Where Does $100 to Human Rights Watch Go?
Human Rights Watch (HRW) is a non-profit tax-exempt 501 (c) (3) headquartered in New York City. Dedicated to protecting human rights around the world, HRW investigates human rights abuses, exposes the facts of the investigations, and presses for changes. As such, HRW is a staff intensive organization (318 employees in 2018) whose focus is on providing a service to the world.
Key information on HRW reported on the IRS Form 990 (2018) include the following:
- Total revenue was $77 million, up from $56 million in 2017 (a 37% increase). Most revenue came from contributions, gifts, and grants.
- Total expenses were $75 million, and can be viewed two ways: by broad general category (i.e. program services, management and general expenses, and fundraising) or by specific line item category (i.e. compensation, office-related expenses, travel and conferences, fees for services, etc). Both are beneficial with the latter approach providing more detailed information on how revenue was spent.
Expenses By Broad General Category
The $75 million in expenses were categorized as follows:
- $54 million (70% of revenue): Program Services
- $14 million (18% of revenue): Fundraising
- $ 7 million (9% of revenue): Management and General Expenses
$54 million or 70% of revenue was spent on program services while $14 million or 18% of revenue was spent on fundraising. Using the above information, every $100 in revenue was spent as follows:
-$ 18: Fundraising
-$ 9: Management and General Expenses
-$ 27: Subtotal: Fundraising and Management and General Expenses
$ 73: Remaining Revenue
-$ 70: Program Services
$ 3: Remaining Revenue: To Fund Balance
As illustrated above, $27 out of every $100 was spent on fundraising and management and general expenses; $70 was spent on program services leaving $3 of unspent revenue added to the general fund (which is often referred to as the endowment).
Expenses by Specific Line Item Category
The $75 million in expenses were categorized as follows:
- $48 million (62% of revenue): Compensation
- $11 million (14% of revenue): Office-related Expenses
- $ 6 million (8% of revenue): Travel and Conferences
- $ 6 million (8% of revenue): Fees for Services (primarily fundraising fees and other fees with no detail provided)
- $ 3 million (4% of revenue): Publications/Media/Grant, Etc
- $ 1 million (1% of revenue): Other Expenses
Compensation is the largest expense for HRW. The 318 employees were compensated $48 million, which equates to an average compensation of $151,000. However, only 98 employees, or about one-third received more than $100,000 in compensation. Kenneth Roth, the Executive Director was compensated $630,309.
Office-related expenses is the second largest expense for HRW whose primary office is in NYC. Consequently, occupancy costs ($6 million) and information technology ($3.1 million) made up the majority of this expense. Collectively, these two expenses -compensation and office expenses – accounted for $59 million or $76 out of every $100 raised. That these two costs account for the majority of expenses at HRW could be due to the high cost of locating the organization in New York City, where rents and salaries are higher than in smaller cities.
Using the above information, every $100 in revenue was spent as follows:
-$ 62: Compensation
-$ 14: Office-related Expenses
-$ 8: Travel and Conferences
-$ 8: Fees for Services
-$ 4: Publications/Media/Grant/Etc
-$ 1: Other Expenses
-$ 97: Total Expenses
$ 3: Unspent Revenue: To General Fund
As illustrated above, HRW spent $97 out of every $100 (primarily on compensation and office expenses) leaving $3 to go to the general fund.
Net Fund Assets (endowment)
At the beginning of the year, HRW had $205 million in net fund assets. After adding the $2 million in unspent revenue and $6 million in unrealized gains on investments, the balance in the net fund assets was $213 million at year-end.
Notes on Fundraising
HRW spent $14 million on fundraising in 2018 or $18 out of every $100 in revenue reported. The three largest expenses within fundraising were compensation for employees ($7.4 million), office-related expenses ($2.8 million) and compensation for independent fundraisers ($2.4 million).
The $2.4 million paid to fundraisers was paid to two firms:
- The Harrington Agency (a fundraising consultant) of Washington, DC was attributed with raising $3.7 million. The agency was compensated $1.9 million, leaving $1.8 million to HRW. In essence, The Harrington Agency was paid 50 cents for every dollar they were attributed with raising.
- Beaconfire Red Digital (a fundraising consultant) of Arlington, VA was attributed with raising $2.1 million. Beaconfire Red Digital was compensated $500,000, leaving $1.6 million to HRW. Beaconfire Red Digital was paid approximately 25 cents for every dollar they were attributed with raising.
HRW also held major dinner fundraisers in the USA and Switzerland. These events raised $14 million. After adjusting for contributions ($11 million), the net was $3 million. Remarkably, HRW spent exactly the same amount as they netted ($3,091,813) on rent/facility costs, food and beverages, entertainment, and “other direct expenses” which are not detailed.
Summary and Bottom Line
HRW experienced a big increase in revenue in 2018 (a 37% increase over the prior year). The organization raised about $77 million in 2018 and spent $75 million, primarily on compensation for the 318 employees and office-related expenses. The average compensation of each employee was $151,000.
Fundraising events do not appear to have provide significant income although they may provide publicity and recognition. Professional fundraisers kept between 25-50% of what they raised for the organization.
HRW has more than $200 million in net fund assets (which is often referred to as the endowment).
To read the IRS Form 990 (2017 for the year ending June 30, 2018), click here.