Where Does $100 to Shriners Hospitals Go (2019)?

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 $9 billion, which provides significant investment income to the organization. However, it is important to note SHC had net assets of $7.6 billion at the beginning of the year.  This big change is a result of unrealized gains on investments (about $900 million) and a transfer from SHC – MA (about $600 million) to reimburse expenses that SHC- Colorado paid for SHC – Massachusetts.

SHC – Colorado reported $816 million in revenue in 2019 (compared to $951 million in 2018), which primarily came from three (3) sources:

• $404 million in contributions, gifts, and grants (including $22 million from the government)
• $270 million in investment income, gain on the sale of assets, etc
• $141 million in patient services (i.e. insurance payments)

SHC – Colorado reported $852 million in expenses (not including $51 million in depreciation) and were categorized as follows:

• $436 million (53% of revenue):  Compensation-related Expenses
• $165 million (20% of revenue):  Fees for Services (fundraising, investment, and other with no detail provided)
• $ 81 million (10% of revenue):  Medical Supplies and Patient Costs
• $  73 million (9% of revenue):  Office-related Expenses
• $  35 million (4% of revenue):  Grants
• $  35 million (4% of revenue):  Advertising and Promotion
• $  14 million (2% of revenue):  Events and Other Expenses (no detail provided)
• $   9 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 5,530 employees who were compensated $436 million, which equates to an average compensation of $79,000. The most highly compensated employee was reported to be Michelle James, the Chief of Staff,  who received $2,195,078 in compensation.

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

$100:  Revenue

-$ 53:  Compensation-related expenses

-$ 20:  Fees for Services

-$ 10:  Medical Supplies and Patient Costs

-$  9:  Office-related expenses

-$  4:  Advertising and Promotion

-$  2:  Events and Other Expenses

-$  1:  Travel and Conferences

-$  1:  Interest, Fees, Taxes

-$100 : Subtotal Expenses

 $  00:  Revenue Remaining

-$   4:  Grants

-$  4:  Amount of Expenses over Revenue 

As illustrated above, SHC – Colorado spent $104 for every $100 in revenue in 2019.  This appears to be due to a $136 million decline in total revenue in 2019 ($816 million in 2019 compared to $951 million in 2018) while expenses remained relatively stable ($852 million in 2019 compared to $843 million in 2018).

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 $34 million 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 (2019):

SHC – Massachusetts has net assets of about $500 million (compared to $1.1 billion the previous year) – the decline of which is due to SHC- Massachusetts transferring about $600 million to SCH – Colorado to reimburse for expenses paid in previous years.

SHC – Mass reported $80 million in total revenue in 2019 (compared to $92 million in 2018), which primarily came from three (3) sources:

• $44 million:  Investment income, Gain on the sale of assets, and rents
• $21 million:  Contributions, gifts, and grants (of which $14 million came from SHC – Colorado)
• $13  million:  Patient Services (i.e. patient insurance)

SHC – Mass reported $65 million in expenses (not including $5 million in depreciation) which were categorized as follows:

• $35 million (44% of revenue):  Compensation-related expenses
• $18 million (22% of revenue):  Fees for Services (investment, medical program services)
• $ 6 million (8% of revenue):  Medical Supplies and Patient Costs
• $ 4 million (5% of revenue):  Office-related expenses
• $ 2 million (2% of revenue):  Other Expenses

As illustrated above, the largest expense category was for compensation ($35 million) for 576 employees, which equates to an average compensation of $61,000.  The most highly compensated employee was James F Mooney III, an orthopedic surgeon and professor who was compensated $728,396.

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

 $100:  Revenue

-$ 44:  Compensation-related expenses

-$ 22:  Fees for Services

-$  8:  Medical Supplies and Patient Costs

-$  5:  Office-related expenses

-$  12  Other Expenses

-$ 81: Total Expenses

 $ 19:  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 – Massachusetts 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 $896 million (compared to $1.043 billion in 2018) and spent $917 million in 2019 (not including depreciation) – about $21 million more than they raised. Collectively, the two organizations have $9.5 billion in net assets which provide significant investment income. 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 (2019) for SHC – Colorado, click here.

To read the IRS Form 990 (2019) for SHC – Massachusetts, click here.