Where does $100 to Goodwill go?

Goodwill Industries was established in 1902 and is widely known across the country as the place where we all donate clothing and household goods to help others. There are 161 Goodwill Industries agencies and more than 3,200 retail stores in the US and 14 countries that generated $5.7 billion in revenue in 2016.

Goodwill Industries International, Inc is the executive member association organization that provides oversight, support, expertise, and products to local agencies (each is a separate 501 (c) (3) that operates independently and pays membership dues to support Goodwill Industries International, Inc.).

This analysis concerns Goodwill Industries International, Inc. (Goodwill) that oversees all the Goodwill organizations. To see revenue, expenses including executive salaries, assets, liabilities and other public information of local Goodwill organizations, look to the individual IRS Form 990’s of specific Goodwill Industries agencies  (i.e. Goodwill Industries of Greater New York and Northern New Jersey, Goodwill Industries of Northwest North Carolina).

In 2016, Goodwill reported $42.5 million in revenue from four sources:

• $20.7 million (49% of revenue):  membership dues
• $14.8 million (35% of revenue):  government grants
• $3.7 million (9% of revenue):  contributions
• $3.2 million ( 7% of revenue): conferences/seminars and program services

Expenses totaled $43.9 million (not including $1 million in depreciation)  – about $1.4 million more than revenue raised – and can be analyzed two ways:  by four broad categories (program services, grants, management, and fundraising) and by specific line item expense, which provides more detail.

Expenses by Broad Category (program services, grants, management, and fundraising)

$43.9 million was spent on expenses in the four categories listed below:

• $23.8 million (56% of revenue):  Program Services (mission advancement, retail consultations, low-income senior job training, and gov’t relations)
• $16.6 million (39% of revenue):  Grants
• $ 3.0 million (7% of revenue):  Management
• $  .5 million (1% of revenue):  Fundraising
• $43.9 million (103% of revenue): Total Expenses

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

$100:  Revenue

-$ 56:  Program Services (mission advancement, retail consultations, low-income senior job training, gov’t relations)

-$ 39:  Grants

-$   7:  Management

-$   1:  Fundraising

-$103:  Total Expenses

As illustrated above, Goodwill spent $103 for every $100 in revenue.  Goodwill had $23 million in net fund assets at the beginning of the year-end which covered the excess expenses along with an unrealized loss on investments to end the year with $21 million in net fund assets.

Expenses by Specific Line Item

The $43.9 million in expenses broken down by specific line items is summarized as follows:

• $17.9 million (42% of expenses):  Compensation, Benefits, Pensions, Payroll Taxes
• $16.6 million (39% of revenue):  Grants
• $ 3.8 million (9% of revenue):  Other Fees for Services Expenses (no detail provided)
• $ 2.3 million (5% of revenue):  Travel and Conferences
• $ 2.1 million (5% of revenue):  Office, Occupancy, IT, Employee Relations
• $ 0.8 million (2% of revenue):  Dues, Seminar and Training, Printing, and Interest
• $ 0.4 million (1% of revenue):  Fees for Services (legal, accounting, investment and lobbying)
• $43.9 million (103% of revenue):  Total Expenses

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

$100:  Revenue

-$ 42:  Compensation, Benefits, Pensions, Payroll Taxes

-$  9:  Other Fees for Services (no detail provided)

-$  5:   Travel and Conferences

-$  5:   Office, Occupancy IT, Employee Relations

-$  2:  Dues, Seminar and Training, Printing and Interest

-$  1:  Fees for Services (legal, accounting, investment, and lobbying)

-$ 64: Subtotal Expenses

$  36: Revenue Remaining

-$ 39:  Grants

-$103:  Total Expenses

As illustrated above, $64 of every $100 in revenue was spent on organizational overhead, including $9 for fees for non-specific services.  $39 of every $100 representing $16.6 million was spent on grants made primarily to 62 other Goodwill Industries organizations which means for every $100 in revenue raised by Goodwill, $64 is deducted before $39 is given in grants to other Goodwill organizations who then deduct their overhead expenses.  In summary, Goodwill received $20.7 million in membership dues from other Goodwill Industry organizations and then granted out $16.6 million, which begs the question:  why?

Goodwill’s largest expense was related to employees. The organization used $18 million to compensate 194 employees which equates to an average of $93,000 per employee. 54 received more than $100,000 in compensation with $3 million provided to 9 employees, including $1.1 million to James Gibbons the CEO. Goodwill also pays for first class travel and for personal services (which appears to be an automobile transportation service to aid Mr. Gibbons who is blind).

A brief analysis of the balance sheet of Goodwill reveals that the organization had $29.2 million in assets (primarily in investments, property and equipment, and cash), $8.2 million in liabilities (primarily accounts payable and bonds payable), leaving $21 million in net assets (of which $15.3 million is unrestricted).

In summation, Goodwill oversees 161 independent (but membership paying) organizations. The largest source of revenue is membership dues followed by government grants, and contributions.  $42 of every $100 in revenue is spent on employee compensation including $1.1 million to the CEO, who does fly first class or charter and also receives transportation services because he is blind.

Last year, Goodwill spent $3.8 million or $9 out of every $100 in revenue for outside services with no detail provided.