Where Does $100 to the Food Research and Action Center Go?

The Food Research and Action Center (FRAC) is a non-profit 501 (c) (3) that works to eradicate poverty-related hunger and improve public policies in the United States by awarding grants, assisting people with access to nutrition assistance programs, and working in both the public and private sectors to foster program participation and promote changes in public policies and attitudes.

The 2016 IRS Form 990 reports the following key information about FRAC:

The organization has 47 employees and is based in Washington, DC.

James D Weill has been the President of FRAC since 1998.

FRAC relies on both public (46% of revenue) and private (54% of revenue) funds to cover grants and the operating expenses of the organization.

In 2016, FRAC raised $10 million in revenue (compared to $6.8 million in 2015). Expenses totaled $9.1 million and can be viewed two ways: by broad category (i.e. Grants, Program Services, Management, and Fundraising) or by specific line item category (i.e. grants, compensation-related, office-related, etc). Both ways are beneficial with the former providing a good overview and the latter providing more specific information on expenses.

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

The $9.1 million in expenses were reported in the following four categories:

• $5.0 million (or 50% of revenue):  Program Services
• $3.4 million (or 34% of revenue):  Grants
• $  .5 million (or 5% of revenue):  Fundraising
• $  .2 million (or 2% of revenue):  Management

As illustrated above, half of the revenue was spent on program services while 34% was spent on grants.  55 grants of $5,000 or more were awarded for “support for federal nutrition program implementation)with the largest recipients listed below:

• $750,000:  School Nutrition Foundation
• $162,500:  Hunger Solutions Minnesota
• $157,000:  Hawaii Appleseed Center for Law and Economic Justice
• $140,000:  Hunger Solutions New York
• $131,500:  Virginia Poverty Law Center
• $130,000:  Hunger Free Colorado

The largest grant – $750,000 to the School Nutrition Foundation, a foundation that supports the School Nutrition Association (a non-profit 501 (c) (4) that operates out of the same address as the School Nutrition Foundation) that provides professional development for members to improve the quality of school meal programs.

The School Nutrition Foundation relies almost completely on The Food Research and Action Center for funding. The School Nutrition Foundation spent about $500,000 of the funds to run the foundation, gave approximately $100,000 to the School Nutrition Association, and retained the rest (the foundation has $3.8 million in net fund assets).

The President of the School Nutrition Foundation is Patricia Montague who was compensated $37,388. However, Patricia Montague is also the CEO of The School Nutrition Association from which she received total compensation of $378,388 for a total compensation of $415,776 from the two organizations.

Sounds convoluted?  It is. In summary, FRAC is basically funding the operations of the School Nutrition Foundation, an organization that has managed to accumulate nearly $4 million in net fund assets over the years. The School Nutrition Foundation helps support a professional association (the School Nutrition Association) that provides professional educational services to its members. It is important to note that a 501 (c) (3) – both FRAC and the School Nutrition Foundation – can donate to a 501 (c) (4) – but the 501 (c) (3) must exercise caution because unrestricted donations to a 501 (c) (4) can result in loss of tax exempt status.

Expenses by Specific Category

The $9.1 million in expenses was reported in the following categories:

• $4.1 million or (41% of revenue): Compensation-Related Expenses
• $3.4  million (or 34% of revenue):  Grants
• $ .8 million (or 8% of revenue):  Office-related Expenses
• $ .4 million (or 4% of revenue:  Travel and Conferences
• $ .4 million (or 4% of revenue):  Fees for Services (detail not provided)

As illustrated above, the largest expense for FRAC is for compensation-related expenses which were $4.1 million for 47 employees, which equates to an average of $87,000. However, 13 individuals received more than $100,000 in compensation with the most highly compensated individuals listed below:

• $231,970:  James D Weill, President
• $191, 914:  Ellen Teller, Director of Government Affairs
• $188,884:  Ellen Vollinger, Director of Government Affairs
• $178,895:  Patrick Youngblood, Director of Development
• $148,467:  Geraldine Henchy, Director Nutrition Policy, Early Childhood
• $146,467:  Barbara Western, Director of Operations and Human Resources

As listed above, the 6 most highly compensated individuals (4 women and 2 men) received a total of $1.1 million (most of which was from FRAC, about 10% came from FRAC Action Council – a 501 (c) (4) that is a closely related organization). Given that the 990 reports FRAC had 47 employees, 5 of whom are directors of specific areas, along with a President to manage the total organization, it is unclear why FRAC only reports total management costs of about $200,000 (of which $175,000 are compensation-related).

How $100 In Revenue Was Used

If expenses by broad category are considered, then $100 in revenue was spent as follows:

$100:  Revenue

-$ 50:  Program Services

-$ 34:  Grants

-$   5:  Fundraising

-$   2:  Management

-$ 91:  Total Expenses

$   9:  Amount Remaining:  To Fund Balance

However, if expenses by specific categories are considered, then $100 in revenue was spent as follows:

$100:  Revenue

-$ 41:  Compensation-related Expenses

-$  8:  Office-related Expenses

-$  4:  Travel and Conferences

-$  4:  Fees for Services (detail not provided)

-$ 57:  Subtotal: Organization Expenses

$ 43:  Revenue Remaining

-$ 34:  Grants

$  9:  Amount Remaining: To Fund Balance

As illustrated above, $57 out of every $100 in revenue was spent on staff, office, travel and conferences, and fees for outside services. $34 out of every $100 in revenue was awarded in grants. $9 out of every $100 in revenue was not spent and placed in net fund assets that had $6.3 million at year-end (up from $5.3 million in 2015), $4.9 million of which was temporarily restricted.

The bottom line is that FRAC is a labor intensive organization that spends about 57% of its revenue on staff and organization costs and 34% on grants, with some of the grant funds used to support other non-profits who also award grants to other non-profits. For donors who want dollars to go furthest, donations should not be made to non-profits that deduct overhead costs and then give to other non-profits who deduct overhead costs and also make grants to non-profits. Instead, donation dollars go further when given to one organization that utilizes the funds to deliver a service (i.e. research, assistance, etc) or product.

To read the 2016 IRS Form 990 for FRAC, click here.