Where Does $100 to DAV Go?

The Disabled American Veterans (DAV) organization is a 501 (c) (4) – a social welfare organization – that was created by Congress in 1920 to assist disabled military veterans and their families.  Based in Cold Spring, Kentucky, DAV provides services nationwide to disabled veterans through staff, national service offices and more than 1,300 local chapters.

With more than a million members (who pay $0-$250 for a lifetime of assistance and benefits), DAV is the largest disabled veteran assistance organization in the country. In 2017, DAV reported total revenue of $137 million although only $7 million (about 5% of revenue) came from membership fees.  $108 million (79% of revenue) came from contributions. $20 million (15% of revenue) came from investment income and the gain on the sale of assets while $2 million came from royalties and other sources.

Expenses totaled $142 million (net of $1.6 million in depreciation) in 2017, which is about $5 million more than total revenue reported.  DAV was able to easily cover the shortfall because the organization had $318 million in net fund assets (think savings account) and $33 million in net unrealized gains on investments.

There are two ways to look at expenses:  by broad general category (i.e. program services, grants, management and general expenses, and fundraising costs) or by specific line item category (i.e.compensation, office-related expenses, fees for services, grants, etc). Both are beneficial with the latter providing more detail.

Expenses by Broad General Category

The $142 million in expenses were categorized as follows:

• $ 90 million (66% of revenue):  Program Services
• $  7 million (5% of revenue):   Grants (primarily to DAV offices in various states)
• $ 36 million (26% of revenue):  Fundraising
• $  9 million (6% of revenue):  Management and General Expenses

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

 $100:  Revenue

-$ 66: Program Services

-$   5:  Grants

-$ 71:  Subtotal of Program Services and Grants

$ 29:  Revenue Remaining

-$ 26:  Fundraising

-$  6:  Management and General Expenses

-$ 32: Subtotal Fundraising and Management Expenses

-$  3:  Revenue Spent in Excess of Revenue Reported

As illustrated above, for every $100 in revenue reported, DAV spent $103 and was able to do this because the organization had significant funds (more than $300 million) in net fund assets.

Expenses by Specific Line Item Category

The $142 million in expenses were categorized as follows:

• $ 61 million (45% of revenue):  Office-Related Expenses
• $ 50 million (37% of revenue):  Compensation
• $ 10 million (7% of revenue):  Fees for Services (i.e. fundraising, lobbying, accounting, legal, investment, etc)
• $  7 million (5% of revenue):  Grants (primarily to DAV offices in various states)
• $  6 million (4% of revenue:  Advertising
• $  3 million (2% of revenue):  Travel and Conferences
• $  3 million (2% of revenue):  Royalties
• $  2 million (1% of revenue):  Project Costs, Settlement Costs, and Other Expenses

As illustrated above the two largest expenses were for office-related expenses and compensation for the 741 employees (who were compensated an average of $67,400).  Collectively, these two expenses ate up $82 out of every $100 in revenue reported in 2017.

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

$100:  Revenue

-$ 45:  Office-Related Expenses

-$ 37:  Compensation

-$ 82:  Subtotal Office-Related and Compensation Expenses

 $ 18:  Revenue Remaining

-$  7:  Fees for Services

-$  4: Advertising

-$  2:  Travel and Conferences

-$  2:  Royalties

-$  1:  Project and Other Costs

-$ 16:  Subtotal Fees, Advertising, Travel, Royalties and Other Costs

$   2:  Revenue Remaining

-$  5:  Grants

-$  3:  Revenue Spent in Excess of Revenue Reported

As illustrated above, most revenue contributed to, given to, or earned by DAV is used to cover office-related expenses and compensation for the 741 employees who are providing services including representation for veterans and their families, filing claims for benefits, connecting veterans and their families to resources, providing transportation to vets to appointments, hosting job fairs, and more.

To read the IRS Form 990 (2017), click here.