Where Does $100 to Rotary International Go?

There are an estimated 32,000 Rotary Clubs worldwide that are grouped into 529 districts (an average of 60 clubs per district) in 34 zones (an average of 16 districts in each zone). Each district (529 of them) has a governor.  There are 17 zone directors who each head 2 zones. The governors and directors are  nominated and elected positions. In other words:

• 35,000:  Rotary Clubs
• 529:  Districts (65 Rotary Clubs per district)
• 34:  Zones (16 Districts in each zone)
• 17:  Zone Directors (2 zones per director)

Rotary International (RI) is a separate 501 (c) (4) – a social welfare organization – that supports Rotary clubs worldwide by coordinating global programs and initiatives. Governed by a 20-member Board of Directors (the 17 zone directors along with the president, president-elect, and the general secretary who is also the chief operating officer, Rotary International manages about 330 employees at its international office in Evanston, Illinois along with the employees in 7 international offices.

RI raises about $100 million annually ($95 million in 2017) which came primarily from four sources: membership dues ($69 million), international convention, meetings, and magazine revenue ($18 million), investment income, gains, and rental income ($6 million), and insurance and other income ($2 million).

RI does not solicit donations from the public; instead membership dues are paid by Rotarians which accounts for about 73% of revenue annually. So, the analysis below really pertains to Rotarians who want to know how their membership dues (along with other revenue) are spent. The answer:  primarily on compensation for the employees of RI and to district managers, office-related expenses for RI, travel and conferences, and fees for services at RI.

In 2017, RI reported expenses of $88.4 million (not including $3.4 million in depreciation) which were categorized as follows:

• $35.4 million(37% of revenue):  Compensation
• $9.1 million (10% of revenue): To District Governors (529) – this appears to be comp but it is unclear
• $18.5 million (19% of revenue):  Travel and Conferences
• $13.2 million (14% of revenue):  Office-related Expenses
• $6.0 million (6% of revenue):  Fees for Services (management, legal, acct, invest and other)
• $3.2 million (3% of revenue):  Rotary Magazine
• $2.5 million (3% of revenue):  Advertising and Promotion
• $.5 million (1% of revenue):  Grants

It is important to note that many of the above expenses (more than $46 million) were paid to the Rotary Foundation as reimbursement for expenses (note: the Rotary Foundation operates out of the same address).

Revenue not spent contributed to the net fund assets increasing from $127 million to $137 million at year-end, all of which is unrestricted.

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

 $100:  Revenue

-$ 37:  Compensation

-$ 10:   District Managers

-$ 19:  Travel and Conferences

-$ 14:  Office-related Expenses

-$  6:  Fees for Services

-$  3:  Rotary Magazine

-$  3:  Advertising and Promotion

-$  1:  Grants

-$ 93:  Total Expenses

$   7:  Revenue Remaining:  To Fund Balance

As illustrated above, revenue (primarily membership dues and revenue from conventions and meetings) to RI is used for compensation, District Managers, travel and conferences, office-related expenses, fees for services, the Rotary Magazine, advertising and promotion, and a very small amount for grants ($440,655 to the Rotary Foundation for the Polioplus Fund).

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