Where Does $100 to the ALS Association Go?

The ALS Association was chugging along raising about $25 million a year when the Ice Challenge video went viral a few years ago and brought in $115 million in donations to the organization.  Before the windfall, the ALS Association had about $20 million in net fund assets. According to the IRS Form 990 (2016) for the year ending January 31, 2017, the organization now has just over $100 million in net fund assets (they haven’t spent all the donations from the Ice Challenge yet) and raised nearly $31 million (compared to about $25 million the year before) this past year.

The power of social media is evident but how donation dollars are spent is even more important to supporters of the organization. When people make a donation to a charitable cause, most want to know their hard-earned dollars are going to help the cause and are spent as efficiently as possible, or “getting the most bang for the buck.”  In the case of the ALS Association, donors have to consider the organization is still spending the dollars received from the Ice Challenge so just looking at the most recent year’s performance doesn’t tell the whole story.

In 2015, the organization raised about $25 million but spent $35 million – $10 million more than they brought in but they had the funds from the Ice Challenge and used a portion of those dollars to cover the shortfall. In 2016, the ALS Association raised $31 million and spent nearly $35 million, leaving a $4 million shortfall which was also covered by the funds raised in 2014 from the Ice Challenge.

It is important to understand the ALS Association primarily engages in three activities:  awarding grants for ALS (Lou Gehrig’s disease) research, providing patient and community services through the network of chapters in the states (each files their own 990), and providing public and professional education.  Their main focus, as determined by the amount of dollars spent, is on awarding grants for ALS research with about 60% of revenue raised allocated to grants.

Key information from the IRS Form 990 (2016):

The ALS Association employs 97 staff, of which 25 received more than $100,000 in compensation. The 13 most highly compensated staff were paid $2.6 million:

• $326,750:  Barbara Newhouse, President and CEO
• $242,308:  Stevan W. Gibson, Chief Public Policy Officer
• $224,188:  Gregory Mitchell, EVP Finance and Administration
• $219,995:  Lance Slaughter, EVP Chapter Relations
• $196,842:  Brian Frederick, EVP Communication and Development
• $192,073:  Kimberly Harding Maginnis, SVP, Care Services
• $189,967:  Carrie Munk, VP Communications
• $187,340:  Patrick W Wildman, SVP Public Policy
• $174,533:  David J Hampton, II, SVP Development
• $158,662:  Mary Bruney, VP Chapter Relations
• $158,125:  Teressa Harris, VP Finance
• $142,166:  Kathi Kromer, VP Advocacy
• $139,589:  Monica Santa Cruz, VP Human Resources

The ALS provided $110,670 to Steven W Gibson for severance and $64,375 to Kathi J Kromer, also for severance.

The ALS Association spent $529, 987 on lobbying activities.

The five highest paid independent subcontractors include NNE Marketing of Concord, MA ($345,000 for direct marketing services), Faegre, Baker, Daniels, LLP of Washington, DC ($326,061 for Consulting CDC grant and public service), Lucy Bruijn of Chugiak, AK ($290,000 for Scientific Officer for research oversight), Beaconfire Consulting of Arlington, VA ($182,181 for website design), and Optimal Networks, Inc. of Rockville, MD ($146,306 for IT and Network Services).

$18.6 million in grants were awarded. $864,705 were awarded to foreign entities, mostly for research in Europe. $17.7 million was awarded in grants in the United States to other 501 (c) (3)’s and government agencies. 152 grants greater than $5,000 were awarded primarily for research or treatment. The largest were to Columbia ($1,309,652), Mass General Hospital ($1,065,132), Cedars-Sinai Medical Center ($673,800), Johns Hopkins ($658,310), University of Mass ($584,656), Ludwig Institute for Cancer Research ($533,000), and Cedars Sinai Medical Center ($503,969).

Expenses can be analyzed two ways:  by broad category:  Grants, Program, Management, and Fundraising; or by specific line item expenses which provides more detail. Both ways are listed below.

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

Expenses were reported to be $34.8  million (not including depreciation) in the following categories:

$18.6 million (60% of revenue):  Grants

$ 9.8 million (32% of revenue):  Program Service Expenses

$ 4.6 million (15% of revenue):  Fundraising Expenses

$ 1.8 million (6% of revenue):  Management Expenses

As illustrated above, the ALS Association spent 53% of revenue on program, fundraising, and management expenses and 60% of revenue on grants. The organization spent 113% of revenue using revenue previously raised to cover the shortfall.  Using the above information $100 in revenue was spent as follows:

$100:  Revenue

-$ 32:  Program Service Expenses

-$ 15:  Fundraising Expenses

-$  6:  Management Expenses

-$ 53: Subtotal Program, Fundraising, and Management Expenses

$ 47:  Amount Remaining

-$ 60:  Grants

-$ 13:  Shortfall (covered by previously raised funds).

As illustrated above, $47 of every $100 in revenue was used for grants while $53 was used to cover program, fundraising, and management costs.  An additional $13 from previously raised funds was used to make more grants.

Expenses by Specific Line Item

Specific line item expenses totaling $34.8 million were reported to be as follows:

$ 7.9 million (25% of revenue):  Salaries, Compensation, Benefits, Pensions, Payroll Taxes

$ 3.9 million (13% of revenue):  Other Program, Fundraising, General Expenses (no detail provided)

$ 1.9 million (6% of revenue):  Conferences and Meetings

$ 1.4 million (5% of revenue):  Office, IT, Telecommunications, Occupancy

$ 1.1 million (4% of revenue):  Fees:  Legal, Accounting, Advertising, Credit Card Fees, Etc

$16.2 million (53% of revenue):  Subtotal Salaries, Other, Conferences, Office, and Fees

$18.6 million (60% of revenue):  Grants

As illustrated above, the ALS Association spent 53% of revenue on specific line item expenses and 60% of revenue on grants. The organization spent 113% of revenue using revenue previously raised to cover the shortfall.  Using the above information $100 in revenue was spent as follows:

$100:  Revenue

-$ 25:  Salaries, Compensation, Benefits, Pensions, and Payroll Taxes

-$ 13:  Other Program, Fundraising, General Expenses (no detail provided)

-$  6:  Conferences and Meetings

-$  5:  Office, IT, Telecommunications, Occupancy

-$  4:  Fees:  Legal, Accounting, Advertising, Credit Card Fees, Etc

-$ 53: Subtotal Line Item Expenses

$ 47:  Revenue Remaining

-$ 60:  Grants

-$ 13:  Shortfall (covered by previous donations in fund balance)

As illustrated above, the ALS Association spent $53 of every $100 in revenue on line item expenses related to program, management and fundraising, leaving $47 left for grants. The organization used this entire amount (and more from previous years donations) to cover the grants awarded.

The bottom line is that the ALS Association spends about half the revenue they raise on operating support functions (program, management, and fundraising) with the majority of resources allocated to the grant program which is where the other half of revenue goes in the form of grants. The ALS Association has been spending more than they have been receiving because of the windfall in donations in 2014 that resulted from the Ice Challenge. In fact, they still have not spent about $80 million of the $115 million raised.