Where Does $100 to St. Jude’s Go (2019)?
St. Jude’s is one of the most popular non-profit organizations in the country because the charity’s mission appeals to donors: they treat and help children with cancer and other life threatening illnesses. But, before making donations, donors should understand where revenue is spent and that St. Jude’s is actually two organizations:
- St. Jude Children’s Research Hospital, Inc. (St. Jude)
- American Lebanese Syrian Associated Charities (ALSAC)
ALSAC “exists for the sole purpose of raising funds and building awareness to support the current and future needs of St. Jude Children’s Research Hospital, Inc” while St. Jude engages in research and provides care and services to sick children and their families. St. Jude has a beneficial interest in the assets of ALSAC but the organizations are separate non-profit 501 (c)(3) entities with specific functions: ALSAC raises funds while St. Jude does the research and provides the treatment.
The most recent IRS Form 990’s (2018) for the year ending June 30, 2019 reveal:
- ALSAC raised $1.9 billion (compared to $1.7 billion the prior year);
- ALSAC spent $535million (28% of revenue) on functional expenses (salaries, office, mailings, campaigns, etc);
- ALSAC gave $865 million (46% of revenue) to St. Jude; and
- ALSAC had $520 million (26% of revenue) left at year-end and were added to the fund balance which had $5.4 billion at year-end (compared to $4.7 billion at the beginning of the year).
During the same time period, St. Jude reported the following key financial information:
St. Jude reported total revenue of $1.1 billion, of which $865 million (79%) came from ALSAC. The remaining revenue came from government grants ($94 million), patient care – primarily insurance reimbursements ($109 million), and other contributions/licensing, cafeteria, vending machines, etc ($39 million).
St. Jude spent $930 million (not including $90 million in depreciation) or 85% of the revenue received on functional expenses:
- $546 million (50% of revenue): salaries and benefits
- $131 million (12% of revenue): fees for services
- $111 million (10% of revenue): pharmaceuticals and lab work
- $ 76 million (7% of revenue): office related expenses
- $ 47 million (4% of revenue): other Expenses
- $ 17 million (2% of revenue): travel, meetings, and conferences
- $ 1 million (less than 1% of revenue): grants to other organizations
As illustrated above, the largest expense is for salaries and benefits for the 5,440 employees who received an average compensation of $100,000. The second largest expense is for fees paid for outside services. $100 million of the $131 million in fees for services is not detailed (the remaining $31 million was primarily for “management fees”).
At the beginning of the year, St Jude’s had $5.3 billion in the net fund balance. After adding unspent revenue and adjustments ($670 million) to net assets (which is only explained as a change), St Jude had $6.1 billion at year-end, of which $5.4 billion was the beneficial interest in the assets of ALSAC).
So, if a $100 contribution was given, the money was spent as follows:
-$ 28: ALSAC functional expenses
-$ 26: Into the Fund Balance of ALSAC
-$ 54: Subtotal: ALSAC expenses and allocation to the fund balance
$ 46: Revenue Remaining and Provided to St. Jude (Hospital)
-$ 23: Salaries and Benefits of hospital staff (50% of $46)
-$ 5: Fees for Services (12% of $46)
-$ 5: Pharmaceuticals and Lab Work (10% of $46)
-$ 3: Office related expenses at hospital (7% of $46)
-$ 2: Other Expenses (4% of $46)
-$ 1: Travel, Conferences, and Grants (2% of $46)
-$ 39: Total St. Jude Expenses
$ 7: Amount Remaining (to Fund Balance at St. Jude)
The bottom line is that $28 of a $100 contribution went to pay the fundraising costs at ALSAC. $26 was retained and placed in the fund balance while $46 was given to St. Jude (the hospital). Of that $46, St. Jude spent $39 while the remaining $7 went into their fund balance.
In other words, out of every $100 contribution given to St. Jude, $33 was retained/added to savings, $28 spent on fundraising, and $39 on hospital expenses. That St Jude has $6.1 billion (up $800 million from the previous year and up from $2.4 billion 7 years ago so the organization is clearly focused on growing the endowment by adding hundreds of millions of dollars annually) in net fund assets (of which $1.1 billion are restricted) raises the following questions:
Why are more funds not spent on helping sick children and families? In 2019, net fund assets grew by $800 million. Did St. Jude really need to grow net fund assets by nearly $1 billion in one year? Or, could 800 more children with serious illnesses and their families be helped?
When will services be expanded to help more sick children?
When will more money be allocated to the hospital than to fundraising and savings (note: savings are important and can be used for capital expansion but ALSAC has consistently given about 50% of revenue to St Jude’s annually, consistently spent about 29% of revenue on fundraising annually, and consistently saved about 20% of revenue raised annually).
How is it that St. Jude (the hospital) only used $39 out of every $100 for patient expenses?
To read the IRS Form 990 for St Jude Children’s Research Hospital (2018 for the year ending June 30, 2019), click here.
To read the IRS Form 990 for ALSAC (2018 for the year ending June 30, 2019), click here.
For more information, click on Executive Compensation at St Jude (2019)