Where Does $100 to the National Urban League Go?

The National Urban League (NUL) is a nonpartisan civil rights organization that advocates on behalf of African Americans for economic and social injustice and against racial discrimination. A non-profit, tax-exempt 501 (c) (3), NUL has 90 affiliates serving 300 communities in 36 states and the District of Columbia. How do they do this? A variety of ways including the awarding of grants and the provision of services, research, and public advocacy.

The Form 990 (2018) submitted by NUL to the IRS provides the public with key information about NUL including:

Total revenue was $50 million in 2018 (compared to $60 million in 2017), most of which came from 3 sources:  government grants ($21 million), contributions, and grants ($19 million), and sponsorship, franchise, conference, exhibitor, and membership income ($8 million).

Total expenses were $56 million (not including $1 million in depreciation) and can be viewed two ways:  by broad general categories (i.e. program services, grants, management and general expenses, and fundraising) or by specific line item categories (i.e. compensation, fees for services, conferences and travel, grants, office-related expenses, etc). Both ways are beneficial with the latter approach providing more detail on how revenue was spent.

Expenses by Specific Line Item Categories

The $56 million in expenses were classified as follows:

• $22 million (44% of revenue):  Grants
• $16 million (32% of revenue):  Compensation
• $ 8 million (16% of revenue):  Fees for Services (primarily other, no detail provided)
• $ 5 million (10% of revenue):  Travel and Conferences
• $ 3 million (6% of revenue):  Office-Related Expenses
• $ 1 million (2% of revenue):  Advertising and Promotion
• $ 1 million (2% of revenue):  Other Expenses (interest, bad debt, other)

As illustrated above, grants are the largest expense at $22 million (which almost directly corresponds to the $21 million in government grants awarded to NUL). NUL awarded 55 grants greater than $5,000 to fund direct assistance programs in workforce, education, housing, and health.  The 15 largest grant recipients are listed below:

• $2,449,817:  Urban League of New York in New York, NY
• $2,437,266:  Urban League of Palm Beach County in West Palm Beach, FL
• $2,050,938:  Urban League of Essex County in Newark, NY
• $2,028,219:  Detroit Urban League of Detroit, MI
• $1,748,624:  Urban League of Greater Pittsburgh in Pittsburgh, PA
• $1,710,877:  Pinellas County Urban League in St. Petersburg, FL
• $1,165,287:  Louisville Urban League in Louisville, KY
• $  825,515:  Chicago Urban League of Chicago, IL
• $  502,144:  Urban League of Philadelphia of Philadelphia, PA
• $  423,250:  Urban League of Greater Atlanta of Atlanta, GA
• $  399,328:  Urban League of Greater New Orleans of New Orleans, LA
• $  382,259:  Urban League of Broward County of Ft. Lauderdale, FL
• $  368,860:  Minneapolis Urban League of Minneapolis, MN
• $  342,851:  Urban League of Greater Chattanooga of Chattanooga, TN
• $  328,135:  Springfield Urban League of Springfield, MA

The second largest expense is compensation for the 134 employees who received $16 million, which equates to an average compensation of $119,400. However, only 37 employees received more than $100,000 in compensation. The most highly compensated employee was the President and CEO, Marc H Morial who received $1,177,156 in total compensation.

$8 million was spent on Fees for Services, of which $6.8 million were described as “other fees” with no detail beyond whether the expense was for program, management or general expenses, or fundraising.

$5 million was spent on travel and conferences including first class travel and travel for companions. Specifically, the Form 990 reports NUL paid for the spouse of the President and CEO to travel first class for any of the league’s own of town events (and this cost was not reported as taxable for Mr. Morial). How any type of first class travel for the President and his spouse can ever be justified given the mission of NUL is beyond explanation.

Expenses exceeded revenue by $6 million and were covered from net assets which had a balance of $40 million at year end (Note: the balance was about $49 million at the beginning of the year. After deducting the excess expenses and unrealized losses on investments, there was a $9 million reduction in net assets).

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

$100:  Revenue

-$ 32:  Compensation

-$ 16:  Fees for Services

-$ 10:  Travel and Conferences

-$  6:  Office-Related Expenses

-$  2:  Advertising and Promotion

-$  2:  Other Expenses

-$ 68:  Subtotal:  Comp, Fees, T&C, Office, Adv, Prom, and Other Expenses

$ 32:  Remaining Revenue

-$ 44:  Grants

-$ 12:  Excess Expenses over Revenue

As illustrated above, NUL spent $112 for every $100 in revenue in 2018.

Expenses by Broad General Categories

The $56 million in expenses were classified as follows:

• $22 million (44% of revenue):  Grants
• $22 million (44% of revenue):  Program Services
• $  8 million (16% of revenue):  Management and General Expenses
• $  4 million (8% of revenue):  Fundraising

As illustrated above, Grants and Program Services used $44 million or 88% of revenue while Management and General Expenses and Fundraising used up $12 million or 24% of revenue.

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

$100:  Revenue

-$ 16:  Management and General Expenses

-$  8:  Fundraising

-$ 24: Management and General and Fundraising Expenses

$ 76:  Revenue Remaining

-$ 44:  Program Services

-$ 44:  Grants

-$ 88:  Subtotal Program Services and Grants

-$ 12:  Excess Expenses over Revenue

Other important information reported on the Form 990 includes:

The 2 highest paid fundraisers were:

• Inez Weinstein Special Events generated $1,513,529 from special events. They retained $79,500 leaving $1,434,029 for NUL.
• Faircom NY Inc generated $315,773 from direct mail. They retained $110,060 (35%) leaving $205,713 for NUL.

Equal Opportunity Day (NUL’s biggest event fundraiser) generated $1,495,529 in gross receipts. After deducting contributions ($1,300,739), the gross income was $194,790. NUL spent $356,738 on direct expenses (no detail provided) leaving a net loss of $161,948.

In August, 2017, NUL had $4,250,000 in bonds issued by BB&T Bank to purchase a condo office for workspace for the DC office. NUL paid $138,424 (about 3%) in issuance costs.

In summary, NUL raised about $50 million in 2018 and spent about $56 million, relying on net assets to cover the difference.  The organization’s largest expenses are grants and compensation (both about $22 million).  NUL has about $40 in net assets. The President and CEO, Marc H Morial received nearly $1.2 million in compensation. In addition, NUL paid for first class travel.

To read the IRS Form 990 (2018), click here.