Where Does $100 to Paws For Purple Hearts Go?

Paws for Purple Hearts (PPH)  is a non-profit (501) (c) (3) that teaches veterans to train service dogs for their fellow veterans with combat related injuries. So, most donors would expect revenue to be primarily spent on program staff compensation, veterans, and service dogs.  According to the most recent IRS Form 990 (2017) submitted to the IRS, this does not appear to be the case.

PPH raised $5.6 million in 2017 (which is $2 million more than in 2016) most of which came from contributions, gifts and grants.

Expenses totaled $5.3 million and were categorized as follows:

• $2.2 million (39% of revenue):  Postage, Printing, Publications, Mailing Lists, Adv, Licensing Fees
• $1.3 million (23% of revenue):  Compensation
• $ .6 million (11% of revenue):  Fees for Services: Program Srvcs and Contract Srvcs
• $ .4 million (7% of revenue):  Fees for Services: Fundraising and Mgmnt
• $ .4 million (7% of revenue):  Office-related Expenses
• $ .4 million (7% of revenue):  Other Expenses (bank fees, furn/equip, supplies, travel, dep)

As illustrated above, $2.6 million was spent on postage, printing, publications, mailing lists, advertising, and licensing fees and fees for professional fundraising and management services.  An additional $600,000 is listed as fees for services (professional fees paid for programs and contract services) which appears to be fees paid to Bergin University of Canine Studies for service dogs and trainers (note:  the organization’s website states all service dogs and trainers are provided by Bergin).

Compensation of $1.3 million was provided to 18 employees, which equates to an average compensation of $72,200.  No employees received more than $100,000 in compensation.  Most staff appear to be allocated to the delivery of program services (although Bergin supplies the service dogs and trainers) although staff are engaged in fundraising and management.

The difference between revenue ($5.6 million) and expenses ($5.3 million) was $300,000, which was added to the general fund increasing the net fund balance from $1.7 million to $2 million at year-end.

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

$100:  Revenue

-$ 39:  Postage, Printing, Publications, Mailing Lists, Adv, Licensing Fees (PPPMAL)

-$  7:  Fees for Services – Fees for Services: Fundraising and Management

-$  7:  Office-related Expenses

-$ 53: Subtotal PPMAL, Fees for Svcs and Office Expenses

$ 47:  Revenue Remaining

-$ 23:  Compensation

-$ 11:  Fees for Services – Program Services and Contract Services

-$  7:  Other Expenses (bank fees, furniture, equipment, supplies, travel, dep)

-$ 41:  Subtotal Compensation, Fees for Services, and Other

$   6:  Revenue Remaining:  To General Fund

As illustrated above, $53 out of every $100 in revenue was spent on postage, printing, mailing lists, advertising, licensing fees, fees for professional fundraising and management, and office-related expenses. $41 out of every $100 was spent on staff compensation and fees for services for programs and contract services (what these specific expenses are is not revealed).  It is important to note that other expenses (which are included in the $41 also includes bank fees which is really an indirect expense and could arguably be included in office-related expenses).

The organization also appears to be focused on growing their general fund which they have done by not spending as much as they raise. In 2017, $300,000 (or $6 out of every $100) in revenue was not spent and added to the general fund which had a $2 million balance at year-end 2017.

Based on the information above, the bottom line is that PPH is spending a lot of money to obtain revenue: about half of revenue was spent on PPPMAL, fundraising, and office-related expenses while about $40 out of every $100 was spent on staff and fees for outside services related to program services. (Note:  even if office-related expenses were not included in the above calculations, nearly half of every $100 in revenue was spent on PPPMAL and fees for services related to fundraising and management).

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