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December 18, 2020

Toys For Tots: Where Does Your Donation Go?

by Anne Paddock

Toys for Tots is one of the most well known organizations whose mission is to work with the US Marine Corp to collect new unwrapped toys and distribute those toys to economically disadvantaged children at Christmas time.  A non-profit, tax-exempt 501 (c) 3, Toys for Tots is legally known as Marine Toys for Tots Foundation but nearly everyone refers to the organization as “Toys for Tots.”

There are 11 voting members of the governing party, 10 of whom are independent. 9 of the 11 (82%) directors are male while 2 (18%) are female.

So, if you made a donation in 2019, where did it go?  It depends. If you donated a toy, then more than likely, a child received that toy. If you made a cash donation, then the funds were probably used to pay for organization expenses (i.e. compensation, office-related expenses, fees for services, etc), purchase toys, or put into the general fund (savings). How do I know this? Because the Form 990 that Toys for Tots submitted to the IRS (2019) reports the following information:

In 2019, Toys for Tots reported total revenue of $263 million, of which $198 million were non-cash donations (i.e. toys) while $60 million were cash donations.  The other $5 million came from investment income (note:  the organization had $178 million in net assets by year-end which means they spent less than they raised over the years and also benefited from gains in investments of these funds.

Expenses totaled $240 million and can be categorized as follows:

  • $219 million (83% of revenue):  Toys
  • $ 12 million (5% of revenue):  Office-Related Expenses
  • $  4 million (2% of revenue):  Fees for Services (i.e. fundraising, investment management, etc)
  • $  2 million (1% of revenue):  Compensation
  • $  2 million (1% of revenue):  Travel and Conferences
  • $  1 million (<1% of revenue):  Public Relations

Let’s look at cash versus non-cash expenses for a moment.  We know the following:

  • In 2019, Toys for Tots received $198 million in non-cash donations (i.e. toys) and $65 million in cash revenue;
  • In 2019, Toys for Tots distributed $219 million in toys (about $21 million more than they collected); and
  • In 2019, Toys for Tots spent $21 million on organization expenses (listed above)

So, the question becomes:  How did Toys for Tots spend the $65 million in cash donations? The answer is they spent $21 million on toys, $21 million on organization expenses (i.e. office, fees, compensation, travel, and PR), and put $23 million in the general fund (savings). In other words, roughly 1/3 of cash revenue was used for organization expenses, 1/3 on toys, and 1/3 was put into savings, which means a cash donation in 2019 went towards organization costs, toys, or was put into savings.

It’s safe to say that Toys for Tots used $21 million for organization expenses, with office-related expenses (which includes more than $5 million in fundraising expenses) and compensation the largest expenses. 18 employees received $2.2 million in compensation which equates to an average compensation of $122,000 (note:  Toys for Tots relies heavily on volunteers). However, only 5 employees received more than $100,000 in compensation:

  • $373,366:  Henry P Osman, President and CEO (thru 12/31/19)
  • $196,919:  James P Laster, EVP
  • $193,480:  Theodore Silvester, VP, M&D
  • $191,976:  Matthew D Cooper, Secretary, VP Operations
  • $123,396:  Matthew D McDonald, IT Specialist

All of the most highly compensated employees are male.

Toys for Tots did NOT spend revenue on first class or charter travel, companion travel, health or social club dues or initiation fees, discretionary spending accounts, personal staff, gross up payments (or tax indemnification) or for housing.

Bottom Line:  If you want to make a donation and be sure that a child is directly benefiting from that donation, donate a new, unwrapped toy to Toys for Tots. If you donate cash, the funds may be used to support the organization (which is not a bad thing), pay for toys, or put into savings (they already have nearly $200 million).

To read the IRS Form 990 (2019), click here

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