Where Does $100 to Feed the Children Go?
Feed the Children (FTC) is a tax-exempt non-profit 501 (c) (3) based in Oklahoma City, OK. Established in 1979, FTC is primarily engaged in obtaining and distributing food, medicine, and clothing to those in need through grants, primarily to non-profits in the USA.
FTC is governed by 11 independent voting members (directors) of the governing body (Board of Directors) (although the Form 990 lists 12 directors, 8 (67%) of whom are male and 4 (33%) whom are female.
In trying to understand how $100 is spent at FTC, it is important to consider what the organization primarily does: FTC collects non-cash contributions and distributes these items. So, if the $100 donation is a non-cash item, then the contribution is distributed to another organization (another non-profit that is probably in the USA). But, if the donation is cash, then the $100 is used to pay for the organization costs of FTC. So, there are two ways to look at how $100 is spent, both of which will be presented in the following paragraphs.
In 2020, FTC collected $416 million in non-cash contributions and awarded $331 million in non-cash grants which means the organization retained about $85 million in non-cash contributions presumably to be distributed in the future. The $85 million in non-distributed non-cash contributions in 2020 resulted in an increase in net assets (since technically, the FTC did not spend as much as they collected).
In 2020, FTC collected $50 million in cash contributions, gifts, and grants (including $2 million in marketable securities which are readily convertible to cash) and investment/gains, and spent $41 million or organization expenses and $36 million in cash grants, meaning FTC had to use cash reserves to help pay for these expenses (even though they were technically offset by the non-cash grants received but no awarded out). The net gain on the balance sheet was $58 million ($85 million in non-cash contributions less $27 million in cash).
How $100 Was Spent if Non-Cash Contributions Are Considered
In 2020, FTC reported total revenue of $466 million, of which $50 million were contributions, gifts, and grants, and gains/investment income, and $416 million were non-cash contributions (not including $2 marketable securities which are easily converted to cash):
- $196 million: Food
- $ 79 million: School Supplies
- $ 36 million: Hygiene Products
- $ 35 millon: Books and Publications
- $ 33 million: Clothing and Household Goods
- $ 29 million: Eye Glasses
- $ 6 million: Toys
- $ 2 million: Drugs and Medical Supplies
Expenses totaled $408 million (87% of total revenue) and can be categorized as follows:
- $331 million (71% of revenue): Non-Cash Grants
- $ 36 million (8% of revenue): Cash Grants
- $ 17 million (3% of revenue): Compensation
- $ 6 million (1% of revenue): Office-Related Expenses
- $ 6 million (1% of revenue): Direct Mail
- $ 5 million (1% of revenue): Other Expenses (primarily with no detail provided)
- $ 4 million (1% of revenue): Shipping and Handling
- $ 3 million (1% of revenue): Fees for Services (primarily fundraising)
As illustrated above, FTC spent $58 million less than they received.
Using the above information every $100 in revenue (both cash and non-cash) was spent as follows:
-$ 79: Grants
$ 21: Revenue Remaining
-$ 3: Compensation
-$ 1: Office-Related Expenses
-$ 1: Diret Mail
-$ 1: Other Expenses
-$ 1: Shipping and Handling
-$ 1: Fees for Services
-$ 8: Subtotal: Compensation, Office, Mail, Other, SH, and Fees
$ 13: Remains Revenue: To General Fund
As illustrated above, $79 of every $100 in non-cash and cash contributions were distributed in grants. $8 out of every $100 was used for organization expenses.
In order to see how cash contributions were used, we need to just look at cash revenue and cash expenses:
How $100 was Spent if Non-Cash Contributions and Non-Cash Grants Are Not Considered
$50 million in cash contributions were reported in 2020. $77 million in expenses were reported, of which $36 million were cash grants and $41 million were for organization expenses:
- $36 million (70% of revenue): Cash Grants
- $17 million (33% of revenue): Compensation
- $ 6 million (12% of revenue): Office-Related Expenses
- $ 6 million (12% of revenue): Direct Mail
- $ 5 million (10% of revenue): Other Expenses
- $ 4 million (8% of revenue): Shipping and Handling
- $ 3 million (6% of revenue): Fees for Services (primarily fundraising)
In order to pay the organization expenses ($41 million) and make the cash grants ($36 million), FTC had to use cash from the general fund. Given that FTC did not grant out all non-cash contributions (they only granted $331 million of $416 million leaving $85 million in non-cash contributions in the organization), it appears FTC used more cash in 2020 to meet the cash obligations. In short, they added $85 million in non-cash contributions to the general fund but used $27 million more in cash expenses than they collected, which still allowed the general fund to increase by $58 million.
Using the above information, every $100 in cash revenue was spent as follows:
$100: Cash Revenue
-$ 70: Cash Grants
$ 30: Revenue Remaining
-$ 33: Compensation
-$ 12: Office-Related Expenses
-$ 12: Direct Mail
-$ 10: Other Expenses
-$ 8: Shipping and Handling
-$ 6: Fees for Services (primarily fundraising)
-$ 81: Total Expenses
-$ 51: Excess Cash Expenses over Cash Revenue
As illustrated above, $81 out of every $100 in cash contributions were spent on organization expenses. $70 out of every $100 was not spent on cash grants, resulting in the use of $27 million more cash (which was offset by the allocation of $85 million in non-cash contributions).
In summary, FTC is primarily engaged in collecting and distributing non-cash contributions (in the form of grants to other non-profits primarily in the USA) but they rely on cash contributions to pay the expenses of running the organization. FTC did not distribute as many non-cash contributions as they received; but they did spend more cash than they received in 2020. In summary, FTC spent $27 million more cash than they received but allocated $85 million in non-cash contributions allowing the organization to increase net assets from nor did they spend as much cash revenue was they received. As a result, FTC increased their net assets from $85 million at the beginning of the year to $143 million at year-end.
To read the IRS Form 990 (2019 for the year ending June 30, 2020), click here.