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August 31, 2019

Where Does $100 to the National Milk Producers Federation Go?

by Anne Paddock

The National Milk Producers Federation (NMPF) is a farm commodity policy organization representing most (but not all) dairy marketing cooperatives in the United States. A 501 (c) (6), – that also has a political action committee or PAC to host and participate in fundraising activities for political candidates – NMPF’s membership dues are tax deductible because they qualify as ordinary and necessary trade or business expenses. Their non-profit status simply means their earnings are exempt from federal income tax (with the exception of any funds used for lobbying or political activities, which is why they have a PAC) because they do not benefit any private shareholder or individual.

NMPF has three types of membership:  cooperative, associate, and affiliate. Only cooperative members have voting rights.

NMPF members market the majority of the U.S. milk supply, making NMPF the principal voice on national issues for these cooperatives and their dairy farmer members.  Hence, the organization is based in Arlington, Virginia and working for its members since the majority of revenue comes from membership dues.

In 2016, NMPF reported total revenue of $72.8 million (compared to $43.5 million the prior year) of which $70 million came from membership dues.  NMPF does not display or advertise membership rates so the nearly $30 million increase in revenue is either from higher dues or higher membership.

Expenses totaled $74.4 million in 2016 and were categorized as follows:

  • $64.3 million (88% of revenue):  CWT Program*
  • $  6.3 million (9% of revenue):  Compensation
  • $  2.1 million (3% of revenue):  Fees for Services (legal, accounting, and other fees)
  • $ 1.7 million (2% of revenue):  Office, Occupany, IT, Printing, Publications, Dues and Subscriptions, Insurance, Leadership, Travel, Conferences, Interest, Advertising, and Other Expenses)

*CWT is a program where cooperatives (about 30) work together to distribute and export their products (primarily overseas).  Described as a “tool in their trade arsenal,” the CWT Program appears to be a program in which NMPF seeks international contracts that are fulfilled by those cooperatives participating in the program.  CWT members voluntarily contribute 4 cents per hundredweight and are then compensated for what they sell. It is unclear why the Form 990 does not provide the detail of the revenue and expense stream of this program.

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

$100:  Revenue

-$ 88:  CWT Program

$ 12:  Revenue Remaining

-$ 9:  Compensation

-$ 3:  Fees for Services

-$ 2:  Office and Administrative Expenses

-$14:  Total Compensation, Fees for Services, and Office and Administrative Expenses

-$ 2:

As illustrated above,  NMPF spent $102 for every $100 in revenue received in 2016.  The majority of revenue was spent on the CWT Program, detail of which is not available on the Form 990. All we know is that that the NMPF spent $64.3 million on this program.

In reference to compensation, NMPF is staffed with 29 employees who were compensated $6.3 million in 2016 (according to the IRS Form 990), which equates to an average compensation of $217,200. However, only 14 employees received more than $100,000 in compensation.

In essence, it appears the members of NMPF are paying NMPF $70 million annually to run a program called CWT, where 88% of their funds go.  29 people were compensated $6.3 million or an average of more than $200,000 each in 2016 to manage this program.

At year-end NMPF had $4.6 million in net fund assets, down from $6.2 million at the beginning of the year because the organization spent more than they received.

To read the IRS Form 990 (2016), click here.

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