Where Does $100 to the Robert Wood Johnson Foundation Go (2019)?

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 (2019) 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 2019, the organization had more than $11 billion in net assets, most of which were in investments.

RWJF raised $1.166 billion in 2019, $577 from operations and $589 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 $717 million (61% of revenue), $397 million (34% of revenue) of which were grants. The remaining $320 million (27% of revenue) was spent on the following:

• $153 million (13% of revenue):  Other Expenses (primarily “misc office expenses”)
• $ 79 million (7% of revenue):  Compensation
• $ 58 million (5% of revenue):  Fees for Services (primarily investment manager fees)
• $ 18 million (1% of revenue):  Interest and Taxes
• $  5 million (less than 1% of revenue):  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

-$ 34:  Grants

$ 66:  Revenue Remaining

-$ 13:  Other Expenses

-$  7:  Compensation

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

-$  2: Taxes, Interest, Office, Travel, Etc

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

 $ 39:  Revenue Remaining:  To General Fund

So, where does every $100 go?  The short answer is that about 1/3 goes to grants, 1/4 to operating expenses, and about 40% to savings.

As illustrated above, the RWJF spent $34 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 year-end 2018 (since grants in 2019 are based on the previous year’s non-charitable use assets), RWJF had about $11 billion in non-charitable use assets. The $397 million in grants represents 3.6% while the $320 million in operating expenses represents 2.9%. Collectively, grants and operating expenses total $717 million or 6.5% of non-charitable use assets.  However, on the Form 990, Part I (Analysis of Revenue and Expenses), $552 million in total disbursements for charitable purposes are reported (they appear to disqualify many of the operating expenses), which equates to 5% of non-charitable assets.  So, RWJF is doing their job by disbursing at least 5% of non-charitable use assets.  But, are the grants making a difference in health?

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 (2019), click here.