Where Does $100 to Compassion International Go?
Compassion International, Inc. (CI) is a Colorado Springs, Colorado based 501 (c) (3) engaged in Christian ministry to “release children from their economic, social, physical, and spiritual poverty.” With 1,181 employees, CI is one of the largest US charities (although the organization primarily operates internationally) raising $800 million annually and spending most funds on grants to foreign organizations or individuals.
According to CI’s website, the organization spends 81% of revenue on program services (which includes grants and program expenses), 11% on fundraising, and 8% on administration.
The IRS Form 990 (2015) for the year ending June 30, 2016, reports total expenses of $776 million (not including $11 million in depreciation) of which $537 million (67% of revenue) were grants and other assistance to foreign organizations and individuals, $107 million (13% of revenue) were program expenses, $73 million (9% of revenue) was spent on fundraising, and $59 million (7% of revenue) on administrative expenses. The remaining revenue – $24 million or 4% of revenue – was retained by the organization and is reflected in the net fund assets which totaled $213 million at year-end.
A comparison between CI’s website and the numbers submitted to the IRS are very similar:
- The website claims 81% of revenue is spent on program services and the tax return reports that 80% of revenue is spent on program services.
- The website claims 11% of revenue is spent on fundraising while the tax return reports that 9% was spent on fundraising.
- The website claims 8% is spent on administrative expenses while the tax return reports that 7% was spent on administrative costs.
- The website does not report that funds are saved but the tax return does. In reviewing 5 years of IRS Form 990’s, CI reported adding at least $9 million annually in revenue in four out of the last 5 years. Although the amount is relatively small in comparison to total revenue, there is a demonstrated commitment to increasing the net fund assets, which totaled $213 million as of June 30, 2016 (as of June 30, 2013, the net fund balance was $172 million).
Based on the above information, $100 in revenue was spent as follows:
-$ 67: Grants to foreign organizations and individuals
$ 33: Revenue Remaining
-$ 13: Program Expenses
-$ 9: Fundraising Expenses
-$ 7: Administrative Expenses
-$29: Subtotal Program, Fundraising, and Administrative Expenses
$ 4: Revenue Remaining to Fund Balance
As illustrated above $67 out of every $100 was spent on grants and other assistance to foreign organizations and individuals while $29 of every $100 is spent on program, fundraising, and administrative expenses.
An alternative way to look at how revenue is spent is to look at specific line item expenses:
$537 million or 67% of revenue: Grants to foreign organizations and individuals
$131 million or 16% of revenue: Salaries, Benefits, Pension, and Payroll Taxes (avg of $111,000 per employee)
$ 41 million or 5% of revenue (including $28 million to Deloitte Consulting): Fees for Services
$ 36 million or 4% of revenue: Office, IT, Insurance, Occupancy
$ 16 million or 2% of revenue: Travel
$ 15 million or 2% of revenue: Advertising and Promotion
$776 million or 96% of revenue: Total Expenses
Using the above information, $100 in revenue was spent as follows:
-$ 67: Grants to foreign organizations and individuals
-$ 16: Salaries, Benefits, Pension, and Payroll Taxes
-$ 5: Fees for Services
-$ 4: Office, IT, Insurance, Occupancy
-$ 2: Travel
-$ 2: Advertising and Promotion
-$ 96: Total Expenses
$ 4: Amount Remaining to Fund Balance
As illustrated above, $67 out of every $100 in revenue was used for grants to foreign organizations and individuals while $16 was used for salaries and benefits to the 1,181 employees. 126 staff received more than $100,000 in compensation with the most highly compensated individuals (11 executives) listed below:
- $381,073: Santiago H Mellado, President and CEO
- $294,712: Edward Anderson, SVP and CFO
- $257,775: Mark Yeadon, SVP
- $252,626: Mark Hanlon
- $241,761: Scott Todd, SVP (part of the year)
- $235,609: James R Davis, VP USA
- $234,254: Michael L Johnson, Director Marketing USA
- $229,655: Jeremy A Henderson, Director Marketing USA
- $221,505: Cassandra Shepard, SVP
- $216,781: Dawn Williams, VP Finance ($114,423 was separation pay)
- $ 90,617: Wesley K Stafford, President Emeritus (part-time employee)
As illustrated above, 9 of the 11 (82%) most highly compensated individuals are men and the lowest paid SVP is a woman. With the departure of Scott Todd and Dawn Williams, 8 of the 9 most highly compensated employees are men and the lowest paid is a female.
As a church organization, CI does not have to file an IRS Form 990 annually but chooses to do so for transparency which is commendable. The Colorado-based non-profit raised $800 million last year and spent $567 million ($67 out of every $100) on grants and assistance to foreign organizations and individuals – primarily in Sub Saharan Africa, Central and South America.
After grants, the largest expense the organization has is related to compensation and benefits which was $131 million ($16 out of every $100 in revenue) for 1,182 employees which averages out to $111,000 per staff person. $41 million ($5 out of every $100 in revenue) was paid for outside services including $28 million to Deloitte Consulting for consulting services – detail not provided). The remaining $67 million in expenses ($8 out of every $100 in revenue) was spent on office expenses, travel, and advertising. About $24 million was not spent (which includes $11 million in depreciation) and was placed in the net fund balance which had $213 million at year-end. Assets consist primarily of cash and liquid securities and land, buildings and equipment.
And, finally it is worth reiterating that 8 out of the 9 most highly compensated individuals that were still with the organization at year-end were men. The SVP with the lowest compensation was a woman and she was also the lowest compensated of the nine senior management staff.
To read the IRS Form 990 (2015) for the year ending June 30, 2016, click here.