How the Nature Conservancy Spends Revenue (2023)

The Nature Conservancy raises more than $1 billion a year and has nearly $8 billion in net assets , making the organization one of the most well capitalized non-profits in the country. If you’ve ever wondered how a donation is spent but don’t feel inclined to read the dozens and dozens of pages of the IRS Form 990 (the tax return submitted to the IRS annually), then continue reading.

 The bottom line:  most revenue is spent on compensation, outside fees, and office-related expenses.  Less than 10% of revenue was spent on grants.

Established in 1951, the Nature Conservancy works on “conserving the lands and water in which all life depends” and is based in Arlington, Virginia (although there are many offices).  The organization is managed by 21 voting members (directors) of the governing board, 19 of whom are independent.

The most recent IRS Form 990 (2022) for the year ending June 30, 2023 reports the following key information:

REVENUE

The Nature Conservancy raised $1.2 billion (compared to $1.3 billion in 2022, $1.3 billion in 2021, $1.1 billion in 2020 and $1 billion in 2019) in 2023 and spent $1.1 billion. The primary sources of revenue were contributions ($854 million), government grants ($126 million) and gains royalties, and investment income ($62 million).

ASSETS, LIABILITIES, and NET FUND BALANCE

The organization had $9 billion in total assets at year-end, most of which were concentrated in three types of assets:  accounts and pledges receivable ($648 million), investments ($3.4 billion), and other assets ($4.8 billion) – primarily conservation easements.

Liabilities totaled $1.4 billion most of which were concentrated in four areas:  unsecured notes ($767 million), accounts payable and accrued expenses ($245 million), other liabilities ($277 million in planned giving, accruals, refundable advances, and split interest arrangements), and $137 million in deferred revenue.  ,

After adjusting assets for the liabilities, the net fund balance was $7.8 billion, of which $6.1 billion was unrestricted.

GRANTS

Grants totaled $60 million in the US and $36 million outside the US for a total of $96 million (which is about $50 million less than the previous year). The Nature Conservancy awarded 527grants of more than $5,000 to other 501 (c) (3) organizations  and other organizations (14) in the US.   Most overseas grants were to Sub-Saharan Africa and South America.

The largest 8 grants in the US (all for “conservation activities”) were made to:

• $8 million:  Blue Investments for Nature, in Arlington VA for conservation activities
• $8 million:  Spruce Root, Inc., of Juneau, Alaska for conservation activities
• $4 million:  Great Outdoors Colorado, of Denver, CO for conservation activities
• $2 million:  Rainforest Trust, of Warrenton, VA for conservation activities
• $1 million:  American Forest Foundation, in Washington, DC for conservation activities
• $1 million:  Conservation Fund, in Caspar, CA for conservation activities
• $1 million:  University of Washington, in Seattle, WA for conservation services
• $1 million:  Watershed Research and Training Center, in Hayfork, CA for conservation activities

EXPENSES

There are two ways to analyze expenses listed on the IRS Form 990:  by four broad categories (program expenses, grants, management expenses, and fundraising expenses) and by specific line item expenses, with the later providing more detail.

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

Expenses totaled $1.1 billion categorized in the following 4 categories:

• $658 million (56% of revenue):  Program Services
• $ 96 million (8% of revenue):  Grants
• $190 million (16% of revenue):  Management Expenses
• $175 million (15% of revenue):  Fundraising Expenses

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

$100:  Revenue

-$ 16 :  Management Expenses

-$ 15:  Fundraising Expenses

-$ 31 :  Subtotal Management and Fundraising Expenses

  $ 69 :  Revenue Remaining

-$ 56 : Program Services

-$   8:  Grants

-$ 64:  Subtotal Program Services and Grants

  $  5 :  Revenue Remaining

As illustrated above, $31 out of every $100 in revenue was spent on management and fundraising expenses, $56 of every $100 on program services, $8 out of every $100 on grants, while $5 out of every $100 was put into the general fund.

Expenses by Specific Line Item Expense

Expenses totaled $1 billion in the following 9 line items:

• $510 million (43% of revenue):  Compensation, Benefits, Pension, Payroll Taxes
• $240 million (21% of revenue):  Fees for Services (acct, legal, invest, lobbying, fundraising)
• $ 96 million (8% of revenue):  Office, IT, Occupancy, Insurance, Dues, Fees
• $ 99 million (8% of revenue):  Other Expenses (Interest, Travel, Conferences, Construction, etc)
• $ 81 million (7% of revenue):  Donated Conservation Land/Property
• $ 96 million (8% of revenue):  Grants

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

$100:  Revenue

-$ 43:  Compensation, Benefits, Pension, Payroll Taxes

-$ 21:  Fees for Services

-$  8:  Office, IT, Occupancy, Insurance

-$  8:  Other Expenses

-$ 80:  Subtotal:  Compensation, Fees, Office, Travel, and Other Expenses

-$  7:  Donated Conservation Land

-$  8:  Grants

-$ 15:  Subtotal:  Land Conservation, Grants

-$ 95: Total Expenses

 $  5:  Revenue Remaining

As illustrated above, $80 out of every $100 in revenue is spent on staff and administrative expenses. The above information leaves three questions unanswered:

1. There were $192 million in “other fee expenses” of which $144 million was categorized as “program service expenses” from contracted services, No other detail is provided.
2. The organization also expensed donated conservation land and property for $81 million. On the revenue side, the organization reports $38 million in revenue from the sale of land to the government. It is unclear if these two transactions are related and if so, why the organization didn’t show the loss on the revenue side of the financial statements. Supplemental information on the 990 states that acquisitions are recorded at cost or the fair market value at the time of acquisition and when sold, the value is expensed.
3. $5 out of every $100 was put into the general fund (compared to $23 out of every $100 in 2022 and $31 out of every $100 in 2021). This translates to more than $46 million in 2023.

In addition, it is important to point out the Nature Conservancy made a $10 million loan to the Shirley and Harry Hagey Community Trust (Mr Hagey is a member of the board of directors ) at a 0% interest rate to fund conservation in Idaho.

The IRS Form 990 for the Nature Conservancy provides a great deal of detail to allow potential donors to see where revenue is spent but the form also raises a lot of questions. To read the most recent IRS Form 990 (2022 for the year ending June 30, 2023), click here.