Where Does $100 to the Clinton Foundation Go?

The Clinton Foundation – also known as the “Bill, Hillary, and Chelsea Clinton Foundation” (BHCCF) – is based out of Little Rock, Arkansas although there are offices in other locations including New York City. Established in 1997, the organization is a 501 (c) (3) engaged primarily in maintaining and operating the Presidential Library and Museum in Little Rock, and addressing “the world’s most pressing problems.”

BHCCF is not a large grant provider; nor does the organization specialize in implementing projects. Instead, BHCCF appears to be focused on pubic awareness, establishing partnerships with other organizations, and finding solutions (referred to as initiatives) to a variety of global issues including third world problems, climate change, and health-related issues.

Key information about BHCCF taken from the IRS FORM 990 (2016) includes the following:

BHCCF has 578 employees, of which 66 received more than $100,000 in compensation. $4.1 million in compensation was provided to 14 staff:

• $440,292:  Kevin Thurm, COO and EVP
• $403,692:  Bruce R Lindsey, Director
• $329,863:  Mark Gunton, CEO, Clinton GIUSTRA Enterprise Partnerships
• $325,297:  Maura Pally, SVP Programs
• $310,908:  David Watt, Director of Sponsorship, Clinton Global Initiative
• $282,364:  Robert S Harrison, CEO Clinton Global Initiative
• $281,856:  Dymphna Van Der Lans, CEO, Clinton Climate Initiative
• $268,140:  Richard Castro, General Counsel
• $247,310:  Amitabh Desai, Foreign Policy Director
• $245,932:  Carolina Botero, CFO Clinton GIUSTRA Enterprise Partnership
• $234,754:  Stephanie S Streett, Executive Director, Secretary
• $228,233:  Andrew Kessel, CFO
• $217,810:  Danielle Stilz, CDO
• $199,048:  Scott Curran, Assistant Secretary

As illustrated above, 9 of the 14 (64%) most highly compensated staff are men, while 5 (36%) are women (3 of the 5 women are in the lower third in terms of compensation).

The organization paid for first class or charter travel (although this appears to have been limited to transatlantic flights and travel for Bill and Chelsea Clinton).

$70.8 million in revenue was reported in 2016 from 6 primary sources:

• $45.9 million (65% of revenue):  contributions;
• $12.3 million (17% of revenue):  fundraisers;
• $4.7 million (7% of revenue):  government grants;
• $2.9 million (4% of revenue):  program services (library, museum, etc);
• $4.8 million (7% of revenue):investment income; and
• $0.2 million from other sources.

It is important to note total revenue was significantly less in 2016 compared to 2015 when $116.1 million in revenue was reported, which may have been because Hillary Clinton was running for president during 2016. In the years (2009-2013) in which Hillary Clinton was Secretary of State, the Clinton Foundation reported revenue between $55 million and $148 million (with the highest years being the years ending June 30, 2010, June 30, 2013 and June 30, 2014 at $140 million, $148 million and $178 million, respectively). The highest revenue years appear to be the year after she became Secretary of State, the year she left her government position, and the following year when she was planning her presidency run.

There are two ways to look at expenses:  by four broad categories (program, grants, management, and fundraising) or by specific line item expense with the later providing more detail.

In 2016, expenses totaled $81.3 million (not including depreciation) which is about $10 million more than the amount of revenue reported.  The organization was able to cover the shortfall because they had nearly $350 million in net fund assets.

Expense Analysis by Four Broad Categories (Program, Grants, Management, and Fundraising)

• $58.5 million (83% of revenue):  Program Expenses
• $ 2.8 million (4% of revenue):  Grants
• $17.0 million (24% of revenue):  Management Expenses
• $ 3.0 million (4% of revenue) :  Fundraising Expenses

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

$100:  Revenue

-$ 24:  Management Expenses

-$   4:  Fundraising Expenses

-$ 28:  Subtotal Management and Fundraising Expenses

$ 72:  Revenue Remaining

-$  4:  Grants

$ 68:  Revenue Remaining

-$ 83:  Program Expenses

-$ 15:  Shortfall (covered by net fund assets)

As illustrated above, the organization spent $115 for every $100 in revenue reported, the overage covered by the net fund assets. For comparison purposes, it is important to note that in 2015, the organization spent significantly less (about $17 million less than they collected so it is helpful to consider expenses in each category as a percentage of total expenses:

• Management Expenses:  $17 million or 21% of expenses
• Fundraising Expenses: $3 million or 4% of expenses
• Grants:  $2.8 million or 3% of expenses
• Program Expenses:  $58.5 million or 72% of expenses

The difference between expenses as a percentage of revenue and expenses as a percentage of expenses is usually not that significant because most organizations don’t spend as much as they bring in, so 2016 was an unusual year for BHCCF. That said, at the end of the day, how revenue was spent is paramount because revenue drives the organization (without revenue, expenses wouldn’t exist or won’t continue). So, in 2016 BHCCF was able to cover their management, fundraising, and grant expenses but had to rely on resources to meet all their program expenses.  Or, another way of looking at 2016 is to say BHCCF was able to cover their program, grant, and fundraising expenses but had to rely on resources to cover management expenses. Either way, the organization spent more than they raised in 2016 but had the resources to cover their costs.

Expense Analysis by Specific Expense Category

In looking at specific line item expenses, the reader is able to see exactly where revenue was spent. BHCCF reported $81.3 million in expenses (not including depreciation) in 2016 which was spent as follows:

• $37.3 million (53% of revenue):  Salaries, Compensation, Benefits, Pension, Payroll Taxes
• $14.3 million (20% of revenue):  Other Expenses (no detail provided)
• $12.9 million (18% of revenue):  Travel and Conferences
• $ 8.1 million (12% of revenue):  Office, IT, Occupancy, Insurance
• $ 5.1 million (7% of revenue):  Fees for Services (acct, legal, invest fees, staff training, fundraising fees)
• $ 2.8 million (4% of revenue):  Grants
• $  .8 million (1% of revenue):  Advertising, Promotion, Exhibits

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

$100:  Revenue

-$ 53:  Salaries, Compensation, Benefits, Pension, Payroll Taxes

-$ 20:  Other Expenses (no detail provided)

-$ 18:  Travel and Conferences

-$ 12:  Office, IT, Occupancy, Insurance

-$  7:  Fees for Services (act, legal, invest fees, staff training, fundraising fees)

-$  4:  Grants

-$  1:  Advertising, Promotion, Exhibits

-$115:  Total Expenses

As illustrated above, the largest expenses were for staff, office, travel and conferences, and other expenses.  With regards to staff, $37.3 million was spent on 578 employees (about $65,000 each or if the 14 highly compensated staff are not considered, then the average compensation packaged was about $59,000.

Other expenses of $14.3 million are described as fees for services ($6.3 million), direct program expenses ($5 million), a loss on program investment ($1.8 million), and all other expenses ($1.2 million). No other detail is provided for these expenses.

BHCCF spent 18% of revenue (or about $12.9 million) on travel and conferences (that includes first class and charter travel) in 2016 which appears to be related to promoting the organization’s mission. Office expenses accounted for 12% of revenue ($8.1 million).

Collectively, these four expenses – staff, office, travel, and other expenses – amounted to 103% of total revenue collected.

Other noteworthy information is summarized as follows:

At the end of fiscal year 2016, BHCCF had $335 million in total assets, of which $73 million was in cash and publicly traded securities, $105 million was investments in other securities, and $97 million was in land, buildings, and equipment.  Liabilities totaled less than $9 million and were primarily accounts payable, leaving $326 million in net fund assets, of which $182 million is permanently restricted, $16 million was temporarily restricted, and $128 million is unrestricted.

15 independent contractors received more than $100,000 in compensation and the five highest compensated independent contractors were:

• $897,180:  Roundboxx Group, Inc. of Hermosa Beach, California for conference production services
• $757,300:  Price Waterhouse Coopers, LLC of Dallas, Texas for audit and tax services
• $362,000:  Phase 2 Technology, LLC of Alexandria, Virginia for website development
• $324,438:  The Mullian Group PTY LTD of Mullian, Australia for technical advisory services
• $252,282:  Osa International Inc of Wood Dale, Illinois for production services

The BHCCF engages in “program services” (including 6 grants greater that $5,000 totaling $259,034) outside the US with $21.4 million in program service expenses or 37% of total program expenses ($58.5 million) with most going to program services provided to Sub Saharan Africa (where they have 8 offices and 239 employees, agents or independent contractors) and South America (where they have 2 offices and 59 employees, agents, or independent contractors).  BHCCF has 10 offices and a total of 311 employees, agents or independent contractors outside the US.

In 2016, BHCCF awarded $2.5 million in grants in the US with the largest ($2.3 million) to the Alliance for a Healthier Generation – an organization founded by BHCCF and the American Heart Association.

Two outside entities received more than $5,000 in compensation for fundraising:  Anne Lewis DBA Anne Lewis Strategies of Washington, DC received $50,064 for raising $1,407,961 – or 4 cents of every $1 via on-line email marketing; and AB Data of Milwaukee, Wisconsin received $97,500 for raising $233,938 – or 42 cents of every $1 via direct mail marketing (Note to potential donors: Don’t respond to direct mail if you want charitable dollars to go further towards an organization’s mission).

BHCCF held 8 fundraising events that raised $12.3 million in contributions in 2016 with the largest fundraiser being former President Clinton’s 70th birthday party, an event that raised $9.3 million in contributions (but that had gross receipts of $9.4 million). The organization spent $300,000 on facility costs, food and beverages, and entertainment.

Summary

In conclusion, the BHCCF is a foundation founded by the Clinton family 20 years ago to manage the Presidential Library and Museum and to also address and seek solutions to global issues. The organization has about $326 million in net fund assets and raised about $70 million in 2016 to push forth their agenda on what appear to be a macro level partnering with other organizations to administer solutions.  In 2016, BHCCF spent about $80 million ($10 million more than they raised but covered these expenses with existing assets) of which $21 million was spent overseas.

With nearly 600 employees (with what appears to be about half overseas primarily in Sub Sahara Africa and South America), the organization’s primary expenses are staff, office overhead, travel and conferences and $14 million in program expenses that are not detailed on the IRS Form 990.

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