How Dairy Management Spends Revenue (2021)

Dairy Management Inc (DMI) is a non-profit, tax-exempt 501 (c) (6) whose purpose is to promote dairy products in order to increase consumption of dairy products.

Funded by a mandate by Congress, DMI is what is referred to as a “check off program” where all producers have to contribute funds for the good of the industry. Dairy producers are required to contribute 15 cents per 100 pounds (foreign dairy producers are required to contribute 7.5 cents per 100 pounds) which equates to about 1.5 cents per gallon of milk, all of which adds up to about $150-$160 million annually (which is then spent on marketing (about 60%), administrative organization expenses (about 30%) and export expenses (about 10%).

DMI has 78 independent voting members (Directors) on its governing body although 81 are listed on the most recent Form 990 (which appears to be due to timing differences).  62 of the 81 (77%) are male while 19 of the 81 (23%) are female (note:  The Form 990 does not disclose gender; determinations were based on name and google searches).

In 2021, DMI reported total revenue of $154 million (compared to $161 million in 2020, $156 million in 2019, $160 million in 2018 and $155 million in 2017, so revenue is consistent), most of which came from program and core funding revenue from the dairy producers. Expenses were $154 million and were categorized as follows:

• $88 million (57% of revenue):  Domestic Marketing
• $33 million (21% of revenue):  Compensation
• $15 million (10% of revenue):  Export
• $ 7  million (5% of revenue):  Contract Services
• $ 6  million (4% of revenue):  Office-related Expenses
• $ 1  million (1% of revenue):  Travel and Conferences
• $ 2  million (1% of revenue):  Grants
• $ 2  million (1% of revenue):  Fees for Services and Other Expenses

As illustrated above, the largest expenses were for domestic marketing ($88 million), compensation ($33 million) for the 304 employees who received an average compensation of $109,000), and export ($15 million). The most highly compensated employee was Thomas Gallagher, the CEO (through 11/21) who received $2,680.255.

With regard to expenses related to compensation and travel and conferences, it is important to note DMI paid for first class travel, provided tax indemnification and gross up payments, and paid for health or social club dues or initiation fees. See Schedule J of the Form 990 (link below) for more information.

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

$100:  Revenue

-$ 57:  Domestic Marketing

-$ 21:  Compensation

-$ 10:  Export

-$  4: Office-related Expenses

-$  5: Contract Services

-$  1:  Travel and Conferences

-$  1:  Grants

-$  1:  Other Expenses

$   0

As illustrated above, $69 out of every $100 in revenue was spent on domestic marketing, export expenses and grants while $31 out of every $100 was spent on organization expenses.

In summary, DMI consistently raises about $155-$160 million annually and spends whatever they raise (there are no net assets), primarily on marketing and compensation of employees.

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