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October 16, 2019

Where Does $100 to Americans For Prosperity Go?

by Anne Paddock

Americans for Prosperity is actually two organizations:  Americans For Prosperity (AFP) and Americans For Prosperity Foundation (AFPF). Both organizations are tax-exempt non-profit organizations but AFP is a 501 (c) (4) while AFPF is a 501 (c) (3). The primary difference between the two organizations is that donations to AFPF are tax deductible while donations made to AFP are not. In addition, AFP is considered a social welfare organization so they can engage in more lobbying while AFPF is considered an educational organization and is therefore limited in how much they spend on lobbying.

Although both organizations operate out of the same office in Arlington, Virginia and share employees, how a donation was spent depends on which organization received the donation.

AFPF

AFPF reported $27.4 million in revenue, most of which were contributions and gifts ($1.2 million were securities and software licenses). Expenses totaled $23 million (84% of revenue) categorized as follows:

  • $12.3 million (45% of revenue):  Compensation
  • $ 5.0 million (18% of revenue):  Fees for Services (primarily legal)
  • $ 3.0 million (11% of revenue):  Travel and Conferences
  • $ 2.4 million 9% of revenue):  Office-Related
  • $  .3 million (1% of revenue):  Other (advertising, etc)

As illustrated above, the largest expense for the organization was compensation for the 1,126 employees. However, it is important to point out AFP reported having no employees but expensing $22.4 million in compensation. Since both offices share the same office, it appears that collectively the two organizations paid $34.3 million to the 1,126 employees.

Using the above information $100 was spent as follows:

 $100:  Revenue

-$ 45:  Compensation

-$ 18:  Fees for Services (primarily legal)

-$ 11:  Travel and Conferences

-$  9:  Office-Related

-$  1:  Other (advertising, etc)

-$ 84: Total Expenses

 $ 16: Revenue Remaining:  To Fund Balance

As illustrated above, AFPF spent $45 out of every $100 on compensation, $18 out of every $100 on fees for services (primarily legal fees) and $20 out of every $100 on travel, conferences, and office-related expenses.  In total, $84 out of every $100 in revenue was spent, leaving $16 out of every $100 unspent, thereby increasing the fund balance from $2.9 million at the beginning of the year to $7.2 million at year-end.

AFPF paid for first class or charter travel.

6 independent contractors were compensated more than $100,000 with the 5 most highly compensated contractors reported to be:

  • $5.7 million to Quinn Emanual Urquhart and Sullivan of Los Angeles, California for legal fees (note it is unclear why the income statement states total legal fees were $4.2 million; the discrepancy is not addressed)
  • $0.3 million to Info Tech, Inc. of Gainesville, Florida for consulting services
  • $0.2 million to WebbMason, Inc. of Baltimore, Maryland for promotional materials
  • $0.2 million to i360 of Baltimore, Maryland for polling and media ((entity controlled by a substantial contributor, Freedom Partners)
  • $0.1 million to Beacon Hill Staffing Group of Boston, Massachusetts for temporary staffing

AFP

AFP reported $64 million in revenue (primarily contributions and gifts) and $58 million (90% of revenue) in expenses categorized as follows:

  • $22.4 million (35% of revenue):  Compensation
  • $17.0 million (26% of revenue):  Office-Related
  • $ 9.3 million (14% of revenue):  Advertising
  • $ 6.4 million (10% of revenue):  Travel and Conferences
  • $ 1.7 million (3% of revenue):  Fees for Services (primarily “other,” no detail provided)
  • $  .8 million (1% of revenue):  Grants
  • $  .4 million (1% of revenue): Other (list rental, taxes, fees, etc)

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

$100:  Revenue

-$ 35:  Compensation

-$ 26:  Office-Related

-$ 14:  Advertising

-$ 10:  Travel and Conferences

-$  1:  Other Expenses

-$ 89: Subtotal Expenses

$  11:  Revenue Remaining

-$   1:  Grants

$  10:  Revenue Remaining:  To Fund Balance

As illustrated above, AFP spent $61 out of every $100 on compensation and office-related expenses. $14 was spent on advertising while $10 out of every $100 was spent on travel and conferences.  $10 out of every $100 was not spent which contributed to the organization growing the net fund balance from $1.2 million at the beginning of the year to $7 million at the end of the year.

It is important to note AFP paid for first class or charter travel. In addition, 28 independent contractors were compensated more than $100,000 with the 5 most highly compensated independent contractors reported as:

  • $6.1 million to i360 of Baltimore, Maryland for media (entity controlled by a substantial contributor, Freedom Partners)
  • $2.2 million to Innovative Advertising of Mandeville, Louisiana for print and mail design, distribution
  • $ .7 million to Majority Strategies, Inc of Ponte Verda Beach, Florida for print and mail design, distribution
  • $ .7 million to Strive 3 of Reston, Virginia for print and mail design, distribution
  • $ .6 million to Singularis Group of Shawnee Mission, Kansas for print and mail design, distribution

AFPF and AFP

As stated above, AFPF and AFP are separate organizations regulated by rules to maintain their non-profit tax exempt status. Since both organizations operate out of the same office and share staff and expenses, a theoretical combining of their revenue and expenses would look like this:

The combined revenue of both organizations was $91.4 million while expenses were $81 million (88% of revenue), leaving $10.4 million unspent and used to increase the fund balances.

The $81 million in expenses were collectively classified as follows:

  • $34.7 million (38% of revenue):  Compensation
  • $19.4 million (21% of revenue):  Office
  • $ 9.4 million (10% of revenue):  Travel and Conferences
  • $ 9.3 million (10% of revenue):  Advertising
  • $ 6.7 million (7% of revenue):  Fees for Services
  • $  .8 million (1% of revenue):  Grants
  • $  .7 million (1% of revenue):  Other Expenses

As illustrated above, compensation ($34.7 million) for the 1,126 employees was the highest expense, which equates to $30,000 per employee. However, 14 executives (13 males and 1 female) were compensated $4 million for an average of $286,000 each. However, the most highly compensated employee compensation ranged from $216,000 to $477,000.

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

 $100:  Revenue

-$ 38:  Compensation

-$ 21:  Office

-$ 10:  Travel and Conferences

-$10:  Advertising

-$  7:  Fees for Services

-$  1:  Grants

-$  1:  Other Expenses

-$ 88:  Total Expenses of both organizations

 $ 12:  Revenue Remaining:  To Fund Balanaces

As illustrated above, the primary expenses for both organizations were compensation, office, travel and conferences, and advertising. Collectively, $79 out of every $100 in revenue were spent on these expenses.

So, to answer the question, $100 in revenue was primarily spent on compensating staff and office expenses followed by travel and conferences and advertising.

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

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

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