The controversy over Susan G. Komen for the Cure’s support of Planned Parenthood centered on the hundreds of thousands of dollars worth of grants the breast-cancer charity has awarded annually to the women’s-health group.
But the dust-up has raised questions and curiosity about a much larger sum: the hundreds of millions of dollars Komen spends each year on grants, fundraising, and more.
One of America’s biggest charities, Komen says it has spent nearly $2-billion to fight breast cancer since it was founded 30 years ago. Now, with more than 120 affiliates around the country and a global reach, Komen spends upwards of $400-million a year on its operations and stated mission: a world without breast cancer.
Komen’s decision to withdraw, and then reinstate its support of Planned Parenthood has drawn attention to that pot of money, leading to speculation and criticism.
Some observers wonder how much politics and corporate donors may be influencing spending decisions. Others question whether the charity’s overhead costs are sufficiently low or if it gives enough money directly to breast-cancer research and treatment.
Still others have criticized the size of the salary Komen pays its top official and the amount it spends on legal fees, in part to protect its trademark on “for the Cure” fundraising events. .
Several nonprofit finance and governance experts invited by The Chronicle to take a close look at Komen’s publicly available financial data say the charity does a good job of providing that information, though one charity watchdog expresses concern that the organization could be trying to make its spending on fundraising seem smaller than it is.
Opinions on charity financial matters inevitably vary, but a good starting point in the discussion is the examination of Komen’s own documents—the audits, federal tax returns, and annual reports that are available going back nearly 10 years on the group’s Web site.
Here, in black and white-and sometimes pink-the organization presents its vast expenditures in detail.
The Form 990 informational tax return covering Komen’s affiliates, for example, includes 32 pages that list roughly 1,500 grants totaling $83.5-million made in the fiscal year ending March 2011. Another eight pages list each affiliate’s spending that year on lobbying—including sums as small as $60 by the Central Wisconsin group.
For a big-picture look at Komen, the first few pages of the organization’s financial audit for the same fiscal year show $420-million in private support; $439-million in total revenue; and $409-million in expenses, including $333.7-million to program services, $48-million for fundraising, and $27.3-million for other general and administrative costs.
Program services are broken down into four areas: public-health education ($181.1-million), research ($75.3-million), health-screening services ($54.1-million), and treatment services ($23.3-million). And those areas are further broken down into 16 expense categories, such as the salaries, supplies, and the marketing costs associated with each. Out of the $75.3-million Komen spent on research, for example, $63.3-million went directly to awards and grants.
Some critics of Komen disapprove of that spending mix, saying that the charity’s promotions and the words “for the Cure” in its name lead donors to believe that more of its money goes directly to research to fight the disease.
A look at Komen’s audits over the years, shows that while the dollars going to research grants have risen, the share of total spending they represent has shrunk as Komen’s total revenues and expenses have grown. In 2005, for example, Komen awarded about $53-million in grants, roughly 26 percent of its total expenses before counting direct benefits to donors and sponsors, like T-shirts given away at its fundraising races. Last year’s $63.3-million in grants represented 15.5 percent of that total spending. In 2010, the percentage was 17.4.
Such ratios can be tricky to pin down, though, and depend largely on what’s counted. Komen’s annual report—the most recent for the fiscal year ending in March 2010—features a graphic that shows 24 percent of its spending going to research. Those figures do not include expenses related to contributed good and services.
Experts in nonprofit finance and governance who examined Komen’s financial documents acknowledged how interpretations of data may vary. Still, they say, in terms of sharing the raw information, Komen’s documents appear comprehensive, straightforward, and, in some instances, featuring disclosures beyond what are required by law.
Michael L. Wyland, a management consultant in Sioux Falls, S.D., who serves nonprofit clients, points out that Komen’s Form 990 includes information on how the organization tracks the effectiveness of its grants, plus a dozen-page supplement providing details about the research and services it supports.
“It doesn’t mean they are not hiding anything in their numbers,” Mr. Wyland says. “But on the face of it, it’s a lot more information than most organizations bother to give, and it makes it easy to get a good picture of what they are up to and where their money is going.”
Jack Siegel, a Chicago lawyer, who tracks fraud and other problems among charities, which he writes about in his blog, Charity Governance, says he “can’t find much to complain about” with Komen’s financial documents.
He says that while numbers are always open for interpretation-and people may have varying opinions on how Komen should spend its money—the group “looks like a well-run organization, making a lot of disclosures and going out of its way to be thorough.”
He notes that the financial statements show that Komen holds no long-term debt and that the charity reported no deals with charity insiders that could be considered improper.
Mr. Siegel also says that criticism of salaries at Komen may be misplaced. The Form 990 reports that the group’s founder and chief executive, Nancy Brinker, earned total compensation of about $418,000—a sum not out of line with that of top officials at organizations of a similar size, Mr. Siegel says.
Seventeen other officials earned at least $150,000 that year, the document says. (To learn more about executive salaries at big nonprofits, see the results of The Chronicle’s annual study.)
Spending on Mission
Long before the Planned Parenthood flap, Komen caught flak for its practice of aggressively protecting its “for the Cure” trademark, filing or threatening lawsuits against any organization that used the phrase in its own fundraising efforts. Setting aside the debate over whether that practice makes sense, the legal work doesn’t appear to have eaten up too much of Komen’s funds.
According to the Form 990, the charity spent less than $300,000 on all legal costs—not just trademark-related matters—during the fiscal year ending March 2011.
Even adding in the salary of Komen’s general counsel, Jonathan Blum (just over $232,000), legal costs don’t add up to the line item listed for accounting services (about $814,000) or even approach the costs for “advertising and promotion,” which would presumably include a good deal of marketing of the “for the Cure” brand: $20.1-million.
Indeed it is the way the charity accounts for spending on marketing, communications, and program services that has Daniel Borochoff, head of Charity Watch, a nonprofit monitor, looking sidelong at Komen’s reported spending figures.
After examining Komen more closely in recent days and requesting additional financial information, Mr. Borochoff’s organization downgraded its rating of the breast-cancer charity from a B-plus to a B. While Komen’s annual report touts putting an average of 84 percent of its spending over five years toward its mission, Mr. Borochoff says the share is more like 71 percent—at least for the most recent year—with 20 percent going to support research.
He says his analysis includes only cash spending—not contributed goods and services, like donated advertising space—and excludes expenses deemed as joint costs.
Joint costs cover expenses that could be counted both toward fundraising and some other function, like public education.
A joint cost would typically cover, for example, expenses related to fundraising letters that include an educational message, such as about the importance of screenings for early breast-cancer detection.
Mr. Borochoff says that because some charities might use joint-cost allocations to give the false impression they are spending less on fundraising and more on good works, his organization removes those expenses from its data analysis.
With Komen, he says, he dropped $37.3-million of joint costs that the charity had counted toward its spending on program services.
“I’m always suspicious when I see program mixed with fundraising,” Mr. Borochoff says.
Alan Strand, a consultant who advises nonprofits on finances, agrees that joint costs may make it difficult to assess a charity’s spending. But, he says, even in the absence of clear accounting guidelines, charities have many ways to allocate joint costs fairly. And in the case of Komen, he says, he assumes its audited financial statements got it right.
“I’m guessing their finances are pretty tidy,” says Mr. Strand. “What they are saying in their financial statements, 990s, and annual reports match up. It’s impossible to say that it tells the whole story, but it does look like a clean one.”