Where Does $100 to Hope for the Warriors Go (2021)?

Hope For The Warriors (HFTW) is a 501 (c) (3) based in Springfield, Virginia that strives to help those affected by military service. Assistance is primarily through staff support from the 88 employees who were compensated nearly $5 million (an average of $57,000 per employee with only 6 employees compensated more than $100,000). Grants were also awarded ($800,000 or 10% of total revenue) in 2021.

In trying to understand how a $100 donation is spent, it is helpful to look at the IRS Form 990 (2021) which reports revenue, expenses, information on executive compensation, fundraising, assets, liabilities and net fund assets.

REVENUE

$8.2 million in revenue was reported in 2021 (which has been relatively consistent for the last 5 years between $6-$8 million) primarily from contributions, gifts, and grants (including nearly $1 million in grants from the government).

EXPENSES

$6.9 million in expenses were reported in 2021. There are two ways to look at expenses:  by broad general category (grants, program services, management, and fundraising) and by looking at specific line item categories (i.e. compensation-related expenses, office-related expenses, grants, travel and conferences, etc). Both provide beneficial information with the latter approach providing more detail on expenses.

Expenses by Broad General Category

The $6.9 million in expenses were categorize as follows:

• $5.4 million (66% of revenue):  Program Services
• $0.8 million (10% of revenue):  Grants
• $0.6 million (7% of revenue):  Management Expenses
• $0.1 million (1% of revenue):  Fundraising Expenses

Approximately $1.3 was not spent and added to the fund balance which had $3.3 million at year-end, compared to $2 million at the beginning of the year.

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

$100:  Revenue

-$ 66:  Program Services

-$ 10:  Grants

-$  7:  Management Expenses

-$  1:  Fundraising Expenses

-$ 84: Total Expenses

 $  16:  Revenue Remaining:  To General Fund 

As illustrated above, HFTW spent $84 out of every $100 on expenses. $13 of out every $100 in revenue received was left unspent and placed in the general fund (savings).

Expenses by Specific Line Item Category

The $6.9 million in expenses were spent in the following specific line item expenses:

• $4.9 million (60% of revenue):  Compensation-related expenses
• $0.8 million (10% of revenue):  Grants
• $0.5 million (6% of revenue):  Office-related Expenses
• $0.3 million (4% of revenue): Fees for Services (primarily other with no detail provided)
• $0.2 million (2% of revenue): Other expenses (Travel and Conferences, etc)
• $0.2 million (2% of revenue): Advertising and Promotion

As illustrated above, the largest single expense and where more than half of revenue ($60 out one very $100 in revenue) was spent was compensation for the staff.  An additional $14 out of every $100 is used to pay for office-related expenses, travel and conferences, advertising and promotion and fees for outside services. Nearly $300,000 was spent on fees for outside services but no detail is provided for approximately $200,000 of these fees (and the IRS does not require the organization to provide detail because this line item is less than 10% of total expenses).

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

$100:  Revenue

-$ 60:  Compensation-related Expenses

-$  6:  Office-related expenses

-$  4:  Fees for Services

-$  2:  Other expenses

-$  2:  Advertising and Promotion

-$ 74:  Subtotal of Compensation, office, travel, conferences, adv/pro, and fees for services

 $ 26:  Revenue Remaining

-$ 10:  Grants

 $  16:  Revenue Not Spent – To General Fund (savings)

As illustrated above, $74 of out every $100 in revenue was spent on organizational costs while $10 out of every $100 was used for grants to veterans and their families.

EXECUTIVE COMPENSATION

HFTW employed 88 individuals in 2021 who were compensated $4.9 million (an average of $56,000 each). 6 individuals received more than $100,000 in compensation:

• $178,650:  Robin Kelleher, President and CEO
• $156,287: Emma Walsh, Chief Strategy Officer
• $117,881:  Karen Lee Davis, Head of Brand and Donor Experience
• $116,566:  Beverly King, CVN, Clinic Director
• $111,420:  Patricia Winklowsky, Head of Well Being, Programs and Services
• $106,791:  David Martin, Head of People and Culture

5 of the 6 most highly compensated employees are female while 1 is a male (note: gender is not reported on the Form 990; determinations were made based on name and google searches). Interestingly, the Board, which consists of 11 independent voting members (directors) consists of 9 males and 2 females.

FUNDRAISING

HFTW relies primarily on contributions, gifts, and grants for funding. In addition, the organization relies on fundraisers to a lesser extent. In 2021, HFTW held 6 fundraisers that raised $475,876 (about 6% of total revenue). After deducting contributions (which the IRS requires) of $384,676 and the event costs (rental facility costs, food and beverage, entertainment, and prizes) of $82,038, HFTW had a net income of $9,162 from these events. The question that arises is:  How much staff time and resources (i.e. office-related expenses, advertising, and promotion, and travel) are spent on these events that result in 6% of total revenue and less than 1/10th of 1% of revenue after event costs are deducted?

From an outsider looking in, fundraising appears to be a weak link for HFTW.  Over the past 10 years revenue has been $5-$9 million annually with no significant growth.

GRANTS

$800,000 in grants were awarded in 2021, which are summarized as follows:

• 2,739 service members received food and rental assistance in cash ($271,718 or an average of $99 each. In addition the 2,739 service members received non-cash assistance of $21,524 or an average of $8 each.
• 12 service members received travel assistance in cash ($8,157 or an average of $680 each).
• 23 service members received adaptive equipment in cash ($39,417 or an average of $1,700 each).
• 13 recipients received entertainment and respite in cash ($4,436 or an average of $370 each) .
• 52 recipients received scholarships in cash ($109,242 or an average of $2,100 each).
• 186 recipients received gifts in cash ($137,508 or an average of $740); and non-cash gifts of $168,319, or an average of $900 each.
• Event supplies in cash ($1,069) and non-cash $895) were granted.

ASSETS

HFTW reported $4.6 million in assets at year-end that were concentrated in five areas:

• $1.4 million:  Cash
• $1.0 million:  Publicly traded securities
• $1.0 million:  Receivables
• $1.2 million:  Equipment, inventory, and other assets

As illustrated above, the organization is very liquid with $2.4 million of the $4.6 million in cash and publicly traded securities.

LIABILITIES

HFTW reported $1.3 million in liabilities, almost all of which is deferred revenue and loans payable.

NET FUND ASSETS

From 2006-2017, HFTW built up net assets to $5.7 million by year-end 2020, net assets had fallen to $2 million.  After spending significantly less than they received in 2021,  net assets increased to  $3.3 million at year-end 2021, $2.9 of which is without donor restrictions.

SUMMARY

HFTW  is a staff intensive 501 (c) (3) whose focus is more on providing assistance through their staff and office than through grants. Although several hundred recipients received grants in the form of both cash and non-cash benefits, grants were limited to less than $800,000 or about 10% of revenue in 2021.  The question that arises is how much staff time, office costs, and travel expenses were spent to award less than $800,000 in grants?  Ditto the same question for fundraising events. 6 fundraising events were held across the United States with HFTW netting about $9,000. The question becomes how much staff time and associated expenses (office, advertising, travel, etc) were spent to obtain that $9,000? And, lastly, why did HFTW put approximately $1.3 million in the general fund instead of helping more veterans?

To read the IRS Form 990 (2021), click here.