Where Does $100 to Harlem Children’s Zone Go?
Harlem Children’s Zone (HCZ) was initially established in 1970 as the Rheedlen Centers for Children and Families, New York City’s first truancy prevention program. 21 years later in 1991, the organization took PS 194 and turned it into a community center for after school, weekend, and summer programs for children and families in the local Harlem neighborhood.
Today, HCZ provides free support (after school programs, parent workshops, preschool programs, health programs, and charter schools) to nearly 100 blocks in the Harlem neighborhood to keep kids on track through childhood, college, and the early job market.
Based in Harlem in New York City, HCZ reported total revenue of $112 million in 2019, most of which came from contributions, gifts, and grants ($95 million), government grants ($10 million), and fundraising events ($7 million).
Expenses totaled $107 million (including $2 million in depreciation) and can be viewed in four broad categories (grants, program, management and general, and fundraising) but for those who want more detail, more specific categories need to be viewed (i.e. compensation, office-related, travel and conferences, grants, fees for services, etc).
The $107 million in expenses were categorized as follows:
- $ 64 million (57% of revenue: Compensation
- $ 13 million (12% of revenue) : Fees for Services (primarily invest mgmnt fees and other fees)
- $ 12 million (11% of revenue): Office-Related Expenses
- $ 8 million (7% of revenue): Grants
- $ 6 million (5% of revenue): Miscellaneous (primarily other expenses with no detail provided)
- $ 2 million (2% of revenue): Food
- $ 1 million (1% of revenue): Travel and Conferences
- $ 1 million (1% of revenue): Admissions Expenses
As illustrated above, the largest expense for HCZ is compensation. 2,587 received $64 million in compensation which equates to an average compensation of $25,000. 49 employees received more than $100,000 in compensation with the most highly compensated employee, Anne Williams-Isom receiving $712,229 as CEO.
Fees for Services includes accounting and legal fees but these fees are primarily investment management fees ($6.4 million ) paid to firms to manage the endowment (HCZ has $565 million in net assets) and other fees ($6.4 million) with no detail provided.
Office-Related Expenses primarily consist of occupancy ($8.4 million), equipment rental and maintenance ($1.2 million), information technology ($1 million), telephone ($1 million), insurance ($600,000), and general office expenses ($300,000).
Grants of $8 million can be categorized as grants to other organizations and grants to individuals. Grants to other organizations totaled $4.6 million and were two two related organizations that are charter schools: Harlem Children’s Zone Promise Academy 1 and Harlem Children’s Zone Promise Academy. Grants to individuals ($3.2 million) were primarily cash grants for education stipends, hardship assistance, and scholarships to 1,943 individuals, which equates to an average grant of $1,646.
The IRS does not require detail for expense categories that are less than 10% of total expenses so there is no detail for a portion of fees for services ($6.4 million) and miscellaneous expenses ($3.4 million). Collectively these expenses total $10 million.
The $5 million in excess revenue was added to the general fund, which increased from $551 million at the beginning of the year to $565 million at year end (unrealized gains on assets of $8 million also contributes to the increase).
Using the above information, every $100 in revenue was spent as follows:
-$ 57: Compensation
-$ 12: Fees for Services
-$ 11: Office-Related Expenses
-$ 5: Miscellaneous Expenses
-$ 1: Travel and Conferences
-$ 1: Admissions Expenses
-$ 87: Subtotal: Compensation, Fees, Office, Misc, Travel and Conferences, and Admissions
$ 13: Revenue Remaining
-$ 7: Grants
-$ 2: Food
-$ 9: Subtotal: Grants and Food
-$ 96: Total Expenses
$ 4: Revenue Remaining: To General Fund
As illustrated above, $57 out of every $100 was used for compensation for employees. Given that HCZ is a labor intensive organization (with a focus on education), compensation expenses are expected to eat up a large portion of revenue. $11 out of every $100 was spent on office-related expenses (primarily occupancy). About $10 out of every $100 was used for fees for services and miscellaneous expenses (again, with no detail provided). $9 out of every $100 was spent on grants (both to charter schools and individuals) and food.
To read the IRS Form 990 (2018 for the year ending June 30, 2019), click here.