How Revenue is Spent at Hippocrates Health Institute (2021)

The Hippocrates Health Institute (HHI) is a tax-exempt, non-profit 501 (c) (3) that operates out of a 50-acre tropical setting in West Palm Beach, Florida that provides educational and instructional services to teach individuals how to live and eat healthier.  Specifically, HHI has been operating since 1987 and focuses on “transforming and optimizing health” through a vegan diet that emphasizes the benefits of raw food.   The cause is noble and commendable; the cost to attend which pays the 2 executive staff more than $1.6 million annually, is not.

With 7 voting members – four of whom appear to be related (since only 3 are independent) – Brian Clement, President, his wife, Anna Maria Clement (Vice President) Robert Clement, Anna Helena Birgitta Brand,  Solomon Gabbay, Shula Gabbay, and Julia Loggins,   the organization is not one that relies on donations but instead “tuition for services” which is the cost to attend HHI.

For the year ending 12/31/21, the IRS Form 990 reported total revenue of $17 million (compared to $14 million in 2020 and $19 million in 2019), which came from 3 sources:

• $15 million:  Tuition and Sercices
• $ 1 million:  Sale of Inventory
• $ 1 million:  Investment Income

Expenses totaled $11 million (not including $1 million in depreciation) which can be categorized in the following categories:

• $6 million (35% of revenue): Compensation
• $1 million (6% of revenue): Management, Legal, Bank, and Accounting Fees*
• $1 million (6% of revenue):  Supplies and Food
• $1 million (6% of revenue):  Office-Related Expenses
• $2 million (12% of revenue):  Advertising and Promotion, Travel, and Other Expenses (no detail provided)

“*” Includes $200,000 in management fees. Why and who HHI is paying management services to when Brian and Anna Maria Clement are being compensated $1.6 million annually, is unclear.

At year-end the total net assets or fund balance was $34 million.

As illustrated above, the largest expense ($6 million) is compensation for the 107 employees (just 2 years ago there were more than 230 employees who received $9 million in compensation) although it is important to note that Brian and Anna Maria Clement were compensated $1.6 million in 2021.

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

 $100:  Revenue

-$ 35:  Compensation

-$  6:  Management, Bank, Legal, and Accounting Fees

-$  6:  Supplies and Food

-$  6:  Office-Related Expenses

-$ 12:  Advertising and Promotion/Travel/ and Other Expenses (no detail provided)

-$ 65:  Total Expenses  

$ 35:  Remaining Revenue:  To General Fund

For the client who paid $10,000 for a 3-week stay (or approximately $3,300 per week or $500 per day), the funds were spent as follows:

$10,000: Revenue

-$ 3,500: Compensation

-$   600: Management, Bank, Legal, and Accounting Fees

-$   600: Supplies and Food

-$   600: Office-Related Expenses

-$ 1,200: Advertising and Promotion, Travel, and Other Expenses

-$ 6,500:  Total Expenses

 $ 3,500: Revenue Remaining:   into Fund Balance

In summary, HHI is overseen by a Board of seven people, four of whom are related; 3 of whom are independent. The President and Vice President are married and together received $1.6 million in compensation in 2021 ($1.2 million in 2020, $1.6 million in 2019, $1.6 million in compensation in 2018, $1.3 million in 2017, $1.6 million in 2016, and $1.3 million in 2015:  or $10 million from 2015-2021).

An analysis of how each dollar is spent reveals that approximately $0.41 of every dollar is spent on staff, food and supplies, therapists and services. $0.24 of every dollar  is spent on administrative fees for services (management, bank,legal, and accounting), office-elated expense , advertising, promotion, travel and other expenses, leaving $0.35 left to put into the general fund (savings).  One has to question why the two key staff (Brian and Anna Maria Clement) are compensated $1.6 million annually?

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