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Comparing Non Profit Organizations with their Mission

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Comparing Non Profit Organizations

Comparing non profit organizations engaged in research will give you an idea of how they spend the donated funds. What you may find when actually going over the Form 990 that is the required 'accounting' record published for anyone who demands a copy is that most 501 c 3 non profits spend very little on the declared mission of the non profit and spend most of the donations on operating the non profit, particularly on salaries or independent contractors. 

Yes, they spend funds on some services according to what the mission statement says they want to accomplish. However, every one of the seven non profit organizations listed in this Post #1 state in their mission statement that they sponsor research. We have picked these seven to show you examples (if you continue in this thread and read some more interesting posts related to comparing non profits with their mission you may learn something). 

If you carefully note, of the seven non profit organizations listed below, TEA comes in first, the Breast Cancer Research Foundation comes in second, while the Dana-Farber Cancer Institute comes in third. The four other non profit organizations spend very little on research and spend most of the donated funds on salaries or private contractors. The seven examples listed here in POST #1 only show three non profit organizations who spend a significant percentage of donated funds on research (TEAThe Breast Cancer Research Foundation and Dana-Farber Cancer Institute). If you scroll past this first post you will also learn about the difference how a 501 c 3 non profit organization differs from a 501 c 6 non profit. Big difference.

The Erythromelalgia Association [TEA]

Total Revenue for 2018: $50,640
Total Program Expenses: $103,512
Compensation to Officers: 0
Salaries: 0
Independent Contractors: $13,398
Research: $75,000

This non profit organization gets high marks for using donated funds MOSTLY for research

----------------------------------------------------------

National Rosacea Society
Total Revenue for 2007: $824,986
Total Program Expenses (Form 990, Part III): $706,007, of which $100,000 spent on rosacea research
Compensation to Officers: 0
Salaries: 0

Private Contractors: $529,964

2007 Form 990 includes three contractors included in the Compensation of the 5 Highest Paid for Professional Services:

$420,540 to Glendale, $109,424 to Park (both of these corporations are owned by the director/president of the NRS), and $65,272 to DG Printing. DG Printing does not appear to be in any way connected to any of the board members of the NRS.

For every dollar donated to the NRS 12 cents in spent on rosacea research, making the NRS the leader in rosacea research non profit organizations. The NRS is the chief reason the RRDi was formed. What this means is that in the year 2007, every dollar donated to the NRS only 12 cents was spent on rosacea research while the remaining 88 cents was spent on running the NRS and most of the money was spent on private contractors that are owned by the director/president of the NRS, Sam Huff.  For more info

____________________________________________________________

Inflammatory Skin Disease Institute
Total Revenue for 2006: $137,642
Total Program Expenses (Form 990, Part III): $53,495, of which none was spent on rosacea research, but there is a report of two cash grants totaling $500 to two individual scholarships.
Compensation to Officers: $50,000
Salaries: $9,952

If you consider $500 for two scholarships that is the only money spent on research. It would be fair to say that this organization doesn't spend much on research at all.

____________________________________________________________

The Skin Cancer Foundation
Total Revenue for 2006: $3,332,382
Total Program Expenses (Form 990, Part III):$1,820,560, of which $145,053 was spent on grants for skin cancer research and programs (Statement 4)

Compensation to officers: $693,520
Salaries: $733,118

For every dollar donated to the SCF 4 cents was spent on skin cancer research.
____________________________________________________________

The Breast Cancer Research Foundation
Total Revenue for 2007: $42.2 Million
Total Prgram Expenses (Form 990, Part III): $35.2 Million, of which all of this was for grants and allocations

Compensation to officers: $219,364
Salaries: $1.1 Million

For every dollar donated to the TBCRF 81 cents was spent on breast cancer research. This organization was rated A+ by the AIP. Check the details for yourself by clicking here.
____________________________________________________________

Dana-Farber Cancer Institute
Total Revenue for 2005: $698,288,159
Total Program Expenses (Form 990, Part III): $532 million, of which $268 million was spent on cancer research
Compensation to Officers: $6.3 million
Salaries: $188.9 million

For every dollar donated to Dana-Faber Cancer Institute 38 cents is spent on cancer research.
_______________________________________________________________

The American Cancer Society (Group)
Total Revenue for 2005: $971,279,823
Total Program Expenses (Form 990, Part III): $389 million, of which $7.9 million was spent on cancer research
Compensation to Officers: 0
Salaries: $263.3 million

For every dollar donated to the ACS Group 0.8 cents (that is less than a penny!) is spent on cancer research. Carefully look at how much this non profit organization received in donations, which is almost a billion dollars. Less than a penny per dollar donated is spent on research.
______________________________________________________________

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Thought I would add comparing how Wikipedia spends its donated funds compared to other non profit organizations.

Check out the Form 990 for the Wikimedia Foundation, Inc. for 2012 (this foundation runs Wikipedia) and note how much was donated to this 501 c 3 non profit organization:

Total Donations $45 Million

Total percentage donated from the public 95.3%.

Total spent on salaries and compensations: $17.4 Million

Total spent on private contractors: $1.5 Million

Other Expenses: $16.2

Total Expenses $35.1 Million

So while a little more than half of the money was spent on people in the Wikimedia organization and private contractors, the other half of the money spent was on making Wikipedia the site that it is and you know how cool Wikipedia is and what it does. So for $45 million dollars, you can see how this non profit spends the public donations. Less than 5% of donations are from corporate sponsors.

Now compare that with the National Rosacea Society [NRS Form 990 2012] with these figures:

Total Donations Received: $738,289

Total percentage donated from the public 30.69%

Total Spent on Private Contractors owned by the Director of the NRS: $427,863 (58% of the total donations)

Total Spent on Rosacea Research: $100,000 (13.5% of the total donations)

Almost 70% of the donations to the NRS came from corporate sponsors, mainly pharmaceutical companies.

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Hi Brady, thanks for digging in! This was very eye opening. I was very annoyed with this statement and I called the NRS for some answers.

After 2 days, the Director of the NRS gave me a call back. I asked him why so little goes to research and he said that almost all of the money from individual contributions goes to research (his numbers were ~$110,000 from individual contributors and ~$100,000 given to research). However, he stated that the rest of the money from corporate sponsors had "strings attached" and that it couldn't go to research, only promotions, pamphlets, etc. This obviously isn't ideal, but it's corporate money and they can spend it how they please.

I took him at his word, but let me know if there is something else I should have countered his argument with. Overall, I'm still pro-NRS for the moment.

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Mister Twiggy,

Most people obviously do feel the way you do, that the NRS is doing a great job with its spending for the past fifteen years which is how long I have records on the spending.

I question whether the public support donation percentage is actually what is reported. I sent a letter to the IRS asking them to investigate. It may be that the NRS doesn't actually qualify as a 501 c 3 but instead should be a 501 c 6 since the vast majority of its donations come from corporate sponsors, i.e., pharmaceutical. Donations to a 501 c 3 are tax deductible so all the pharmaceutical companies that donate to the NRS can write off the donation. Donations to a 501 c 6 are not tax deductible, which is the major difference. However, an organization designated a 501 c 6 is not required to pay taxes to the IRS.

The most famous 501 c 6 is the National Football League (now the NFL is no longer a non profit, but for years it was). 

A 501 c 3 must indicate on Form 990 the percentage of public support to continue to qualify. A 501 c 6 does not need to do this since they are totally sponsored by corporations, or private interest.

So, in 2012 the NRS claims on its Form 990 that they received in total donations $738,289 and that 30.69% came from public support. You do the math. And you still think the NRS is doing a good job spending its donations? I am confident the pharmaceutical companies approve of how the NRS spends it donations.

Only $100,000 was spent on research which is 13.5% of the total donations.

I question if the NRS is reporting the public support percentage correctly and that is why I asked the IRS to investigate. By the way, my question for Mr. Huff would have been, "Then why was only $100K spent on research when you report that $226,580 came from public support?"

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Since I am on a roll with this I thought it would be good to compare the American Acne and Rosacea Society, which is a 501 c 6 non profit organization. Donations to a 501 c 6 are not tax deductible. However any organization that is designated a 501 c 6 does not pay any taxes to the IRS.

In 2012 this non profit received $450K in donations from private corporations. The mission of this non profit is similar to the NRS. What did they spend the donations on?

Nearly $324K went to "conferences, conventions and meetings."

$47K was spent on "management." $41,775 was spent on 'grants' which is the only research noted on the form.

Their web site cost them $6,849 (I am really into web site costs) and find this one of the more interesting expenditures. The rest was on other expenses.

Form 990 reveals that of the total donations received that the AARS spent 9% of the total on research grants without naming on the form who received the money.

You can click here and read the Form 990 yourself. MORE INFO ON AARS

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NFL, A Non Profit for 73 Years

lfn.png

Thought it would be good to compare the most famous 501 c 6 non profit organization, the National Football League, and see how they spent their donations as a non profit  (now the NFL is no longer a non profit, but for 73 years it was a non profit that didn't pay any federal or state taxes). The NFL began as a non profit organization in 1942 and according to Snopes, "In April 2015, the NFL announced the league office would be giving up its status as a tax-exempt organization during the 2015 fiscal year." 

This will give you an idea of how an organization can avoid paying taxes if they can acquire a 501 c 6 status from the IRS.

In 2012, the Form 990 the NFL reports to the IRS shows that they received in donations and membership dues $326 Million Dollars.

What did the NFL spend its money on?

$100 Million went to compensation to officers, salaries to employees, benefits, payroll taxes, etc.
$73 Million on 'club related financing'
$49 Million on Interest
$22 Million was spent on legal fees, accounting and lobbying
$15 Million on Event Production
$7.8 Million on 'other'
$2.1 Million on Information Technology
$6.7 Million on 'Occupancy'
$12 Million on Travel
$7.4 Million on Depreciation
$2.1 Million on Insurance

Total Expenses: $291.1 Million 

I think you get the idea. The point is the NFL didn't pay any taxes for tax year 2012. 

A 501 c 6 non profit does not pay a dime in taxes. Not one cent. Just like the AARS which was a 501 c 6 from the years 2005 to 2013

Did they do any grants? Yes, indeed:

$1.4 Million went to grants. You can read the Form 990 to find out what those grants are if you would care to.

The NFL spent less than one per cent out of every dollar of the donations received on grants, which means they did something nice for someone. 

You probably weren't aware about this were you?

Can you understand now, why if you donate to a 501 c 6 that your donation is not tax deductible

Your donation is only tax deductible if the non profit is a 501 c 3.

Can you see why the AARS was also designated a 501 c 6 instead of a 501 c 3

Can you now see why it is possible that the NRS might not qualify as a 501 c 3 if it cannot show that it receives enough public support to qualify? It is possible that the NRS may have to change to a 501 c 6 instead if there is not enough public support in donations. Private corporate donation seems to be what really constitutes the majority of the donations to the NRS.

For example, in 1998 the NRS received in donations over $1.1 Million and spent only $16K on rosacea research which is only 1.6 % of its donations. In 1998 the NRS claimed that it received 2.15% ($24,690) from public support. You can see a graph of all this by clicking here and is the main reason I formed the RRDi. I think there is a better way to run a 501 c 3 non profit for rosacea that will spend most of its donations on the mission rather than on private contractors or salaries.

You may be wondering one of these questions:

Why Did the NFL Give Up Its Tax-Exempt Status? Non Profit Quarterly
or
Why in the world would the NFL volunteer to pay taxes?, Time

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Hmm, interesting point. I wish I had the numbers to back it up, I just took him at his word. I agree that they should be more open with how much they actually give to research versus other costs.

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On 8/3/2014 at 7:27 AM, Mister_Twiggy said:

Hmm, interesting point. I wish I had the numbers to back it up, I just took him at his word. I agree that they should be more open with how much they actually give to research versus other costs.

Suggest you read this post on the NRS spending: 

http://irosacea.org/why/

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"Cancer Fund of America and Cancer Support Services Inc will shut down as the result of the largest-ever joint enforcement action undertaken by state charity regulators and the Federal Trade Commission, the attorneys general said in news releases issued simultaneously in their various states."

U.S. states to dissolve cancer charities accused of misusing funds, Barbara Goldberg, Reuters 

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I was intrigued when I heard about The Planetary Society and requested the latest Form 990 from this 501 c 3 non profit organization, which means that any donation to this non profit is tax deductible for the donor. I received the following pdf: 

2018 TPS 990 without Schedule B.PDF

You can review this above yourself and save yourself the time requesting it for yourself. 

A cursory review of the above Form 990 shows some interesting facts. For example, total revenue (donations) in tax year 2017 was $4,945,266.00 and total expenses were $4,885,055.00 so they spent just about all the donations except for about $60K. See the summary below: 

summary.png

What did they spend most of the money on?  What about 'planetary' things?  Actually most of the donations for 2017 were spent on salaries and employees if you go through the expense details which amounted to $2,682,000.00 if you look above. If you will note in the summary, line 5, there are 29 employees of The Planetary Society. That means if you average it out, each employee cost The Planetary Society $92,482.75. Would you like to work for The Planetary Society? Remember that each employee is paid with donations from the public. However, you should note that the six board of directors received the highest amount in salaries and compensation. 

The salaries for six of the board of directors amounted to $911,122 which is 34% of the total expenses on salaries listed on 15 above which you can view below in detail:  

officers_salaries.png

I challenge any of you to find in the Form 990 provided for free from The Planetary Society to find what this non profit organization spent on 'planetary' or 'space' items?  I found one grant they spent in the amount of $98,759 (line 13 in the summary above) and for its Lightsail Project which is listed below in the amount of $123,000 spent on an independent contractor, Ecliptic Enterprise Corporation (see below). 

independent_contractors.png

So the only two items I could find that remotely relates to 'space' are one grant and its one project which totals $221,759.00. That means for every dollar donated to The Planetary Society about 4 cents is actually spent on what its mission statement is about. The other 96 cents of a donated dollar is spent on operating the organization and most of the expense is on salaries and employees (54%). This is not uncommon practices for non profit organizations which is the theme of this entire thread. If you take the time and effort to receive a Form 990 from any 501 c 3 that is required to publish one that makes it available to anyone who asks, you will find that most non profits spend very little on its 'mission.' 

One other item of note are the assets listed by this non profit organization. When you bring in millions of donations each year, it is possible that the non profit organization accumulates assets. Note below what is listed in the Form 990: 

assets.png

The total assets are significant. In other words, if this organization ever decided to dissolve, it could sell the assets and the organization is required to disclose where all the money from those assets went. But most people simply don't care how non profit organizations spend their donations. Especially when it comes to rosacea non profits. Are you surprised or do you even care about any of this?

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