Where Does $100 to Shriners Hospitals Go (2018)?

Shriners Hospitals for Children is a network of 22 hospitals that provide specialized pediatric care (orthopaedic, burn, spinal cord, and palate) for children under the age of 18. According to the Shriners website, 20 out of the 22 hospitals are located in the United States and file IRS Form 990’s under two corporations:

• The Shriners Hospitals for Children (for 18 of the hospitals in the US) – a Colorado corporation based in Tampa, Florida; and
• The Shriners Hospitals for Children (for 2 of the hospitals in Massachusetts) – a Massachusetts corporation based in Tampa, Florida.

The Shriners Hospitals for Children (the Colorado corporation for 18 hospitals)

The Shriners Hospitals for Children – Colorado (SHC – Colorado) is a non-profit 501 (c) (3) based in Tampa, Florida that includes 18 hospitals in the US. Key information about SHC – Colorado is summarized below (based on the IRS Form 990 (2018):

SHC – Colorado has net assets of $7.6 billion, which provides significant investment income to the organization. However, it is important to note SHC had net assets of $8.3 billion at the beginning of the year. The deterioration is primarily due to a $726 million unrealized loss on investments.

SHC – Colorado reported $951 million in revenue in 2018, which primarily came from three (3) sources:

• $428 million in contributions, gifts, and grants (including $19 million from the government)
• $382 million in investment income, gain on the sale of assets, etc
• $140 million in patient services (i.e. insurance payments)

SHC – Colorado reported $843 million in expenses (not including $41 million in depreciation) and were categorized as follows:

• $429 million (45% of revenue):  Compensation-related Expenses
• $157 million (17% of revenue):  Fees for Services (fundraising, investment, and other with no detail provided)
• $ 84  million (9% of revenue):  Medical Supplies and Patient Costs
• $ 68 million (7% of revenue):  Office-related Expenses
• $ 34  million (3% of revenue):  Grants
• $ 30  million (3% of revenue):  Advertising and Promotion
• $ 25 million (2% of revenue):  Events and Other Expenses (no detail provided)
• $ 11   million (1% of revenue):  Travel and Conferences
• $  5   million (1% of revenue):  Interest, Fees, Taxes

As illustrated above, the largest single category expense was compensation-related costs for the 5,940 employees who were compensated $429 million, which equates to an average compensation of $72,000. The most highly compensated employee was reported to be Allison Scott, an orthopedic surgeon and assistant professor who received $1,675,307 in compensation.

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

$100:  Revenue

-$ 45:  Compensation-related expenses

-$ 17:  Fees for Services

-$  9:  Medical Supplies and Patient Costs

-$  7:  Office-related expenses

-$  3:  Advertising and Promotion

-$  2:  Events and Other Expenses

-$  1:  Travel and Conferences

-$  1:  Interest, Fees, Taxes

-$ 85: Subtotal Expenses

 $  15:  Revenue Remaining

-$  3:  Grants

$  12:  Revenue Remaining

As illustrated above, revenue was primarily spent on compensation for the medical staff, fees for outside services, medical supplies and patient costs, office-related expenses and advertising and promotion. With regard to advertising and promotion, it is important to point out SCH – Colorado used Edge Direct of Baltimore Maryland for direct mail solicitation and tv ads which raised $49 million. Edge Direct was compensated $15 million (31% or $31 out of every $100 they raised), leaving $34million for SCH – Colorado. So, if your donation was through Edge Direct, then $69 out of every $100 was given to SHC – Colorado, while $31 was retained by Edge Direct.

It is also important to point out SCH – Colorado paid for first class flights for board members and executive staff whose flights are more than 2.5 hours long. Companion travel is provided for board members whose companion is participating in Shriners business. And, temporary housing allowances were provided for recruited individuals when relocation was required.

The Shriners Hospitals for Children (the Massachusetts corporation for 2 hospitals)

The Shriners Hospitals for Children – Massachusetts (SHC – Massachusetts) is a non-profit 501 (c) (3) based in Tampa, Florida that includes 2 hospitals in Massachusetts. Key information about SHC – Mass is summarized below (based on the IRS Form 990 (2018):

SHC – Massachusetts has net assets of $1 billion, which provided a significant portion of income to the organization even though the organization reported $116 million in unrealized losses on investments in 2018.

SHC – Massachusetts reported $92 million in total revenue in 2018, which primarily came from three (3) sources:

• $56 million:  Investment income, Gain on the sale of assets, and rents
• $23 million:  Contributions, gifts, and grants (of which nearly $16 million came from SHC – Colorado)
• $13  million:  Patient Services (i.e. patient insurance)

SHC – Massachusetts reported $63 million in expenses (not including $4 million in depreciation) which were categorized as follows:

• $35 million (38% of revenue):  Compensation-related expenses
• $16 million (17 % of revenue):  Fees for Services (investment, medical program services)
• $ 6 million (7% of revenue):  Medical Supplies and Patient Costs
• $ 5 million (5% of revenue):  Office-related expenses
• $ 1 million (1% of revenue):  Other Expenses

As illustrated above, the largest expense category was for compensation ($35 million) on 593 employees, which equates to an average compensation of $59,000.  The most highly compensated employee was John Deweese, an orthopedic surgeon and professor who was compensated $721,000.

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

 $100:  Revenue

-$ 38:  Compensation-related expenses

-$ 17:  Fees for Services

-$  7:  Medical Supplies and Patient Costs

-$  5:  Office-related expenses

-$  1:  Other Expenses

-$ 68: Total Expenses

 $ 32:  Revenue Remaining

As illustrated above, revenue was primarily spent on compensation for the medical staff, fees for services, medical supplies and patient costs, and office-related expenses.

It is also important to point out SCH – Mass provides first class flights for board members and executive staff whose flights are more than 2.5 hours long.  Companion travel is provided for board members whose companion is participating in Shriners business. And, temporary housing allowances were provided for recruited individuals when relocation was required.

SUMMARY

In summation, the 20 Shriners Hospitals for Children in the United States raised nearly $1.043 billion and spent $906 million in 2018 (not including depreciation). Even though the organizations have substantial investments and significant investment income, the two organizations collectively reported $842 million in unrealized losses on investments.  Key information to take away is that both organizations raised significantly more than they spent and were able to weather substantial unrealized losses on investments.  The largest expense for both organizations is compensation for employees.  First class and companion travel was paid for by both organizations.

To read the IRS Form 990 (2018) for SHC – Colorado, click here.

To read the IRS Form 990 (2018) for SHC – Massachusetts, click here.