How Revenue is Spent at AARP
AARP – the American Association of Retired Persons – is a tax-exempt, non-profit organization who offers a broad mission: “to empower people to choose how they live as they age” but more specifically focuses on the issues and benefits of those 50 years and older. With an estimated 38 million members who pay $9-$16 annually, AARP is one of the largest non-profit member-based organizations in the country.
Based in Washington, DC, AARP has 12 voting members in its governing body, 11 of whom are independent; 8 of whom are female while 4 are male. In 2019, reported total revenue of $1.75 billion (compared to $1.8 billion in 2018) with the largest sources of revenue from royalties ($977 million), memberships dues ($300 million), investment income and gains ($250 million), and publication advertising revenue ($128 million), which means AARP is primarily engaged in obtaining revenue from royalties through the use of their name with the sale of insurance policies and other products sold to members.
Expenses totaled $1.6 billion and can be categorized as follows:
- $343 million (20% of revenue): Compensation
- $306 million (17% of revenue): Advertising and Promotion
- $266 million (15% of revenue): Fees (primarily consulting and professional services for programs)
- $261 million (15% of revenue): Printing and Postage
- $145 million (8% of revenue): Office-Related Expenses
- $125 million (7% of revenue): Grants
- $103 million (6% of revenue): Other Expenses
- $ 35 million (2% of revenue): Research, Surveys, Taxes, Licenses
- $ 29 million (2% of revenue): Travel and Conferences
As illustrated above, the largest expense is for compensation for the estimated 2,000 employees who received $343 million (or an average of $171,000). 1,214 (or about 60% of employees) received more than $100,000 in compensation. The most highly compensated employee was Jo Ann Jenkins, who received $1.4 million in compensation.
AARP paid for first class or charter travel, travel for companions, gross up payments or made tax indemnification. Specifically, AARP paid for first class travel for AARP board members, officers, and key employees when business class accommodations were not available for flights exceeding 5 hours (not hard to do with a connection), or when there is late night arrival, or medical reasons. The CEO, President, and Board Chair were allowed to fly first class or business class on flights exceeding 90 minutes.
So, if you want to know where revenue is spent, the answer is that 75% of revenue is spent on compensating employees, advertising and promotion, fees, printing and postage, and office-related expenses. Every $100 in revenue was spent as follows:
-$ 20: Compensation
-$ 17: Advertising and Promotion
-$ 15: Fees
-$ 15: Printing and Postage
-$ 8: Office-Related Expenses
-$ 6: Other Expenses
-$ 2: Research, Surveys, Taxes, Licenses
-$ 2: Travel and Conferences
-$ 85: Subtotal Expenses: Compensation, A/P, Fees, Printing,Postage, Office, Other, Travel
$ 15: Remaining Revenue
-$ 7: Grants
$ 8: Unspent Revenue: To General Fund
As illustrated above, AARP spent $85 out of every $100 on organization expenses. An additional $7 out of every $100 was used for grants ($125 million in total grants of which $102 million was to the AARP Foundation).
At year-end, AARP reported net assets of $1.5 billion compared to $1.2 billion at the beginning of the year with the growth attributable to the allocation of $140 million in unspent revenue and $160 million in net unrealized gains on investments.
To read the IRS Form 990 (2019), click here.