How Revenue is Spent at the American Red Cross (2022)

When most people think of the American Red Cross (ARC), they often think of blood collection, testing, and distribution and/or disaster services – both domestic and international and in the most simplistic terms, this is what the ARC is about.

Formally known as the American National Red Cross (the organization is the designated affiliate of the International Federation of Red Cross and Red Crescent Societies), ARC was established by Clara Barton in 1881 and given a charter by Congress in 1900 and again in 1905 to carry out humanitarian services. Since that time, the charter has been amended nine times, with the most recent in 2007 to address reforms to the organization.

ARC receives widespread public support having raised $3.2 billion (for the year ending June 30, 2022) compared to $3.1. billion in 2021, $2.8 billion in 2020, $2.8 billion in 2019 and $3.7 billion in 2018.

Most of the organization’s revenue ($1.9 billion or 59% of revenue) came from the sale of biomedical services (i.e. blood and plasma collected through donations and sold) with the remaining revenue obtained primarily through contributions, gifts, and grants ($1.1 billion including $44 million from the government).

Although contributions, gifts, and grants only comprised 33% of total revenue (or $1.1 billion), it is important to remember the revenue stream of biomedical services is dependent upon donations (i.e. blood and plasma) so although one donation is tax-deductible (revenue) and the other isn’t (blood),  donors and potential donors still need to understand where revenue dollars come from and how those dollars are spent.

Expenses are best understood by looking at the big picture where costs are grouped into four categories: program, management, fundraising, and grants; or by line-item (i.e. salaries, office, advertising, etc) which provides a more detailed explanation of how revenue was spent. Both are important although the detailed line-item approach provides a more comprehensive understanding of where revenue is spent.

Expenses by Category (Program, Management, Fundraising, and Grants)

Expenses totaled $3 billion (for the year ending June 30, 2022) categorized as follows:

• $2.5 billion or 78% of revenue:  Program Expenses
• $0.1 billion or $98 million or 3% of revenue:  Management Expenses
• $0.2 billion or $189 million or 6% of revenue:  Fundraising Expenses
• $0.2 billion or $225 million or 7% of revenue:  Grants

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

$100:  Revenue

-$ 78: Program Expenses

-$  6: Fundraising Expenses

-$  3: Management Expenses

-$  7:  Grants

-$ 94:  Total Expenses

$    6:  Revenue Remaining:  To General Fund

Expenses by Line Item

Expenses totaled $3 billion for the year ending June 30, 2022, categorized as follows:

• $1.709 billion (or 53% of revenue):  Salaries, Pension, Benefits, Payroll Taxes
• $   454 million (or 14% of revenue):  Biomedical Supplies
• $   254 million (or 8% of revenue):  Office, IT, Occupancy, Insurance
• $   225 million (or 7% of revenue):  Grants
• $  207 million (or 6% of revenue): Fees for Services (management, legal, acct, lobbying, other)
• $    99  million (or 3% of revenue):  Advertising and Other Expenses
• $    46 million (or 1% of revenue):  Travel, Meetings and Conferences
• $    27 million (or 1% of revenue):  Other Fees for Services and Program Supplies (no detail provided)
• $    23 million (or 1% of revenue):  Interest

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

$100:  Revenue

-$ 53:  Salaries, Pensions, Benefits, Payroll Taxes

-$ 14:  Biomedical Supplies

-$  8:  Office, IT, Occupancy, Insurance

-$  7:  Grants

-$  6:  Fees for Services

-$  1:  Travel, Meetings and Conferences

-$  1:  Interest

-$  1:  Other Fees for Services and Program Supplies (no detail provided)

-$  3:  Advertising and Other Expenses

-$ 94:  Total Expenses

 $   6:  Revenue Remaining:  To General Fund

As illustrated above, more than half of total revenue was for salaries, benefits, pensions, and payroll taxes for the 17,106 employees (which equates to about $100,000 per employee). Given that the organization is primarily collecting, testing, and distributing biomedical supplies (i.e. blood and plasma), high staff expenses are to be expected. Most revenue is going to support the staff and office costs associated with collecting, testing, and distributing biomedical supplies.

It is important to note $6 of every $100 (or $207 million) was spent on other fees for services with no detail provided.

And, finally it is very important to note that ARC had $2.4 billion in net fund assets at the beginning of the year. At the end of the year, net fund assets were $2.7 billion – a $300 million increase which is  substantial.  This increase was due to spending about $134 million less than the organization received and a $309 million adjustment to net assets (for employee retirement pension and post retirement benefits) offset by a $111 negative adjustment due to unrealized losses on investments.

To read the IRS Form 990 (2021 for the year ending June 30, 2022), click here.