Where Does $100 to the American Lung Association Go (2023)?

by Anne Paddock

The American Lung Association (ALA) was established more than 100 years ago (1918) initially to fight tuberculosis but expanded its mission to improve lung health and preventing lung disease through research, education, and advocacy.

There are 16 independent voting members (directors) of the governing body although 18 are listed on the Form 990 (2023) due to timing differences; 11 of the 18 (61%) are male while 7 of the 18 (39%) are female.

Specifically, ALA works to “defeat” lung cancer, “improve” the air we breathe, “reduce” the burden of lung disease on individuals and families, and “eliminate” tobacco use and tobacco-related diseases. To do this, the organization relies on staff (558 people) so the organization is a non-profit (a 501 (c) (3)) that provides services rather than a non-profit that collects revenue to make grants for funding research (ALA only made $17 million in grants in 2023) for program assistance.

So, how does the ALA spend revenue? ALA claims (on their website) that 90% of revenue is spent on programs, 8% on fundraising and 2% on management and general expenses. The Form 990 (2023) reports ALA spent $104 for every $100 raised: 74% was spent on programs, 15% spent on grants, 11% on fundraising, and 4% on management and general expenses. However, it is important to note these percentages change every year.

Based in Chicago, Illinois, the ALA has local offices nationwide. In 2023, total revenue was $109 million (compared to $129 million in 2022, $100 million in 2021, $104 million in 2020, and $113 million in 2019) most of which came from contributions, gifts, and non-government grants ($70 million) and government grants ($30 million).

It is important to note the ALA relied heavily on NNE Marketing, a firm in Lexington, Massachusetts, for direct mail marketing that raised $15 million (note: the firm was compensated $378,000).

Expenses totaled $113 million (104% of revenue) in 2023 and can be categorized as follows:

$46 million (42% of revenue): Compensation
$31 million (29% of revenue): Fees for Services (primarily consultants for “program service”)
$15 million (14% of revenue): Direct Mail/Advertising/Printing/Postage
$17 million (15% of revenue): Grants
$ 4 million (4% of revenue): Office-related Costs

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

$100: Revenue

-$ 42: Compensation

-$ 29: Fees for Services (primarily consultants for “program service” with no detail provided)

-$ 14: Direct Mail/Advertising/Printing/Postage

-$ 4: Office-related Costs

-$ 89: Subtotal: Compensation, Fees, Direct Mail, Office

$ 11: Revenue Remaining

-$ 15: Grants

-$ 4: Excess Expenses over Revenue

As illustrated above, $89 out of every $100 in revenue was spent on administrative expenses with the largest expense being compensation for the 558 staff who received $46 million which equates to an average compensation of $82,000, fees for services (primarily described as consultants for “program service” with no detail provided), and direct mail/advertising/printing/postage.. Note: the ALA has fewer employees (100 less than in 2022 and 250 less than in 2021) but compensation costs have increased ($42 million in 2021 and in 2022) which means they are paying fewer employees more. The most highly compensated employee was Harold Wimmer, the President and CEO who received $655,327.

Net fund assets were $166 million at the beginning of the year. After adjustments for unrealized gains on investments ($9 million) and other changes in net assets – primarily changes in beneficial interests in trusts ($4 million), net assets were at $174 million at year-end, even though ALA spent $4 million more than the organization raised.

In conclusion, if you donated $100 to ALA, most of your donation was spent on compensating employees, paying for outside services, and direct mail/adverting/printing/postage. The website of the ALA reports “90% of your money goes to program services” but without knowing what the $31 millionin “other fees” described as “consultants for program services specifically are, it is difficult to make conclusions. In addition, ALA reports $8 million in direct mail and advertising are “program service” expenses but it is unclear what programs these expenses supported.

To read the IRS Form 990 (2022) for the year ending June 30, 2023, click here.