How Revenue is Spent at the Horatio Alger Association (2023)

The Horatio Alger Association (HAA) is named for the gilded age writer, Horatio Alger who wrote about impoverished boys who rose from their humble backgrounds through education and good works to higher echelons of society.  Consequently HAA awards need based scholarships and honors the achievements of those who have overcome adversity and obtained personal achievement and success throw perseverance.

At the heart of HAA is the firm belief in achieving the “American Dream” through the free-enterprise system.  So, the purpose of this organization appears to be the awarding of grants (but surprisingly only $8.7 million or about 28% of total revenue was awarded in grants in 2023 (which was better than the previous year when $2.4 million was awarded in grants), while the Executive Director, Terrence Giroux received $1.5 million in compensation in 2023 (compared to $5.2 million in 2022).

A tax-exempt, non-profit 501 (c) 3, HAA is based in Alexandria, Virginia.  In 2023, HAA reported total revenue of $31 million (compared to $22 million in 2022, $20 million in 2021 and $27 million in 2020) which came primarily from two (2) sources:  contributions, gifts, and grants ($18 million) and the Horatio Alger Foundation, a related organization ($13 million).

Expenses totaled $30 million in 2023, categorized as follows:

• $8.7 million (28% of revenue):  Grants
• $6.5  million (21% of revenue):  Travel and Conferences
• $5.8  million (19% of revenue):  Advertising, Promotion, AV and Multimedia, and Othe
• $3.9  million (12% of revenue):  Fees for Services
• $3.2  million (10% of revenue):  Compensation*
• $1.6 million (5% of revenue):  Office Expenses

As illustrated above, the largest expense is grants which used up $28 out of of every $100 in revenue collected. Travel and conferences and advertising used up $40 out of every $100 received.  Fees for services are fees paid to independent contractors (primarily event management services).

The Form 990 reports that 14 employees received $3.2 million (an average of $230,000). Given that 7 employees received $3.1 million in compensation (see the Form 990, Schedule J, Part II), the remaining 7 employees received $100,000 collectively which appears to be an error.

Grants – the major purpose of the organization – totaled $8.7 million or about 28% of revenue (in 2022 grants were 11% of revenue while in 2021 grants were 65% of revenue which is more in line with a non-profit whose primary purpose is to award grants).  1,536 individuals in the US received $8.5 million in scholarships in 2023, or about $5,500 each.

HAA closed the year with $17 million in net assets (note: HAA started the year with $15 million in net assets) with the improvement attributable to spending about $1 million less than the organization collected and nearly $1 million in unrealized gains on investments.

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

$100:  Revenue

-$ 28:  Grants

$ 72:  Remaining Revenue

-$ 19:  Advertising and Promotion, AV and Multimedia, and Other Expensees

-$ 12: Fees for Services

-$  5:  Office Expenses

-$ 10:  Compensation*

-$ 21:  Travel and Conferences

-$ 67:  Subtotal: Advertising, Fees, Compensation, Travel and Conferences

 $  5:  Unspent Revenue:  To General Fund

As illustrated above, HAA spent $95 for every $100 in revenue raised.

In summary, HAA spent 28% of revenue on grants, which has historically been the organization’s largest expense (but not in 2022 when 11% of revenue was spent on grants).  The question to be asked is:  Does the organization really need to pay someone $1.5 million to award individual grants to young people?

To read the IRS Form 990 (2023), click here.