining

-$ 42:  Grants

-$105:  Amount Spent

As illustrated above, the organization spent $105 for every $100 in revenue reported.

Expenses by Specific Line Item

  • $50 million (37% of revenue):  Salary, Compensation, Benefits, Pension, Payroll Taxes
  • $12 million (9% of revenue):  Other Expenses (no detail provided)
  • $10 million (8% of revenue):  Office, Occupancy, Insurance, Supplies
  • $10 million (8% of revenue):  Travel, Conferences, and Meetings
  • $ 1 million (1% of revenue):  Taxes, Interest, Advertising, Bank Fees
  • $57 million (42% of revenue):  Grants (to 812 Boys and Girls Clubs)

A $100 contribution was spent as follows:

$100:  Revenue

-$ 37:  Salary, Compensation, Benefits, Pension, Payroll Taxes

-$  9:  Other Expenses (no detail provided)

-$  8:  Office, Occupancy, Insurance, Supplies

-$  8:  Travel, Conferences, and Meetings

-$  1:    Taxes, Interest, Advertising, Bank Fees

-$ 63:  Subtotal Salary, Other, Office, Travel, Taxes

 $ 37:  Amount Remaining

-$ 42:  Grants

-$105:  Amount Spent

As illustrated above, the detailed expense list also shows that roughly $63 out of every $100 was spent on the costs associated with running the national office. The organization gave $42 out of every $100 to The Boys and Girls Club chapters. The shortfall was made up by funds in the net fund balance.

Key Information on the IRS Form 990 includes:

The national organization employed 518 people and utilized 350 volunteers in 2015.

115 staff received compensation greater than $100,000.

The 12 most highly compensated staff were:

  • $760,469:  James Clark, President and CEO
  • $382,958:  Julie Teer, SVP Resource Development
  • $368,790:  Lorraine Orr, SVP Club Services
  • $333,048:  Damon Williams, SVP Program and Youth Development
  • $317,899:  Paul Sansone, Assistant Treasurer
  • $281,905:  Kevin McCartney, SVP Government Relations
  • $278,436:  Chad Royal Pascoe, VP Resource Development
  • $277,782:  Mehta Anand, Former Assistant Treasurer
  • $275,214:  John Miller, SVP Program and Youth Development
  • $269,900:  Kristine Morain, Assistant Secretary
  • $266,171:  William Mishrell, SVP Planning and Measurement
  • $262,918:  Neil Fielden, SVP Human Resources

As listed above, $4.1 million was provided to the 12 most highly compensated staff.

The organization utilized three primary firms for fundraising:

  • SCA Direct provided direct marketing services. They raised $749,994 and were compensated $909,533 costing The Boys and Girls Club $253,861.
  • Murad Auctions provided text to pledge services. They raised $317,854 and were compensated $21,255 netting The Boys and Girls Club $296,599.
  • Sophist Productions, LLC provided test to pledge services. They raised $50,374 and were compensated $15,650 netting The Boys and Girls Club $34,724.

The five highest compensated contractors include:

  • ILink Systems (Redmond, Washington) for website development:  $1,248,784
  • SCA Direct, Inc. (Washington, DC) for direct mail campaign:  $1,003,585
  • Marketing Support, Inc. (Chicago, IL) for Public Relations campaign:  $685,914
  • CapGemini US LLC (Bloomfield, IL) for Digital Youth:  $634,996
  • FirstPic, Inc. (Gambrills, MD) for support mentoring:  $629,246

The Boys and Girls Club is a labor intensive organization in that they are providing a service (as opposed to a product) to youth so salaries, compensation, benefits and pension benefits are expected to be higher but at the national office, these costs are also related to the administration of the program throughout the country, along with research, and lobbying efforts. The smaller offices appear to pay membership fees ($6.6 million to the national office) while the national office distributed grants totaling $57 million (or $42 of every $100) to 812 Boys and Girls Clubs throughout the country.

Donations made directly to a local chapter (rather than the national chapter)  may make donor dollars go further because program, management, and fundraising expenses will only be deducted once whereas a donation made to the national chapter will have the national program, management and fundraising expenses deducted. Then, a grant given from the national office to a local chapter office will have the local program, management, and fundraising costs deducted.

Some expenses appear to be high – $4.1 million to 12 staff members, $10 million in travel, conventions, and meetings, $12 million in unexplained expenses along with some fundraising costs including the funds paid to SCA Direct who was paid more than $250,000 more than what they collected for the organization.

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