HSUS 2007 Tax Return

Following is a story courtesy of the Fur Commission. Below that story is some additional analysis we here at CNMAO decided to publish…

HSUS’s 990s Online: HSUS’s Membership? — Not What You’d Think – And More!

The Humane Society of the United States has posted their 2007 tax return online at:
http://www.hsus.org/about_us/annual_reports_financial/annual_reports_financial_statements.html

You’ll want to take a good look.

HSUS’s gross receipts were $152 million. But, out of that $152 million, $50 million went missing when HSUS declared $101 million in
revenue. And out of that $101 million, only $85 million of that was came from the public. And out of that $85 million from the public, almost $10 million, or over 11%, came from just four donors (page 18). Who those four were, only the IRS knows for sure.

While virtually everyone was losing money in the stock market in 2007, HSUS managed to rack up a $6 million profits on their trades on about $55 million in securities. And they paid no fees and had no expenses on those transactions. Zilch. (Stmt 2, page 20)

HSUS, which constantly promotes oil-based synthetic clothing over natural fibers, earned $676,499 on an oil and gas lease (page 1).

They closed the year with over $200 million in net assets, even after a downward adjustment of $31 million to their assets (line 20, page 1).

Hands On Animal Care and Better Documentation

The good news is that some of HSUS’s money is actually going to help animals, which is a nice shift. After HSUS declared they’d raised over $30 million for relief for homeless animals in the Hurricane Katrina disaster, the Louisiana Attorney General took note. HSUS was forced to actually spend some of that money on hands-on animal care in Louisiana and Mississippi. You can see it in some of the outgoing grants. The bad news? It’s still a fraction of what HSUS declares was raised.

Another step forward, after at least a decade of HSUS using Share Group, Inc. as their telemarketing firm, HSUS is finally listing them among their top 5 contractors receiving over $50,000, see page 10. Share, HSUS reports, received $1.7 million in fees.

But we’re not so sure. The Los Angeles Times, among others, has commented on the fact that each time HSUS uses this telemarketer, Share does not share, keeping 97% of the funds. http://www.consumerfreedom.com/news_detail.cfm/headline/3675

Members Go Poof!

What is also interesting is that, while HSUS regularly claims it has 10 million members and constituents, which many in the media assume means members, or 1 out of about every 30 Americans, Statement 9, page 62, disputes this, reporting that:

“Membership services handles tens of thousands of public and member/donor communications annually.”

This is a number far too low for any group with 10 million members and reflect something more in the order of a few hundred thousand members.

Page 62 continues:

“Publications produces hundreds of items each year, including a quarterly magazine sent every other month to 420,000 members.”

Well, there you have it. HSUS has 420,000 members, just 4.2% of what is commonly reported. At $25 each, that would generate $10.5 million in membership fees.

That’s only one of every 714 Americans or, roughly, 8,400 in each state.

A large percentage of members represent those who mistakenly believe they’re giving money to their local humane shelter when they mail a check. And easily half of these HSUS members are people engaged in animal ag and wildlife pursuits who reluctantly join HSUS simply to monitor what the loyal opposition is up to.

It’s hardly a mandate to impose a vegan lifestyle on all those omnivores.

Also, if any of those members have ever received an invite to a membership meeting, as requited by HSUS own bylaws and state and federal law, we’d like to hear from you.

Distributed by;
Teresa Platt, Fur Commission USA,
www.furcommission.com

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CNMAO’s own analysis of the HSUS tax returns for 2007 revealed the following additional information…

The web page makes it sound like HSUS is doing their “members” a favor by publishing the return. They’re required by law to provide it to ANYONE that requests it. It’s certainly cheaper to post it on a web page than mail it to all that may request it.

Regarding revenues…

• Donations appear to have actually fallen from the high of $108.4 million in 2005 to $85.2 million in 2007.
• $6.1 million of the $101.8 million in revenue went to grants…less than 6%. The biggest grant was for $1.4 million to Californians for Humane Farms aka California Proposition 2…yes, back in 2007. It will be interesting to see how much support was provided in 2008.

A 501(c)’s Form 990 tax return expenses are categorized as program services, management & general and fundraising. Program services is where the charitable work is reported. Legally, there is some latitude in the categorization of expenses. Whether or not pursued, organizations have an implicit incentive to aggressively categorize activity as program services to look as good as possible. Without an audit, there is nothing that could be easily detect as miscategorized in any Form 990.

Regarding expenses…

• 9 officers made over $50,000 in compensation. Wayne Pacelle made $235,000 in compensation and benefits. 146 employees other than officers made over $50,000 in compensation. The highest paid of those is the Senior VP of International Programs who received over $210,000 in compensation and benefits.
• A total of $3.4 million was spent on lobbying expenses which is within federal limits for a charitable organization, but still a lot of money for a charitable organization.
• National Outdoor Sports Advertising received $2.3 million, more than the Share Group.
• Two lock box processors received a combined total of $1.1 million.
• Mailing costs were $18.1 million, but only $1.1 million was classified as fundraising…could it have been the cost of the “please donate plea” return envelopes included with nearly every mailing? And, $8.3 million was spent on education materials, publications and campaigns, but only $1.2 million was classified as fundraising.
• $1.5 million (less than 2% of revenues) was spent on direct animal care facilities. Combined with Fund for Animals (an affiliate) they spent a total of $3.6 million on Cape Wildlife Center in Massachusetts, Cleveland Amory Black Beauty Ranch in Texas, California Wildlife Rehabilitation Center in California and Duchess Sanctuary (Equine Haven) in Oregon. HSUS is NOT a big player in operated animal care facilities and four widely dispersed small units aren’t exactly a formidable network. And, those units appear to provide little to no experience in sheltering dogs, cats and other pets.

Reported related organizations include:
Center for Respect of Life & Environment
Humane Society Legislative Fund
Fund for Animals
Humane Society International
Doris Day Animal League
Wildlife Land Trust
Humane Society of Hong Kong
Humane Society International UK
Humane Society International France
Global Alliance for Humane Sustainable Development
National Association for Humane & Environmental Education
Earthkind USA
And the many organizations that receive grants or with which they have a “working” partnership.

We didn’t do a detailed comparison of 2006 vs. 2007, but did notice:

In 2006, 126 employees, officers, directors and trustees received over $50,000 in compensation. 23% more exceeded that threshold in 2007. Wayne Pacelle’s total compensation in 2006 and 2007 were substantially the same.

In 2006, grants of $6.5 million were provided on $100.8 million in revenue. Based on grant activity, pressure from Louisiana and Mississippi Attorneys General regarding Hurricane Katrina didn’t appear to take significant affect until 2007, even though Hurricane Katrina occurred in September 2005. And, total grants appear to be much less than the $30 million received.