Where Does $100 to the Alliance Defending Freedom Go?

The Alliance Defending Freedom (ADF) “is committed to transforming law and culture so true freedom can flourish” although there are many people who would disagree with this statement because the ADF advocates for religious freedom to uphold their idea of justice and preserve the right of certain people to freely live out their faith.

That this freedom results in the discrimination of others and infringes on the rights of women to choose what they want to do with their bodies doesn’t appear to matter to the ADF. It’s their religion, their faith and their definition of justice that trumps the rights of others. How ironic is it that ADF (a non-profit that relies on public donations) calls itself an alliance defending freedom but only defends the freedom of those who believe what they believe?

The ADF raised $51.5 million for the year ending June 30, 2016 according to the IRS Form 990 (2015) submitted to the IRS and available for public review, most of which ($50 million) came from contributions, gifts, and grants. During the same period, ADF spent $55.3 million (not including the non-cash expense of depreciation) – approximately $4 million more than they raised which resulted in the net fund assets declining to $28 million at year-end.

There are two ways to look at expenses:  by broad category (Program, Management, Fundraising, and Grants) and by line item expense  which provides a more detailed look at expenses. Both provide a different view of looking at how revenue is spent with the line item giving the most specific information.

Expenses By Broad Category

Expenses (not including depreciation) totaled $55.3 million which were categorized in the following categories;

$35.8 million (or 70% of revenue):  Program Services

$ 4.1 million (or 8% of revenue):  Management Expenses

$ 7.8 million (or 15% of revenue):  Fundraising Expenses

$ 7.6 million (or 15% of revenue):  Grants 

$55.3 million (or 108% of revenue):  Total Expenses

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

$100:  Revenue

-$ 70:  Program Services

-$   8:  Management Expenses

-$ 15:  Fundraising Expenses

-$ 93:  Subtotal Program, Management and Fundraising Expenses

$  7:  Amount Remaining

-$ 15:  Grants

-$08:  From Fund Balance

As illustrated above, $23 of every $100 in revenue was spent on management and fundraising expenses while $70 was spent on program services. $15 was spent on grants (both domestic and international) requiring the organization to use funds in the net fund balance to cover the shortfall.

Expenses by Line Item

Expenses (not including depreciation) totaled $55.3 million and was reported in the following line items:

$23.7 million (46% of revenue):  Compensation, Benefits, Pension, Payroll Taxes

$ 7.9 million (15% of revenue):  Travel and Meetings/Conferences

$ 4.5 million (9% of revenue):  Office, IT, Occupancy

$4.5 million (9% of revenue):  Fees for Services

$0.6 million (1% of revenue):  Other Expenses: resource materials, receipt processing, currency transl.

$6.5 million (13% of revenue):  Advertising and Promotion

$7.6 million (15% of revenue):  Grants

$55.3 million (108% of revenue): Total Expenses

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

$100:  Revenue

-$ 46:  Compensation, Benefits, Pension, Payroll Taxes

-$ 15:  Travel and Meetings/Conferences

-$  9:  Office, IT, Occupancy

-$  9:  Fees for Services

-$  1:  Other Expenses:  resource materials, receipt processing, currency transl.

-$ 13: Advertising and Promotion

-$ 93:  Subtotal Expenses

-$ 15:  Grants

-$108:  Total Expenses

As illustrated above, the line item expense is compensation and benefits for the staff of the organization followed by Travel and Meetings/Conferences, and Grants which warrants discussion.

Compensation/Benefits/Pensions/Payroll Taxes

Nearly half of the revenue raised goes towards salaries and benefits for the 292 employees.  The 15 highest compensated employees (14 men and 1 woman) were given $3.7 million:

• $421,248:  Alan Sears, President and CEO
• $327,309:  Benjamin Bull, Chief Counsel, EVP of ADF Programs
• $257,843:  Gary McCaleb, Sr. Counsel, VP of Advocacy and Research
• $257,133:  Wayne Swindler, EVP Operations
• $250,359:  Mark Feddern, CFO and Security Director (left in 2016)
• $246,523:  Mark Crozet, SVP Development
• $229,623:  Doug Napier, SVP of Alliance Relations
• $227,377:  Kristen Waggoner, Sr Counsel, SVP US Legal Adv.
• $225,116:  Jordan Lorenc, Sr Counsel
• $222,841:  Charles Bolte, CCO (left in 2016)
• $219,571:  Jeffrey Ventrella, Sr Counsel, SVP of Training
• $214,590:  Kevin Theriot, Sr Counsel, VP Center for Life
• $213,112:  Glen Lavy, Corporate Counsel
• $211,576:  David Cortman, Sr Counsel, VP US Litigation
• $188,110:  Tim Chandler,Sr Counsel, SVP of Alliance ADV

Two members of the CEO’s family – Janet Bitzko and Rebecca Sears – were compensated $79,331 and $59,608, respectively.  A family member of the CFO – Lucas Swindler – was compensated $15,229.

Mark Feddern and Charles Bolte were received severance following termination of $46,354 and $74,652, respectively.

Travel

ADF pays for first class travel for employees and companions but it is unclear how much of the $4.5 million spent on travel went towards first class travel for employees and companions.

Grants

$7.6 million or 15% of revenue was awarded in grants, of which $4.5 million was awarded to domestic organizations and individuals and $3.1 million was awarded to international organizations and individuals:

$831,600 in cash scholarships were provided to 132 individuals in the US.

37 organizations in the US received more than $5,000 in grants with the largest grants provided to:

• $1,464,041 to the ADF Foundation (ADF actually made three cash transfers to the ADF Foundation in the amounts of $1,464,041, $119,501, and $204,446 (for compensation paid),
• $375,000 to the CL Foundation in Colorado Springs, CO for a life project,
• $330,000 to the Civil Rights Research Center in Washington, DC for all areas,
• $290,332 to the Freedom of Conscience Defense Fund of Rancho Santa Fe for life and marriage projects;
• $164,500 to the Fidelis Center for Law and Policy in Chicago, IL for a life project, and
• $133,800 to the Center for Religious Expression of Memphis, TN for a public square project.

$3.1 million in foreign grants were made of which $2.5 million were grants to recipients in Europe for “human rights legal work” with the remaining grants to recipients in North America and South Asia. The specific recipients are not provided on the IRS Form 990.

Fundraising

As stated above, ADF spent $7.8 million on fundraising of which $2.5 million was paid for professional fundraising services. According to the IRS Form 990, ADF primarily relied on Masterworks, Inc. of Poulsbo, WA for consulting on the direct mail program.  $16.1 million was collected from this program and Masterworks was compensated $2.1 million (13%), netting ADF $14 million (87%).

ADF also used Infocision of Cleveland, Ohio who collected $152,519 and was compensated $90,158 (59%), netting ADF $62,361 (41%).

ADF also paid $210,113 to the Dunham Company of Plano, Texas for fundraising consultation (no other information was provided).

Summary

ADF raises about $50 million a year and has about $28 million in net fund assets (concentrated in land, buildings, and equipment and cash and investments) but spent about $55 million this past year (relying on net fund assets to meet the shortfall).

The organization employs nearly 300 people who are managed by 15 highly compensated individuals (14 men and 1 woman) who are paid $3.7 million (an average of $250,000 each) although ADF also paid $741,381 for management services to non-employees.  The organization paid for first class travel for employees and companions.  Two members of the CEO’s family are employed by ADF as is one family member of the CFO. Severance packages totaling nearly $125,000 were paid to two employees who were terminated in 2016.

A $100 donation to the ADF was primarily used to pay the staff salaries, benefits, pensions, and payroll taxes of the organization ($46) along with travel including first class travel for employees and companions ($15) , and grants  ($15 with $9 awarded to recipients in the US and $6 to foreign recipients), advertising and promotion 9$13), office expenses ($9), and fees for outside services  ($9) to support the organization’s mission.  Whether a donor or potential donor agrees with the organization’s mission, the question of whether revenue dollars are being maximized has to be asked.

To read the IRS Form 990 (2015) for the year ending June 30, 2016 click here.