How Revenue is Spent at the Horatio Alger Association

The Horatio Alger Association (HAA) is named for the gilded age writer, Horatio Alger who wrote about impoverished boys who rose from their humble backgrounds through education and good works to higher echelons of society.  Consequently HAA awards need based scholarships and honors the achievements of those who have overcome adversity and obtained personal achievement and success throw perseverance.  At the heart of HAA is the firm belief in achieving the “American Dream” through the free-enterprise system.

A tax-exempt, non-profit 501 (c) 3, HAA is based in Alexandria, Virginia.  In 2021, HAA reported total revenue of $20 million (compared to $27 million in 2020) which came primarily from two (2) sources:  contributions, gifts, and grants ($12 million) and the Horatio Alger Foundation, a related organization ($7 million).

Expenses totaled $23 million in 2021 ($3 million more than the organization raised) with expenses categorized as follows:

• $13 million (65% of revenue):  Grants
• $ 2 million (10% of revenue):  Compensation
• $ 3 million (15% of revenue):  Fees for Services
• $ 2 million (10% of revenue):  Travel and Conferences
• $ 3 million (15% of revenue):  Advertising, Promotion, AV, and Multimedia

As illustrated above, the largest expense is grants.  1,251 individuals received $11 million in non-cash assistance (scholarship) which equates to an average of $9,000 each.  It is unclear how these grants were non-cash unless HAA has a relationship with specific colleges or universities.

Approximately $500,000 in scholarship grants were awarded to students in North America (i.e. Mexico and Canada but not the US) although the number of students is not disclosed.

Approximately $900,000 in grants were awarded to domestic organizations with only 2 grants greater than $5,000, to Foster’s Outriders Foundation ($250,000) in Jackson, Wyoming and the Mortel Family Charitable Foundation ($50,000) in Hummelstown, Pennsylvania.  Therefore, HAA made at least 130 grants of less than $5,000 to other domestic organizations or government organizations.

HAA closed the year with $21 million in net assets (note: HAA started the year with $24 million in net assets but had to deduct $3 million for the excess expenses over revenue).

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

$100:  Revenue

-$ 65:  Grants

$ 35:  Remaining Revenue

-$ 15:  Advertising and Promotion, AV and Multimedia

-$ 15: Fees for Services

-$ 10:  Compensation

-$ 10:  Travel and Conferences

-$ 50:  Subtotal: Advertising, Fees, Compensation, Travel and Conferences

-$ 15:  Excess Expenses Over Revenue

As illustrated above, HAA spent $115 for every $100 in revenue raised (which means the organization had to rely on net assets to cover the shortfall, which amounted to $3 million).

In summary, HAA spent 65% of revenue on grants, primarily non-cash scholarships to 1,251 individuals who received an average scholarship of $9,000.  The organization spent 25% of revenue on compensation for the 14 employees (who received an average compensation of $180,000. 30% of revenue was spent on advertising and Promotion, AV and Multimedia, Travel and Conferences.

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