Where Does $100 to the Heritage Foundation Go (2022)?

The Heritage Foundation (Heritage) is a non-profit, tax-exempt organization staffed by conservative “experts” who provide advice on political, economic, social, and financial problems in the United States. Based in Washington, DC Heritage raises about $100 million annually, spends less than they raise and therefore has about $330 million in net fund assets.

There are 17 voting members of the governing body, 15 of whom are independent – although 22 are listed on the Form 990 (which appears to be due to timing differences) of which 17 (77%) are male while 5 (23%) are female.

In 2022, Heritage raised $106 million, most of which came from contributions, gifts, and grants. Expenses totaled $91 million and can be viewed two ways:  by broad general category (program service, management and general, and fundraising) or by specific line item categories (i.e. compensation, office-related, travel and conferences, fees for services, etc). Both ways are beneficial with the latter approach providing more specific detail on how revenue was spent.

Expenses by Broad General Category

The $91 million in expenses (not including $3 million in depreciation) were categorized as follows:

• $73 million (69% of revenue):  Program Services
• $ 2 million (2% of revenue):  Management and General
• $16 million (15% of revenue):  Fundraising

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

$100:  Revenue

-$ 69:  Program Services

-$ 15:  Fundraising

-$  2:  Management and General Expenses

-$ 86:  Total Expenses

  $ 14:  Revenue Remaining:  To Fund Balance

As illustrated above, $69 out of every $100 was spent on program services while $17 out of every $100 was spent on fundraising and management and general expenses. $14 out of every $100 was allocated to the general fund.

Expenses by Specific Line Item Category

The $91 million (86% of revenue) in expenses were categorized as follows:

• $44 million (41% of revenue):  Compensation
• $23 million (22% of revenue):  Office-Related
• $11  million (10% of revenue):  Fees for Services
• $ 7  million (7% of revenue):  Travel and Conferences
• $ 3 million (3% of revenue):  Advertising and Promotion
• $ 2 million (2% of revenue):  Grants
• $ 1 million (1% of revenue):  Other Expenses

As illustrated above, the largest expense for Heritage is compensation ($44 million) for the organization’s 499 employees who received an average compensation of $88,000. 150 employees received more than $100,000 in compensation with the most highly compensated employee, Kevin Roberts, the President, receiving $675,471.

Office-related expenses were the second largest expense made up primarily of three expenses:  office-related ($14 million) with no detail provided, IT ($4 million), and occupancy ($4 million).

Fees for Services ($11 million) were primarily fees paid to non-employees, $7 million of which is not detailed. $2 million was paid to professional fundraisers while $1 million was paid to investment managers. It is important to point out that Heritage paid more than $100,000 to 49 organizations with the 5 most highly compensated organizations listed below:

• $4.4 million:  DPR Construction, of Redwood, CA for construction
• $1.8 million:  Bognet Construction Associates, of Vienna, VA for construction
• $1.5 million:  MDS Communications, of Mesa, AZ for fundraising consulting
• $1.1 million:  Conrad Direct, of Creskill, NJ for mailing contact management
• $1.0 million:  Merkle Response Services, of Hagerstown, MD for mailing contact management

It is important to note, Heritage used outside sources for fundraising. These fundraisers raised $19.6 million, retained $2.4 million (12%), netting Heritage $17.2 million.

$7 million was spent on travel and conferences, including first class or charter travel and companion travel (see Form 990, Schedule J, Part III, Supplemental Information for more detail).

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

$100:  Revenue

-$ 41:  Compensation

-$ 22:  Office-related Expenses

-$ 10:  Fees for Services

-$  7:  Travel and Conferences

-$  2:  Grants

-$  1:  Other Expenses

-$  3:  Advertising and Promotion

-$ 86: Total Expenses

 $  14:  Excess Revenue:  To Fund Balance

As illustrated above, $63 out of every $100 in revenue was spent on compensation and office-related expenses. $10 out of every $100 was spent on compensating non-employees while $7 out of every $100 was spent on travel and conferences. $3 out of every $100 was spent on advertising while $2 was spent on grants (16 grants greater than $5,000 were made with the largest ($400,000) to a related organization called Heritage Action for America. $14 out of every $100 (which translates to $13 million) was allocated to the general fund.  Net assets at year-end were $332 million.

To read the IRS Form 990 (2022), click here.