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May 31, 2021

Where Does $100 to the Robert Wood Johnson Foundation Go?

by Anne Paddock

The Robert Wood Johnson Foundation (RWJF) is one of the largest, if not the largest philanthropy focused solely on health. The foundation’s goal, through the use of grants, is “to improve the health and healthcare of all Americans.”

Given that people in the US (compared to other high income countries) have shorter lives, more heart disease, obesity, diabetes, lung disease, disabilities, HIV and AIDS, drug-related deaths, adolescent pregnancy, bad birth outcomes, and disabilities than nearly every single other country (as measured by the American Public Health Association) but spend more per capita (about $8,000 per person) than every other country in the world, is there any question the US needs to focus on health and reversing the current trends? But, the more potent question is this:  Is the foundation making a difference – reversing the health trends in the US – with the more than $400 million in grants awarded annually and the $300 million the foundation spends annually to support, manage, and grow itself?

Let’s start with a few facts, based on the most recent Form 990 (2018) submitted to the IRS:

The Robert Wood Johnson Foundation (RWJF) is a private non-profit, tax-exempt 501 (c) (3) foundation based in Princeton, New Jersey.

By year-end 2018, the organization had more than $11 billion in net assets, most of which were in investments.

RWJF raised $1.189 billion in 2018, $549 from operations and $640 million from investments. In operations, most of the revenue came from the sale of assets (i.e. securities) while investment income came primarily from capital gains and dividends.

Expenses totaled $745 million (63% of revenue), $425 million (36% of revenue) of which were grants. The remaining $320 million (27% of revenue) was spent on the following:

  • $156 million (13% of revenue):  Other Expenses (primarily “misc office expenses”)
  • $ 74 million (6% of revenue):  Compensation
  • $ 55 million (5% of revenue):  Fees for Services (primarily investment manager fees)
  • $ 15 million (1% of revenue):  Taxes
  • $ 13 million (1% of revenue):  Interest and Depreciation
  • $  4 million (less than 1% of revenue):  Office-Related Expenses
  • $  3 million (less than 1% of revenue):  Travel

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

 $100:  Revenue

-$ 36:  Grants

$ 64:  Revenue Remaining

-$ 13:  Other Expenses

-$  6:  Compensation

-$  5:  Fees for Services (primarily investment management fees

-$  3: Taxes, Interest, Office, and Travel

-$ 27: Subtotal: Other, Compensation, Fees, Taxes, Int, Office, Travel

$ 37:  Revenue Remaining:  To General Fund

So, where does $100 go?  The short answer is that about 1/3 goes to grants, 1/3 to operating expenses, and 1/3 to savings.

As illustrated above, the RWJF spent $36 out of every $100 in revenue on grants.  It is important to note that charitable foundations must pay out at least 5% (of their non-charitable use assets from the proceeding year) each year in the form of grants and operating charitable activities.  At the end of 2017, the foundation had about $10 billion in net assets.  Grants of $425 million and operating expenses of $320 million in 2018 represent about 7% of the non-charitable use assets, with grants at 4% and operating expenses at about 3%.  However, in Part I (“Analysis of Revenue and Expenses) on the Form 990, RWJF reports $517 million in disbursements of charitable purposes (they appear to have disqualified many operating expenses) which equates to about 5% of their non-charitable use assets.

So, RWJF is doing what they are supposed to do:  making grants/disbursements but are their efforts  effective?  That is, are they improving the “range of issues, including access to care, childhood obesity (“our goal is to accelerate evidence-based strategic, actionable, and equitable solutions for improving children’s weight and nutrition, diet quality, and food access and security”), and training for doctors and nurses” along with the social and economic factors that impact health including quality of housing, violence, poverty and access to fresh food?  That’s a tough question to answer and may be better addressed by asking more questions including but not limited to:

  • Have childhood obesity rates declined?
  • Have Type 2 diabetes rates among both children and adults declined?
  • Have adult obesity rates declined?
  • Has heart disease among all age groups declined?
  • Have food deserts declined in lower income areas?
  • Has kidney disease among the lower income declined?

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

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