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April 29, 2018

Where Does $100 to the V Foundation Go?

by Anne Paddock

The V Foundation was founded by Jim Valvano, the legendary basketball coach who died in 1993 when he was 47 years old. Based in Cary, North Carolina, the V Foundation was established to raise funds for cancer research so the organization engages in primarily two functions:  fundraising and awarding grants.  However, it is also important to note that an affiliate organization – Don’t Ever Give Up, Inc. – a non-profit 501 (c) (3) – that operates out of the same office – exists to raise funds for the V Foundation.

It is unclear why Don’t Ever Give Up, Inc. was established (in 2015) to raise funds when one of the two purposes of the V Foundation is to raise funds.  Sometimes non-profits form an affiliate organization to focus solely on fundraising so that the primary organization’s fundraising costs appear lower than what they actually are.  To fully understand the V Foundation, it is necessary to look at the IRS Form 990’s of BOTH organizations. If both organizations were considered collectively (since Don’t Ever Give Up, Inc. exists to support the V Foundation), then a more accurate picture of revenue and expenses are revealed.

The key financial points based on the 2016 Form 990 (covering the year beginning October 1, 2016 and ending September 30, 2017) are summarized as follows:

The V Foundation raised $29.3 million while Don’t Ever Give Up, Inc. raised $12 million. $6.7 million of the $12 million from Don’t Ever Give Up, Inc. was given to the V Foundation so collectively, the two organizations reported $34.6 million ($29.3 million – $6.7 million + $12 million) in total revenue.

The V Foundation reported $27.6 million in expenses while Don’t Ever Give Up, Inc. reported $11.8 million (of which $6.7 million was a grant to the V Foundation) so the total expenses of both organizations were $32.7 million ($27.6 million + ($11.8 million – $6.7 million = $5.1 million) reported in the following categories:

  • $ 4.7 million (or 14% of revenue):  Fundraising Costs ($1.4 million from the V Foundation and $3.3 million from Don’t Ever Give Up, Inc.)
  • $ 2.9 million (or 8% of revenue):  Management Costs ($1.3 million from the V Foundation and $1.6 million from Don’t Ever Give Up, Inc.)
  • $ 1.9 million (or 5% of revenue):  Program Expenses ($1.7 million from the V Foundation and $.2 million from Don’t Ever Give Up, Inc.)
  • $23.2 million (or 67% of revenue):  Grants

As illustrated above, the two organizations spent $4.7 million (or 14% of revenue) on fundraising costs, $2.9 million (or  8% of revenue) on management costs, $1.9 million (or 5% of revenue) on program expenses, and $23.2 million (or 67% of revenue) on grants.

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

$100:  Revenue

-$ 14:  Fundraising Costs

-$  8:  Management Expenses

-$ 5:  Program Expenses

-$ 27:  Total Fundraising, Management, and Program Expenses

$ 73:  Revenue Remaining

-$ 67:  Grants

$   6:  Amount Remaining:  To Fund Balance

As illustrated above, $27 out of every $100 in revenue raised went to pay fundraising, management and program expenses. $67 out of every $100 raised was awarded in grants.

_________________________________________________________________________

The specific organization financial information is summarized as follows:

THE V FOUNDATION

The V Foundation reported $29.3 million in revenue, of which $20.9 million were contributions (including $2.2 million in publicly traded securities which were sold) and gifts while $6.7 million came from a grant by Don’t Ever Give Up, Inc. and $1.7 million came primarily from investment income and the sale of assets.  2 other gifts/grants came from two foundations:  $1.5 million from the BRCA Foundation (an organization that funds medical research) of San Francisco, CA and the Gray Foundation of Saratoga Springs, NY, who also funds medical research). Why these two organizations didn’t use the funds towards grants directly related to cancer research is unclear.  By giving the funds to the V Foundation, the funds are diluted by program service, management, and fundraising of the V Foundation.

Expenses totaled $27.6 million and can be viewed two ways:  by broad category (grants, program services, management, and fundraising) or by specific line item categories (i.e. compensation-related, office-related, grants, etc). Both ways are beneficial with the former providing a general overview while the later provides more specific expense information.

Expenses by Broad Category (Grants, Program Services, Management, and Fundraising)

The $27.6 million in expenses were reported in the following four categories:

  • $23.2 million (or 79% of revenue):  Grants
  • $ 1.7 million (or 6% of revenue):  Program Services Expenses
  • $ 1.4 million or 5% of revenue):  Fundraising Expenses
  • $ 1.3 million (or 4% of revenue):  Management Expenses

As illustrated above, the organization spends about 15% of revenue on program services (i.e. grant review), fundraising, and management and 79% on grants. The unspent revenue – $1.7 million – was added to the net fund assets which had $34.8 million at year-end.

Fundraising costs appear low – primarily because the fundraising costs of an affiliate organization (Don’t Ever Give Up, Inc.) are on a separate IRS Form 990.

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

$100:  Revenue

-$  6:  Program Service Expenses

-$  5:  Fundraising Expenses

-$  4:  Management Expenses

$ 15:  Total Program Service Fundraising, and Management Expenses

$ 85:  Revenue Remaining

-$ 79:  Grants

$  6:  Amount Remaining:  To Fund Balance

As illustrated above, the V Foundation spent $15 out of every $100 in revenue collected on organization expenses, and $79 out of every $100 collected was used for grants for cancer research.

Expenses By Specific Category:

The $27.6 million in expenses were reported in the following categories:

  • $23.2 million (or 79% of revenue):  Grants
  • $ 2.7 million (or 9% of revenue:  Compensation-Related Expenses
  • $  .6 million (or 2% of revenue):  Office-Related Expenses
  • $  .6 million (or 2% of revenue:  Fees for Services (Investment, Bank, Affiliate Organization)
  • $  .3 million (or 1% of revenue):  Travel and Summit
  • $  .2 million (or 1% of revenue:  Donor Recognition and Advertising/Promotion

As illustrated above, the largest expense after grants is compensation-related expenses for the 45 employees who received $2.7 million (which equates to $60,000 each). However, 12 individuals received more than $100,000 with the highest compensated individual the CEO, Susan Braun who received $368,737.

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

$100:  Revenue

-$  9:  Compensation-Related Expenses

-$  2:  Office-Related Expenses

-$  2:  Fees for Services (Investment, Bank, Affiliate Organization)

-$  1:  Travel and Summit

-$  1:  Donor Recognition and Advertising/Promotion 

$ 15:  Subtotal Expenses

$ 85:  Revenue Remaining

-$ 79:  Grants

$   6:  Amount Remaining:  To Fund Balance

As illustrated above, the V Foundation spent $15 out of every $100 on support expenses for the organization and $79 out of every $100 on grants, leaving $6 for the fund balance.

DON’T EVER GIVE UP, INC.

The IRS Form 990 (2016 representing the year beginning October 1, 2016 and ending September 30, 2017) reveals the following key information about Don’t Ever Give Up, Inc.:

Don’t Ever Give Up, Inc. raised $12 million from fundraising events.

Expenses totaled $11.8 million and can be viewed two ways:  by broad category (i.e. grants, program, management, and fundraising) and by specific line category (i.e. compensation-related, office-related, fundraisers, etc). Both are beneficial with the former providing a general overview while the later provides more detailed information on how revenue was spent.

Expenses by Broad Category (Grants, Program, Management, and Fundraising)

The $11.8 million in expenses were reported in the following categories:

  • $ 6.7 million (or 56% of revenue):  Grants
  • $ 3.3 million (or 28% of revenue):  Fundraising Expenses
  • $ 1.6 million (or 13% of revenue):  Management Expenses
  • $  .2 million (or 2% of revenue):  Program Expenses

As illustrated above, Don’t Ever Give Up, Inc. spent $3.3 million or 28% of revenue to pay for the organization’s primary function:  raising funds.  Management costs totaled $1.6 million which appears to be primarily staff costs even though the organization reports having no employees (Don’t Ever Give Up, Inc. uses the employees of the V Foundation). Program expenses were very low because Don’t Ever Give Up, Inc. is a fundraising organization so fundraising costs are allocated to fundraising. In total, Don’t Ever Give Up, Inc. spent $5.1 million or 42% of revenue on expenses to support the organization while $6.7 million or 56% of revenue was used for grants to the V Foundation.

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

 $100:  Revenue

-$ 28:  Fundraising Expenses

-$ 13:  Management Expenses

-$  2:  Program Expenses

-$ 43: Total Fundraising, Management, and Program Expenses

$ 57:  Revenue Remaining

-$ 56: Grants

$  1:  Amount Remaining:  To Fund Balance

As illustrated above, Don’t Ever Give Up, Inc. spent $43 out of every $100 in revenue raised on fundraising, management, and program expenses.  $56 out of every $100 raised was provided to the V Foundation. The unused revenue – about $200,000 or $1 out of ever $100 raised was placed in the fund assets which had just under $500,000 at year-end.

Expenses by Specific Category

$11.8 million in expenses were allocated to the following specific categories:

  • $ 2.1 million (or 17% of revenue):  Fundraising and Other Costs
  • $ 1.9 million (or 16% of revenue):  Compensation-Related Expenses
  • $  .7 million (or 6% of revenue):   Office-Related Expenses (Office, IT, Occupancy, Bank Fees, Insurance)
  • $  .2 million (or 2% of revenue):  Advertising and Promotion
  • $  .2 million (or 2% of revenue):  Travel Expenses
  • $ 6.7 million (or 56% of revenue):  Grants

The fundraising costs above are primarily the costs of the 24 fundraising events an are reported as a NET figure.

These events produced a gross income of $1.5 million ($13.5 million in gross receipts less $12 million in contributions).  Don’t Ever Give Up, Inc. spent $3.5 million on direct expenses related to these events (which led to a $2 million loss).

  • $1,709,576  Other Expenses (no detail provided)
  • $  838,620: Rent/Facility Costs
  • $  734,867:  Food and Beverages
  • $  160,655:  Entertainment

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

$100:  Revenue

-$ 17:  Fundraising and Other Costs

-$ 16:  Compensation-Related Expenses

-$  6:  Office-Related Expenses (Office, IT, Occupancy, Bank Fees, Insurance)

-$  2:  Advertising and Promotion

-$  2:  Travel Expenses

-$ 43: Total Organization Expenses

$ 57:  Revenue Remaining

-$ 56:  Grants

 $  1:  Amount Remaining: To Fund Balance

____________________________________________________________________

In summary, the V Foundation was formed in 1993 to raise funds and award grants for cancer research. In 2015, Don’t Ever Give Up, Inc. was formed to raise funds for the V Foundation which appears to make the fundraising and management costs of the V Foundation appear lower than what they actually are. Don’t Ever Give Up, Inc. exists to raise funds for the V Foundation, reports no employees (they use the employees from the V Foundation and reimburse the organization) so both organizations have to be considered to fully understand how revenue is used.

Collectively, the two organizations raised nearly $35 million last year and spent nearly $10 million (about 27% of revenue) on fundraising, management, and program service expenses. About $23 million (about 67% of revenue) was awarded in grants for cancer research.

To read the IRS Form 990 (2016) for the V Foundation, click here.

To read the IRS Form 990 (2016) for Don’t Ever Give Up, Inc, click here.

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