How Revenue is Spent at AARP (2022)

AARP – the American Association of Retired Persons – is a tax-exempt, non-profit organization who offers a broad mission:  “to empower people to choose how they live as they age” but more specifically focuses on the issues and benefits of those 50 years and older.  With an estimated 37 million members who pay $12-$16 annually, AARP is one of the largest non-profit member-based organizations in the country. However, membership dues are not the main source of AARP’s revenue and expenses are not dominated by member services. Instead, AARP relies primarily on royalties for revenue with expenses dominated by compensation and advertising/promotion,

Based in Washington, DC, AARP has 13 voting members in its governing body, 12 of whom are independent; 6 of whom are female while 6 are male.

In 2022, AARP reported total revenue of $1.8 billion (compared to $2.0 billion in 2021) with the largest sources of revenue from royalties ($1.1 billion), memberships dues ($291 million), investment income and gains ($148 million), and publication advertising revenue ($121 million), which means AARP is primarily engaged in obtaining revenue from royalties through the use of their name with the sale of insurance policies and other products sold to members.

Expenses totaled $1.650 billion and can be categorized as follows:

• $386 million (22% of revenue):  Compensation
• $387 million (22% of revenue):  Advertising and Promotion
• $326 million (18% of revenue): Fees (primarily consulting and professional services for programs)
• $296 million (16% of revenue):  Printing and Postage
• $151 million (8% of revenue):  Office-Related Expenses (primarily IT expenses)
• $ 40 million (2% of revenue):  Grants
• $ 25 million (1% of revenue):  Other Expenses
• $ 25  million (1% of revenue):  Research, Surveys, Taxes, Licenses
• $ 22  million (1% of revenue):  Travel and Conferences

As illustrated above, the largest expenses were for compensation for the 2,114 employees who received $386 million (or an average of $183,000), and advertising and promotion ($387 million).   1,321 (or about 62% of employees) received more than $100,000 in compensation.  The most highly compensated employee was Jo Ann Jenkins, who received $1.6 million in compensation in 2022.

AARP paid for first class or charter travel, travel for companions, gross up payments or made tax indemnification.  Specifically, AARP paid for first class travel for AARP board members, officers, and key employees when business class accommodations were not available for flights exceeding 5 hours (not hard to do with a connection), or when there is late night arrival, or medical reasons.  The CEO, President, and Board Chair were allowed to fly first class or business class on flights exceeding 90 minutes.

So, if you want to know where revenue is spent, the answer is that nearly 90% of revenue is spent on compensating employees, advertising and promotion, fees, printing and postage, travel and conferences, and office-related expenses.  Every $100 in revenue was spent as follows:

$100:  Revenue

-$ 22:  Compensation

-$ 22:  Advertising and Promotion

-$ 18:  Fees

-$ 16:  Printing and Postage

-$  8:  Office-Related Expenses

-$  1:  Other Expenses

-$  1:  Research, Surveys, Taxes, Licenses

-$  1:  Travel and Conferences

-$ 89:  Subtotal Expenses: Compensation, A/P, Fees, Printing,Postage, Office, Travel

 $ 11:  Remaining Revenue

-$  2:  Grants

$  9:  Unspent Revenue:  To General Fund

As illustrated above, AARP spent $89 out of every $100 on organization expenses. An additional $2 out of every $100 was used for grants ($40 million in total grants, of which $3.5 million was to AARP Foundation).

At year-end, AARP reported net assets of $2.4 billion – a $200 million increase over the previous year with the growth attributable to the allocation of $140 million in unspent revenue and a $400 million change in net assets offset by a $300 million net unrealized loss on investments.  It is important to point out that AARP has increased net assets by more than $700 million since 2019.

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