Where Does $100 to Susan G Komen Go?

When most people think of Susan G Komen and pink ribbons, they think of the organization that works to reduce breast cancer deaths by raising money to fund research and community-based educational, medical, financial, and psychosocial support services for those facing a breast cancer diagnosis.  However, there are actually two Susan G Komen organizations:

The Susan G Komen Breast Cancer Foundation, Group (“Group”):  This 501 (c) (3) comprises the 76 US affiliates and 1 international affiliate, and is the organization that most people think of because of its local presence in more than 120 cities and communities in which more than 300 events are conducted annually. Largely supported by contributions and fundraising, the Group is based in Dallas, Texas.

The Susan G Komen Breast Cancer Foundation, Inc. (“Foundation”):  This 501 (c) (3) operates out of the same office as the Group and is supported by funds from the Group (the affiliates pay a predetermined percentage – a minimum of 25% – of their net monies raised to the Foundation to help fund the research grant programs).  In addition, the Foundation is  also supported by contributions and fundraising events.

Although both organizations engage in similar functions – fundraising, grant making, and program services, think of Group as the consolidation of all the local affiliates while the Foundation as the parent organization.

So, how is $100 in revenue spent? The answer depends on which organization received the revenue. An analysis of both organizations follows.

If the Group received the revenue, then the following analysis is relevant, with information from the Form 990 (2015 covering the year beginning April 1, 2015 and ending March 30, 2106) submitted to the IRS.

Group Analysis

The Group raised $104 million most of which came from fundraising events and contributions. Expenses were $113 million – about $9 million more than collected.  Although the Group had $61 million in net fund assets to cover the deficit, there were $4 million in rescinded grants and $1 million in donated services that reduced the net asset loss to $4 million bringing the net asset fund balance to $57 million at year-end.

The $113 million in expenses can be analyzed two ways:  by four broad categories (grants, program, management, and fundraising) or by specific line item categories (i.e. compensation, office, etc). Both are beneficial with the specific line item category providing a more detailed explanation of where funds are spent.

Expenses by Four Broad Categories (grants, program, management, and fundraising)

The following expenses were reported:

• $ 41 million (39% of revenue):  Grants
• $ 53 million (51% of revenue):  Program Services
• $  8 million (8% of revenue):  Management
• $ 11 million (10% of revenue):  Fundraising
• $113 million (108% of revenue):  Total Expenses

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

$100:  Revenue

-$ 51:  Program Services

-$ 39:  Grants

-$ 10:  Fundraising

-$  8:  Management

-$108:  Total Expenses

The bottom line is that $39 out of every $100 in revenue was used for research grants – a figure that some people would say is too low given that research is the key to treatment and a cure.

Expenses by Specific Line Item Categories

The $113 million in expenses were reported in the following categories:

• $ 41 million (39% of revenue):  Grants
• $ 30 million (29% of revenue):  Compensation, Benefits, Pension, and Payroll Taxes
• $ 18 million (17% of revenue):  Payments to affiliate
• $ 11 million (10% of revenue):  Office, Occupancy, Insurance
• $  6 million (6% of revenue):  Race Production, Food and Beverage, Gifts
• $  2 million (2% of revenue):  Advertising and Promotion
• $  2 million (2% of revenue):  Other (Fees for Services) and Other Expenses
• $  2 million (2% of revenue):  Professional Services and Consulting
• $  1 million (1% of revenue):  Travel and Conferences
• $113 million (108% of revenue):  Total Expenses

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

$100:  Revenue

-$ 29:  Compensation, Benefits, Pension, and Payroll Taxes

-$ 10:  Office, Occupancy, Insurance

-$  1:  Travel and Conferences

-$  2:  Other (Fees for Services and Other Expenses

-$  2:  Professional Services and Consulting

-$ 2:  Advertising and Promotion

-$ 46: Subtotal Expenses

$ 54:  Revenue Remaining

-$ 39  Grants

-$   6:  Race Production, Food and Beverage, Gifts

$  9:   Revenue Remaining

-$17:  Payments to Affiliate

-$  8:  Expenses in excess of revenue

As illustrated above, the organization spent $108 for every $100 in revenue. Although there is no timing of expenses on the 990, the Group used about $46 out of every $100 to cover staff and overhead expenses leaving about $54.  After using $39 for grants and $6 for Race Production and other costs, $9 out of every $100 in revenue was left.  In order to pay the affiliate (the Foundation) $17 out of every $100 in revenue, the Group had to rely on net fund assets because they spent more than they raised.

If the revenue and expenses of the Foundation are viewed, the following information is pertinent.

Foundation Analysis

The Foundation reported the receipt of $70 million for the year beginning April 1, 2016 and ending March 30, 2017, most of which came from contributions, fundraising, and affiliate organizations ($16 million or about 23% of revenue). During the same period, expenses were $99 million – about $29 million more than was raised.

The Foundation had $141 million in net fund assets so there was sufficient resources to cover the $29 million in expenses not covered by revenue.  After adjusting for unrealized gains on investments, donated services and changes other assets, the net fund balance was $128 million at year-end (a $13 million decrease as opposed to a $29 million).

The $99 million in expenses can be analyzed two ways:  by four broad categories (grants, program, management, and fundraising) or by specific line item categories (i.e. compensation, office, etc). Both are beneficial with the specific line item category providing a more detailed explanation of where funds are spent.

Expenses by Four Broad Categories (grants, program, management, and fundraising)

The following expenses were reported:

• $35 million (50% of revenue):  Grants
• $39 million (56% of revenue):  Program Services
• $12 million (17% of revenue):  Management
• $13 million (18% of revenue):  Fundraising
• $99 million (141% of revenue):  Total Expenses

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

$100:  Revenue

-$ 56:  Program Services

-$ 50:  Grants

-$ 18:  Fundraising

-$  17:  Management

-$141:  Total Expenses

The bottom line is that $50 out of every $100 in revenue was used for research grants although it is very important to note that the Foundation spent significantly more ($99 million) than what they raised ($70 million).

Expenses by Specific Line Item Categories

The $99 million in expenses were reported in the following categories:

• $35  million (50% of revenue):  Grants
• $25  million (36% of revenue):  Compensation, Benefits, Pension, and Payroll Taxes
• $14  million (20% of revenue):  Office, IT, Occupancy, Insurance
• $10 million ( 14% of revenue):  Consulting and Professional Services
• $ 6 million (9% of revenue):  Fees for Services: acct, legal, lobbying, fundraising, bank, etc
• $ 5  million (7% of revenue):  Equipment Rental and Maintenance
• $ 1  million (1% of revenue):  Advertising and Promotion
• $ 3  million (4% of revenue):  Travel and Conferences
• $99 million (141% of revenue):  Total Expenses

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

$100:  Revenue

-$ 50:  Grants

$ 50:  Revenue Remaining

-$ 36:  Compensation, Benefits, Pension, and Payroll Taxes

-$ 20:  Office, IT, Occupancy, Insurance

-$ 14:  Consulting and Professional Services

-$  9:  Fees for Services: acct, legal, fundraising, lobbying, bank, etc

-$  7:  Equipment Rental and Maintenance

-$  4:  Travel and Conferences

-$  1:  Advertising and Promotion

-$91:  Foundation Expenses exclusive of grants

-$141: Total Expenses including grants

As illustrated above, the Foundation spent $141 for every $100 in revenue received. Half of the revenue received went towards grants while the organization needed $91 out of every $100 to meet the other expenses.   Consulting, professional services, and fees for services  total $23 of every $100 in revenue which may appear high (but there is no other detail provided with regards to these expenses).

The bottom line is that both the Group and the Foundation are primarily engaged in raising funds to support the organization and to provide grants.  The Group spends about 39% of revenue on grants while the Foundation spends about 50%. The both spent more than they raised which resulted in a collective net fund balance decreasing from $202 million to $185 million. And, finally it is important to point out that if $100 was donated to the Group, $17 of that $100 was given to the Foundation who then deducted their costs.

To read the IRS Form 990’s, click here.