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September 29, 2020

How Revenue is Spent at Consumer Reports

by Anne Paddock

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
  • advertising/promotion

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:

$100:  Revenue

-$ 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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