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March 27, 2020

Where Does Revenue to Dairy Management Inc (DMI) Go?

by Anne Paddock

Dairy Management Inc (DMI) is a non-profit, tax-exempt 501 (c) (6) whose purpose is to promote dairy products in order to increase consumption of dairy products.  Funded by a mandate by Congress, DMI is what is referred to as a “check off program” where all producers have to contribute funds for the good of the industry. Dairy farmers are required to contribute 15 cents per 100 pounds (foreign dairy farmers are required to contribute 7.5 cents per 100 pounds) which equates to about 1.5 cents per gallon of milk.

In 2017, DMI reported total revenue of $155 million, most of which came from program and core funding revenue. Expenses were $155 million and were categorized as follows:

  • $82 million (53% of revenue):  Domestic Marketing
  • $27 million (18% of revenue):  Compensation
  • $17 million (11% of revenue):  Export
  • $ 8 million (5% of revenue):  Research
  • $ 6 million (4% of revenue):  Office-related Expenses
  • $ 6 million (4% of revenue):  Contract Services
  • $ 5 million (3% of revenue):  Travel and Conferences
  • $ 2 million (1% of revenue):  Grants
  • $ 2 million (1% of revenue):  Other

As illustrated above, the largest expenses were for domestic marketing ($82 million), compensation ($27 million) for the 280 employees who received an average compensation of nearly $100,000), and export ($17 million). The three most highly compensated employees were Gregory D Miller ($1,546,760) and Carolyn Gibbs  ($1,191,557).  With regard to expenses related to compensation and travel and conferences, it is important to note DMI paid for first class travel, provided tax indemnification and gross up payments, and paid for health or social club dues or initiation fees. See Schedule J of the Form 990 (link below) for more information.

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

$100:  Revenue

-$ 53:  Domestic Marketing

-$ 18:  Compensation

-$ 11:  Export

-$  5:  Research

-$  4: Office-related Expenses

-$  4: Contract Services

-$  3:  Travel and Conferences

-$  1:  Grants

-$  1:  Other Expenses

$   0

As illustrated above, $53 out of every $100 in revenue was spent on domestic marketing while $18 out of every $100 was spent on compensating staff.

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

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