How Revenue is Spent at Consumer Reports
Consumer Reports, the beloved watchdog organization that many people rely on for objective consumer product information is a non-profit, tax-exempt 501 (c) (3) organization based in Yonkers, New York.
If you’ve ever wondered how Consumer Reports spends the $250 million the organization raises annually, the answer may surprise you: nearly $200 million is spent on three things:
- compensation for employees;
- printing, postage/shipping, and order processing; and
The most recent Form 990 (2018 for the year ending May 31, 2019) reports the following key financial information:
Consumer Reports reported total revenue of $255 million in 2019, compared to $248 million the previous year. Most revenue came from subscriptions and newsstand sales ($101 million), on-line subscriptions ($102 million), and contributions, gifts, and grants ($35 million).
Expenses totaled $230 million (not including $15 million in depreciation), which were categorized as follows:
- $ 98 million (38% of revenue): Compensation
- $ 61 million (24% of revenue): Printing and Publications, Shipping and Postage, Order Processing
- $ 33 million (13% of revenue): Advertising and Promotion
- $ 13 million (5% of revenue): Fees for Services (primarily other with no detail provided)
- $ 11 million (4% of revenue): Office-Related Expenses
- $ 8 million (4% of revenue): Other Expenses (no detail provided)
- $ 4 million (2% of revenue): Product Testing
- $ 2 million (1% of revenue): Travel and Conferences
As illustrated above, the largest expense is compensation ($98 million) for the 690 employees followed by printing, shipping, and order processing ($61 million), and advertising and promotion ($33 million). Using the above information, every $100 in revenue was spent as follows:
-$ 38: Compensation
-$ 24: Printing and Publications, Shipping and Postage, Order Processing
-$ 13: Advertising and Promotion
-$ 5: Fees for Services
-$ 4: Office-Related Expenses
-$ 4: Other Expenses
-$ 2: Product Testing
-$ 1: Travel and Conferences
-$ 91: Total Expenses
$ 9: Revenue Remaining: To General Fund
The bottom line is that Consumer Reports relies primarily on subscriptions (magazine and on-line) for revenue. These two sources bring in about $200 million a year, or about 80% of revenue. The organization has three large expenses: compensation, printing/shipping,processing, and advertising and promotion that account for about 75% of expenses.
The organization does spend less than what they collect, which has enabled the organization to have $168 million in net fund assets.
To read the IRS Form 990 (2018 for the year ending May 31, 2019), click here.
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