How Mercy Ships Spends Revenue

Mercy Ships is a tax-exempt, non-profit 501 (c) (3) headquartered in Lindale, Texas, that operates two hospital ships in developing countries to provide free medical care.  Described as a “predominately Christian interdenominational missionary organization, Mercy Ships “treats all patients….without regard to their religions, race, or gender” by navigating the ship to offshore locations.

There are ten voting members (directors) of the governing body, 9 of whom are independent; 9 are male while 1 is female.

So, if you donated $100 to Mercy Ships in 2020, how was your donation spent?  The short answer is that $60 was spent on expenses (primarily compensation, fundraising, fees, and office-related expenses), $10 was given to the Mercy Ships Foundation (a related organization), and $30 was put into the general fund (think savings account). The long answer follows.

In 2020, Mercy Ships reported total revenue of $110 million (compared to $106 million in 2019) with most revenue from contributions, gifts, and grants ($109 million including $17 million from a related organization (Mercy Ships Foundation, also a 501 (c) (3)).

Expenses totaled $79 million in 2020 ($31 million less than total revenue) and can be categorized as follows:

• $20 million (18% of revenue):  Compensation
• $14 million (13% of revenue):  Fees for Services (primarily fundraising costs)
• $11 million (10% of revenue):  Grants (primarily to Mercy Ships Foundation)
• $10 million (9% of revenue):  Office-Related Expenses
• $ 6 million (5% of revenue):  Postage and Printing
• $ 6 million (5% of revenue):  Medical Supplies and Food
• $ 4 million (4% of revenue):  Marine Expenses
• $ 5 million (5% of revenue):  Other Expenses
• $ 3 million (3% of revenue):  Advertising and Promotion

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

$100:  Revenue

-$ 18:  Compensation

-$ 13:  Fees for Services

-$  9:  Office-Related Expenses

-$  5:  Postage and Printing

-$  3:  Advertising and Promotion

-$  5:  Other Expenses

-$ 53:  Subtotal: Compensation, Fees, Office, Postage, Printing, Advertising and Other

 $  47:  Revenue Remaining

-$  5:  Medical Supplies and Food

-$  4:  Marine Expenses

-$  9:  Subtotal: Medical Supplies, Food, and Marine Expenses

 $ 38:  Revenue Remaining

-$ 10:  Grants (to Foundation)

$  28  Revenue Remaining (to General Fund)

$   0

As illustrated above, $58 million (53% of revenue) was spent on compensation, fees, office-related expenses, postage, printing, advertising and promotion, and other expenses.  $10 million (9% of revenue) was spent on medical supplies, food, and marine expenses.  $11 million (10% of revenue) AND $31 million (28% of revenue) was given to the foundation and general fund, respectively, which means $42 million or 38% of revenue was not spent but allocated to the foundation (in the form of a grant) and savings.

To read the IRS Form 990 (2020), click here.