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December 4, 2018

Fundraising at the Natural Resources Defense Council

by Anne Paddock

Fundraising is at the core of any non-profit with one of the most pressing donor concerns being how much an organization spends on fundraising. For the Natural Resources Defense Council – a New York City-based organization that raised $177 million last year – the answer appears to be about $12.3 million (or 7% of revenue), according to the IRS Form 990 for the year ending June 30, 2017.  These expenses are summarized as follows:

  • $5.4 million:  Compensation-related expenses*
  • $4.0 million :  Office-related expenses
  • $1.1 million:  List Rentals, Recruiting,Storage, Other, Travel and Conferences
  • $1.0 million:  Fees for Services
  • $0.8 million:  Advertising and Promotion

As illustrated above, the largest fundraising expenses are for compensation of staff and office related expenses, which means the organization is primarily relying on in-house staff for fundraising.

Of the $5.4 million in compensation-related expenses reported on Part IX, the Statement of Functional Expenses, $246,291 was for “compensation of current officers, directors, trustees, and key employees. In Part VII, Section A, Officers, Directors, Trustees, Key Employees and Highest Compensated Employees, $306,458 was paid to John Murray, who was the former Director of Development, and $88,146 was paid to Anders Yang, the Chief Development Officer who started in 7/2016. Both of these positions are in fundraising and collectively total $394,604 in compensation to key employees so it is unclear why only $246,291 was allocated to this category on Part IX, the Statement of Functional Expenses (which summarizes all expenses in Program Services, Management, and Fundraising).

In focusing on the Fees for Services, it is notable that NRDC reports $1 million in fundraising expenses in this category, of which $246,991 is for professional fundraising fees, most of which ($231,181) were paid to two fundraising consultants:  O’Brien Garrett of Washington, DC and Stephen Mills, also of Washington, DC. The remaining funds ($15,810) was paid to telemarketers who raised $67,494 – an insignificant sum relative to total revenue raised.

Also part of the $1 million in Fees for Services listed above,  is the $450,276 in fundraising fees from “clean energy” according to Attachment 4 (Part IX Other Fees). In Attachment 4 there are 14 line items of other fees paid to outside professionals totaling $17.2 million, but only the $450,276 fees paid from one category defined as “clean energy” are allocated to fundraising.

Within the $17.2 million in fees paid to professionals, are fees paid for membership consulting ($559,927) which is classified as a program expense, not a fundraising expense.  Membership refers to E2 Environmental Entrepreneur, part of NRDC where supporters pay fees (starting at $1,000) to become members of an organization that brings together people that support environmental issues. In 2017, $43 million (nearly 25% of all revenue) in membership fees were collected. In addition, fees paid to professionals for communications consulting ($269,949) were also classified as a program expense.

NRDC raises funds through mail, e-mail, phone, and in-person solicitations. In addition, the organization solicits for grants (both governmental and non-governmental) and holds fundraisers, so they appear to be covering their bases. The 990 reports NRDC conducted three major fundraising events that raised $2,759,754. After deducting $2,606,144 in contributions, $153,610 was the gross income. NRDC spent $434,980 on rental facilities and other direct expenses resulting in a net loss of $281,370. However, this loss needs to be interpreted relative to the contributions received ($2.6 million) so although the organization reports a net loss, the fundraisers raised significant sums of money.

The 990 reports the five highest paid independent contractors were:

  • $2.5 million:  Devine Mulvey, Inc of Washington, DC for advertising
  • $2.1 million:  Thompson Mailing of Bloomsburg, PA for mailing services
  • $1.5 million:  Marcum Technology, LLC for technology services
  • $1.3 million:  Advertising Council, Inc of New York, NY for public relations
  • $1.2 million:  Princeton South, Inc. of Ewing, NJ for mailing services

As illustrated above, $3.7 million was spent for mailing services, $2.5 million for advertising, and $1.3 million for public relations. Although these type of expenses appear to be fundraiser oriented, they must also cover program services since these expenses are not listed under fundraising.

To read the IRS Form 990 for the year ending June 30, 2017, click here.

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