Where Does $100 to the American Friends of the Hebrew University Go?

The American Friends of the Hebrew University (AFHU) is a 501 (c)(3) based in New York City whose purpose is to raise funds to support the Hebrew University of Jerusalem – Israel’s second oldest university established 101 years ago (1918).

The university has about 23,500 students at 6 campuses.

Over the past three years, AFHU reported the following information on the IRS Form 990’s:

                                                            2015                              2016                              2017         

Total Revenue:                                $69 million                    $62  million                    $72 million

Total Grants:                                    $49 million                    $49 million                    $46 million

Administrative Expenses:               $13 million                    $13 million                     $15 million

As illustrated above, AFHU raised approximately $70 million a year, which came primarily from two sources:  contributions ($46 million) and investment income and gains on the sale of assets ($24 million). The organization awarded nearly $50 million in grants (primarily to Hebrew University) annually.  The rest of the revenue was spent on administrative costs (program, management, and fundraising) to run the non-profit with the remainder retained by the organization, whose net fund assets (think savings account) increased from $527 million in 2015 to $574 million in 2016 to $637 million in 2017.

So, the question becomes:  why does a non-profit whose purpose is to support a university (and does to the tune of about $50 million a year) continue to increase its net fund assets, especially in the past two years (by $110 million)? The information in the 990 states the funds are saved “for the purpose of generating income that will ultimately be used to support the Hebrew University’s educational mission,” which is exactly what the grants are also currently doing.

Total expenses can be viewed two ways:  by broad general category (grants, program, management, and fundraising) or by specific line item category (i.e. grants, compensation, office, travel and conferences, etc). Both approaches provide valuable information with the latter providing more detail to how donations are spent.

Expenses by Broad General Category

In 2017, AFHU reported $61 million in expenses in the following categories

• $46 million (64% of revenue):  Grants
• $  8 million (11% of revenue):  Fundraising Expenses
• $  4 million (6% of revenue):  Management Expenses
• $ 3 million (4% of revenue):  Program Expenses

As illustrated above, 15 million or 21% of revenue was used for fundraising, management, and program expenses while $46 million or 64% of revenue was used for grants (almost all of which went to Hebrew University). 11 million or 15% of revenue was retained by AFHU and added to the net fund assets.

Using the above information, a $100 donation to AFHU was used as follows in 2017:

 $100:  Revenue

-$ 11:  Fundraising

-$  6:  Management Expenses

-$  4:  Program Expenses

-$ 21:  Subtotal Fundraising, Management, and Program Expenses

$ 79:  Revenue Remaining

-$ 64: Grants

$ 15: Revenue Remaining:  To Net Fund Assets

Expenses by Specific Line Item Category

In 2017, AFHU reported $61 million in expenses in the following categories:

• $46.0 million (64% of revenue):  Grants
• $ 9.0 million (13% of revenue): Compensation
• $ 2.2 million (3% of revenue): Advertising/Promotion/Events/Direct Mail/Printing
• $ 1.7 million (2% of revenue):  Fees for Services (i.e. legal, accounting, investment, fundraising, other)
• $ 1.4 million (2% of revenue):  Office-related Expenses
• $ 0.4 million (0.5% of revenue):  Travel and Conferences
• $ 0.3 million (0.5% of revenue):  Miscellaneous Expenses

As illustrated above, AFHU spent $9 million on compensation for 83 employees, which equates to an average compensation of nearly $109,000 (although only 18 individuals received more than $100,000 in compensation.

Using the above information, a $100 donation to AFHU was used as follows in 2017:

 $100:  Revenue

-$ 13:  Compensation

-$  3:  Advertising/Promotion/Events/Direct Mail/Printing

-$  2:  Fees for Services (i.e. legal, accounting, investment, fundraising, other)

-$  2:  Office-related Expenses

-$  1:  Travel/Conferences and Miscellaneous Expenses

-$ 21:  Total Administrative Expenses

$ 79:  Revenue Remaining

-$ 64:  Grants

$  15:  Revenue Remaining:  To Net Fund Assets

As illustrated above, $21 out of every $100 was spent on administrative expenses while $64 was spent on grants, leaving $15 unspent.

To read the IRS Form 990 (2016) for the year ending September 30, 2017, click here.