How Revenue is Spent at the American Dental Association

The American Dental Association (ADA) is a non-profit, tax-exempt 501 (c) (6) – a professional association representing more than 163,000 dentists (members) in all 50 states, D.C., Puerto Rico, and the Virgin Islands. Based in Chicago, Illinois, the ADA has 53 state and 545 local dental societies.

Membership dues are $554 a year although recent dental school graduates, graduate students, internationals, active life and retired members pay a reduced rate.

REVENUE

In 2017, the ADA reported total revenue of $133 million, which primarily came from 6 sources:

• $ 56 million:  Membership Dues
• $ 32 million:  Investment Income, Gains, Sales, Royalties, Net Rental Income
• $ 26 million:  Testing Service Revenue
• $  7 million:  Meetings/Seminars
• $  7 million:  Publications
• $  5 million: Other (insurance reimbursement, program maintenance, contributions, etc)

Membership Dues is the largest source of revenue for the ADA. With an estimated 163,000 members, the average annual membership dues is $344. Although the standard annual membership dues are $554 a year, the reduced rates for students, recent grads, internationals, life and retried members brings the average rate down.

EXPENSES

Expenses totaled $130 million in 2017 and were categorized as follows:

• $ 62 million (47% of revenue):  Compensation
• $ 13 million (10% of revenue):  Office-Related Expenses
• $ 11 million (8% of revenue):  Fees for Services (primarily “other” with no detail provided)
• $  9 million (7% of revenue):  Travel and Conferences
• $  8 million (6% of revenue):  Outside Services
• $  8 million (6% of revenue):  Other Expenses (primarily depreciation and other expenses)
• $  6 million (4% of revenue):  Grants
• $  6 million (4% of revenue):  Advertising/Promotion/Royalties
• $  5 million (4% of revenue):  Test Administration Fees
• $  2 million (2% of revenue):  Stipends/Honoraria/Income and Sales Tax

As illustrated above, compensation is the largest expense for the ADA and accounted for nearly half of all expenses. 510 employees received $62 million which equates to an average compensation of $121,600.  The most highly compensated employee was the Executive Director, Kathleen T O’Loughlin whose compensation totaled $644,257.  The Form 990 (2017) reports the ADA paid for companion travel, tax indemnification and gross up payments, and health and social club dues or initiation fees (See Schedule J for more detail).

Fees for Services were fees paid to non-employees. Most of the $11 million in fees for services were described as “other” with no detail provided. However, the Form 990 reports 28 independent contractors received more than $100,000 with the five (5) most highly compensated listed below:

• $2.3 million:  Freeman of Dallas, TX for marketing and event planning
• $1.5 million:  NCS Pearson of Chicago, IL for testing services (could be a portion of the test administration fees)
• $1.1 million:  Elsevier of Philadelphia, PA for marketing and event planning
• $ .8 million:  Aramark Receivables, LLC of Chicago, IL for catering services
• $ .6 million:  Marsh USA Inc of Chicago,IL for insurance and risk management (could be a portion of office expenses)

$8 million in outside service expenses are not detailed.

Grants of $6 million were primarily to the American Dental Association Foundation ($3 million) for public support and state/local dental associations, also for public support. The ADA Foundation raised $7 million in 2017 (of which $3 million came from the ADA), spent $9 million ($3  million on grants, $4 million on compensation, and $2 million on other expenses), and had $26 million in net assets at year-end.

In total, the ADA spent $130 million of the $133 million in revenue collected. The unspent revenue was allocated to the general fund which along with unrealized gains on investments ($12 million) and changes in assets – primarily pension-related ($3 million) contributed to the general fund increasing from $96 million at the beginning of the year to $113 million at year-end.

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

$100:  Revenue

-$ 47:  Compensation

-$ 10:  Office-Related Expenses

-$  8:  Fees for Services

-$  7:  Travel and Conferences

-$  6:  Outside Services

-$  6:  Other Expenses

-$  4:  Grants

-$  4:  Advertising/Promotion/Royalties

-$  4:  Test Administration Fees

-$  2:  Stipends, Honoraria, Income and Sales Tax

-$ 98: Total Expenses

-$  2:  Unspent Revenue:  To General Fund

Or, using the above information every $554 in annual membership dues was spent as follows:

$554:  Revenue

-$261:  Compensation

-$ 56:  Office-Related Expenses

-$ 44:  Fees for Services

-$ 39:  Travel and Conferences

-$ 33:  Outside Services

-$ 33:  Other Expenses

-$ 22:  Grants

-$ 22:  Advertising/Promotion/Royalties

-$ 22:  Test Administration Fees

-$ 11:  Stipends, Honoraria, Income and Sales Tax

-$543:  Total Expenses

 $ 11:  Unspent Revenue:  To General Fund

So, if you are wondering where your membership dues were spent, the answer is that almost half were spent on compensating employees.  About 10% was spent on office-related expenses while 18% was spent on fees for services, outside services, and test administration fees.  Travel and conferences, other expenses, advertising, and stipends used 19% while 4% was used for grants (half of which was provided to the ADA Foundation).

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

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