Where Does $100 to St Jude’s Go (2020)?

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.

So, where does a $100 donation go?  The quick answer is that half goes to the hospital, 30% to organization expenses, and 20% goes into savings.  For more detail, read on.

The most recent IRS Form 990’s (2019) for the year ending June 30, 2020 reveal:

• ALSAC raised $1.9 billion (compared to $1.9 billion the prior year);
• ALSAC spent $589 million (31% of revenue) on functional expenses (salaries, office, mailings, campaigns, etc);
• ALSAC gave $975 million (51% of revenue) to St. Jude; and
• ALSAC had $334 million (18% of revenue) left at year-end and these funds were added to the fund balance which had $5.7 billion at year-end (compared to $5.4 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 $1.2 billion, of which $975 million (79%) came from ALSAC. The remaining revenue came from government grants ($106 million), patient care – primarily insurance reimbursements ($126 million), and other contributions/licensing, cafeteria, vending machines, etc ($31 million).

St. Jude spent $1 billion (not including $93 million in depreciation) or 81% of the revenue received on functional expenses:

• $598 million (48% of revenue):  Compensation
• $147 million (12% of revenue):  Fees for Services (primarily “other”)
• $117 million (9% of revenue):  Pharmaceuticals/Lab Work
• $ 86 million (7% of revenue):  0ffice-Related Expenses
• $ 46 million (4% of revenue):  Other Expenses (no detail provided
• $ 13 million (1% of revenue):  Travel and Conferences
• $  2  million  (less than 1% of revenue):  Grants to other organizations

As illustrated above, the largest expense is for compensation. 5,693 employees received  $598 million which equates to an average compensation of $105,000.  The second largest expense is for fees paid for outside services. $109 million of the $147 million in fees for services is not detailed (the remaining $38 million was primarily for “management fees” which is unclear given the organization has a senior management team).

At the beginning of the year, St Jude’s had $6.1 billion in the net fund balance. After adding unspent revenue and adjustments ($504 million) to net assets (which is explained as a change in interest in net assets of ALSAC without donor restrictions), St Jude had $6.6 billion at year-end, of which $5.7 billion was the beneficial interest in the assets of ALSAC).

So, if a $100 contribution was given, the money was spent as follows:

$100:  Revenue

-$ 31:  ALSAC functional expenses

-$ 18:  Into the Fund Balance of ALSAC

-$ 49:  Subtotal: ALSAC expenses and allocation to the fund balance

 $ 51:  Revenue Remaining Provided to St. Jude (Hospital)

-$ 24:  Salaries and Benefits of hospital staff (48% of $51)

-$   6:  Fees for Services (12% of $51)

-$   5: Pharmaceuticals and Lab Work (9% of $51)

-$   4: Office related expenses at hospital (7% of $51)

-$   2:  Other Expenses (4% of $51)

-$    1: Travel, Conferences, and Grants (1% of $51)

-$ 42: Total St. Jude Expenses

$     9:  Amount Remaining (to Fund Balance at St. Jude)

The bottom line is:

• ALSAC spent $31 out of every $100 on fundraising expenses;
• ALSAC put $18 out of every $100 in savings;
• ALSAC gave St. Jude $51 out of every $100;
• St Jude spent $42 of that $51 on patient care and organization costs; and
• St Jude put $9 of that $51 in savings.

In other words, out of every $100 contribution given to St. Jude, $27 was retained/added to savings, $31 spent on fundraising, and $42 on hospital expenses. That St Jude has $6.6 billion (up $500 million from the previous year and up from $2.4 billion 8 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 and in 2020, net assets grew by another $500 million. Did St. Jude really need to grow net fund assets by $1.3 billion in one year?  Or, could 1,300 more children (assuming each child will cost $1 million) 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 30% of revenue on fundraising annually, and consistently saved about 20% of revenue raised annually)?
• How is it that St. Jude (the hospital) only used $42 out of every $100 for patient expenses in 2020?

To read the ALSAC IRS Form 990 (2019) for the year ending June 30, 2020, click here.

To read the St. Jude IRS Form 990 (2019) for the year ending June 30, 2020, click here