How Revenue is Spent at Hippocrates Health Institute (2019)
The Hippocrates Health Institute (HHI) is a tax-exempt, non-profit 501 (c) (3) that operates out of a 50-acre tropical setting in West Palm Beach, Florida that provides educational and instructional services to teach individuals how to live and eat healthier. Specifically, HHI has been operating since 1987 and focuses on “transforming and optimizing health” through a vegan diet that emphasizes the benefits of raw food. The cause is noble and commendable; the cost to attend which pays the 2 executive staff more than $1.6 million annually, is not.
With 7 voting members – five of whom appear to be related (since only 2 are independent) – Brian Clement, President, his wife, Anna Maria Clement (Vice President) Robert Clement, Anna Helena Birgitta Brand, Solomon Gabbay, Shula Gabbay, and Julia Loggins, the organization is not one that relies on donations but instead “tuition for services” which is the cost to attend HHI.
For the year ending 12/31/19, the IRS Form 990 reported total revenue of $19 million, of which $15 million (79%) came from tuition and services (medical, therapy, and other), $1.5 million (8%) from the sale of inventory, with the remaining $2.5 million (3%) from investment income, contributions, and other income.
Expenses totaled $18 million (not including $1 million in depreciation) which can be categorized in the following categories:
- $9 million (47% of revenue): Compensation
- $2 million (11% of revenue): Management, Legal, Bank, and Accounting Fees*
- $3 million (16% of revenue): Supplies and Food
- $2 million (11% of revenue): Office-Related Expenses
- $2 million (11% of revenue): Advertising and Promotion, Travel, and Other Expenses (no detail provided)
“*” Includes $500,000 in management fees. Why and who HHI is paying $500,000 annually for management services when Brian and Anna Maria Clement are being compensated $1.6 million annually, is unclear.
At year-end the total net assets or fund balance was $27 million.
As illustrated above, the largest expense ($9 million) is compensation for the 223 employees although it is important to note that Brian and Anna Maria Clement were compensated $1.6 million in 2019.
Based on the above information, every $100 in revenue was spent as follows:
-$ 47: Compensation
-$ 11: Management, Bank, Legal, and Accounting Fees
-$ 16: Supplies and Food
-$. 11: Office-Related Expenses
-$ 11: Advertising and Promotion/Travel/ and Other Expenses (no detail provided)
-$ 96: Total Expenses
For the client who paid $10,000 for a 3-week stay (or approximately $3,300 per week or $500 per day), the funds was spent as follows:
-$ 4,700: Compensation
-$ 1,600: Management, Bank, Legal, and Accounting Fees
-$ 1,100: Supplies and Food
-$ 1,100: Office-Related Expenses
-$ 1,100: Advertising and Promotion, Travel, and Other Expenses
-$9,600: Total Expenses
$ 400: Revenue Remaining: into Fund Balance
In summary, HHI is overseen by a Board of seven people, five of whom are related; 2 of whom are independent. The President and Vice President are married and together received $1.6 million in compensation in 2019, $1.6 million in compensation in 2018, $1.3 million in 2017, $1.6 million in 2016, and $1.3 million in 2015.
An analysis of how each dollar is spent reveals that approximately $0.58 of every dollar is spent on staff, food and supplies, therapists and services. The remaining $0.38 is spent on administrative fees for services (management, bank,legal, and accounting), office-elated expense , advertising, promotion, travel and other expenses, leaving $0.4 left to put into the general fund (savings). One has to question why the two key staff (Brian and Anna Maria Clement) were compensated $1.6 million I 2019 but also saw need to pay $500,000 in management fees to an outside provider in 2019 (and $700,000 in 2018)?
To read the IRS Form 990 (2019), click here.