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October 10, 2017

Where Does $100 to Alex’s Lemonade Stand Go?

by Anne Paddock

Alex’s Lemonade Stand Foundation (ALSF) is one of the most well-known charitable foundations dedicated to raising funds for research into treatments and cures for childhood cancers.

Established in Pennsylvania in 2005, a year after Alex (Alexandra) Scott passed away from neuroblastoma at 8 years old, ALSF was founded by her parents, Jason and Elizabeth Scott to continue what Alex started (when Alex was 4 years old she opened up a lemonade stand to raise money so that doctors could help other children).

Key pieces of information reported on the IRS Form 990 (2016) include the following:

  • ALSF raised $21.2 million in 2016 – about $300,000 more than in 2015.
  • ALSF spent about $20.8 million (not including depreciation) in 2016, most of which – $16.2 million (76% of revenue) was awarded in grants to other organizations (primarily pediatric cancer research). 93 grants in excess of $5,000 were awarded for pediatric research with the 4 largest to the Children’s Hospital of Philadelphia ($1.6 million), Baylor College of Medicine ($1.3 million), University of California at San Francisco ($1.3 million), and the Dana Farber Cancer Institute ($1 million).
  • ALSF had $13.8 million in net fund assets at the end of 2016. Most of these assets were in cash, savings, and publicly traded securities.
  • ALSF employed 63 staff in 2016.
  • Jason Scott and Elizabeth Scott are C0-Executive Directors. Each received total compensation of approximately $159,000 for a total of $318,000. They founded the organization and retain tight control with the unanimous power to appoint and remove board members. They are the only staff whose compensation exceeds $100,000.
  • The three highest paid independent contractors include Clever Name Here, Inc of Beacon, NY ($198,221) for website development, Marriott Business Services of Atlanta, GA ($154,570) for event venue and catering, Classic Party Rentals of El Segundo, CA ($105,316).

There are two ways to analyze the foundation’s expenses:  by broad category (Grants, Program, Management, and Fundraising) or by specific line item expense which provides more detail.

Expenses by Broad Category (Grant, Program, Management, and Fundraising)

ALSF raised $21.2 million in 2016, which was used as follows:

$16.2 million (76% of revenue):  Grants

$  2.1 million (10% of revenue):  Program Services

$ 1.2 million (6% of revenue):  Management Expenses

$ 1.3 million (6% of revenue):  Fundraising Expenses

$20.8 million (98% of revenue): Total Expenses

The remaining funds were added to the fund balance which grew to $13.8 million at year-end (from $13.4 million at the beginning of the year).

Using the information above, $100 in revenue was spent as follows:

$100:  Revenue

-$ 10:  Program Services

-$  6:  Management Expenses

-$  6:  Fundraising Expenses

-$ 22: Subtotal Program, Management, and Fundraising Expenses

$ 78:  Amount Remaining

-$ 76:  Grants

$  2:  Amount Not Spent – To Fund Balance

As illustrated above, $76 out of every $100 in revenue was awarded to organizations for pediatric research while $10 was spent on program services, $6 on management, and $6 on fundraising.

Expenses by Specific Line Item 

ALSF raised $21.2 million in 2016 which was used as follows:

$16.2 million (76% of revenue):  Grants

$ 2.8 millon (13% of revenue):  Salaries, Compensation, Benefits, Pensions, and Payroll Taxes

$ 0.7 million (3% of revenue): Office, Database, and Insurance

$ 0.3 million (2% of revenue):  Travel, Meetings, and Conferences

$ 0.2 million (1% of revenue):  Licenses, Fees for Services

$ 0.2 millon (1% of revenue):  Promotion Materials and Advertising

$0.2 millon (1% of revenue):  Other Fundraising Event

$0.2 milloin (1% of revenue):  Other Expenses (no detail provided)

$20.8 million (98% of revenue):  Total Expenses

Using the information above, $100 in revenue was used as follows:

$100:  Revenue

-$ 76:  Grants

-$ 13:  Salaries, Compensation, Benefits, Pension, Payroll Taxes

-$  3:  Office, Database, and Insurance

-$  2:  Travel, Conferences, and Meetings

-$  1:  Licenses, Fees for Services

-$  1:  Promotion Materials, Advertising

-$  1:  Other Fundraising Event

-$  1:  Other Expenses (no detail provided)

-$98: Total Expenses

ALSF operates as a sort of “United Way” for pediatric cancer. They educate the public about pediatric cancer, sort through grant requests and act as a conduit to fund pediatric cancer research.  The bottom line is that $76 out of every $100 in revenue is distributed in grants. The foundation spends about $22 on operating costs, leaving $2 for their fund balance which had $13.8 million in net assets (mostly liquid) at year-end. The only way for donor dollars to go further is if ALSF was bypassed and the donation made directly to any of the 93 recipient organizations listed on the IRS Form 990.

To read the IRS Form 990 (2016) click here.

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