How Revenue is Spent at Hippocrates Health Institute (2018)

The Hippocrates Health Institute (HHI) is a non-profit 501 (c) (3) that operates out of a 50-acre tropical setting in West Palm Beach, Florida that provides educational and instructional services to teach individuals how to live and eat healthier.  Specifically, HHI has been operating since 1987 and focuses on “transforming and optimizing health” through a vegan diet that emphasizes the benefits of raw food.   In other words, HHI is a health spa that doesn’t have to pay taxes on profits.

With 7 voting members – five of whom appear to be related (since only 2 are independent) – Brian Clement, President, his wife, Anna Maria Clement (Vice President) Robert Clement, Anna Helena Birgitta Brand,  Solomon Gabbay, Shula Gabbay, and Julia Loggins,   the organization is not one that relies on donations but instead “tuition for services” which is the cost to attend HHI.

For the year ending 12/31/18, the IRS Form 990 reported total revenue of $19 million, of which $17 million (89%) came from tuition and services (medical, therapy, and other), $1.5 million (8%) from the sale of inventory, with the remaining $0.5 million (3%) from investment income and contributions.

Expenses totaled $19 million (not including $1 million in depreciation) which can be categorized in the following categories:

• $10 million (53% of revenue): Compensation
• $ 3 million (16% of revenue): Management, Legal, Bank, and Accounting Fees
• $ 2 million (11% of revenue):  Supplies and Food* (*rounded up)
• $ 2 million (10% of revenue):  Office-Related Expenses
• $ 2 million (10% of revenue):  Advertising and Promotion, Travel, and Other Expenses (no detail provided)

At year-end the total net assets or fund balance was $26 million at year-end.

As illustrated above, the largest expense ($10 million) is compensation for the 253 employees although it is important to note that Brian and Anna Maria Clement were compensated $1.6 million in 2018.

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

 $1.00:  Revenue

-$0.53:  Compensation

-$0.16:  Management, Bank, Legal, and Accounting Fees

-$0.11:  Supplies and Food

-$0.10:  Office-Related Expenses

-$0.10:  Advertising and Promotion/Travel/ and Other Expenses (no detail provided)

-$1.00:  Total Expenses  

For the client who paid $10,000 for a 3-week stay (or approximately $3,300 per week or $500 per day) – their signature program, the funds was spent as follows:

$10,000: Revenue

-$ 5,300: Compensation

-$ 1,600: Management, Bank, Legal, and Accounting Fees

-$ 1,100: Supplies and Food

-$ 1,000: Office-Related Expenses

-$ 1,000: Advertising and Promotion, Travel, and Other Expenses

$ 1,000: Revenue Remaining into Fund Balance

In summary, HHI is overseen by a Board of seven people, five of whom are related; 2 of whom are independent. The President and Vice President are married and together received $1.6 million in compensation in 2018 ($1.3 million in 2017, and $1.5 million in 2016).

An analysis of how each dollar is spent reveals that approximately $0.56 of every dollar is spent on staff, food and supplies, therapists and services. The remaining $0.44 is spent on the compensation for the two key staff (Brian and Anna Maria Clement), outside fees for management (nearly $700,000 which begs the question of why pay the top 2 executives received $1.6 million and also paid nearly $700,000 for outside management services)? bank, legal, and accounting, office, occupancy, insurance, advertising and promotion, travel, and other unexplained expenses.

To read the IRS Form 990 (2018), click here.