SPLC — Crunching the Numbers

As another summer winds down to a close, it’s always worthwhile to have a look at the Southern Poverty Law Center’s financial numbers and compare them to the company’s fundraising rhetoric.

According to the financial records for the most recent fiscal year, ending October 31, 2014, the SPLC reported total operating expenses of $42,414,311 against total annual revenues of $54,420,509, leaving a tidy “non-profit” of $12,006,198 when all was said and done.

Remember, friends, “non-profit” is a tax status, not a mission statement.

While the financial records on the web site are up-to-date, there are a couple of errors in the text that will, no doubt, be corrected in the near future. The most glaring error states that:

“At the end of the fiscal year, our endowment – a special, board-designated fund established to support our future work – stood at $245.3 million.”

That figure is three years old. According to the SPLC’s most recent IRS Form 990, the company’s endowment fund closed 2014 at a record-breaking $302,825,586 dollars (Page 26). In 2000, Ken Silverstein reported in Harper’s Magazine that SPLC founder Morris Dees at one time announced that the SPLC would cease all fundraising activities once the Endowment Fund reached $55 million dollars. As that target drew nigh, Mr. Dees doubled his bet, saying that he could “live off the interest” of a $100 million dollar endowment.

The Endowment Fund reached that number by 2002, and yet, the fundraising continued. Five years later, the $200 million dollar mark was reached in 2007 and yet, the fundraising continued. Maybe Mr. Dees was misquoted and really had $300 million in mind the whole time.

Click Image to Enlarge

Click Image to Enlarge

Speaking of fundraising, the second error on the financial information page states: “During the last fiscal year, approximately 68% of our total expenses were spent on program services.”

Like everything else to do with the SPLC, that statement is up for interpretation. According to the Form 990, the company spent $13,032,973 “seeking justice by supporting victims of civil rights abuses and hate crimes,” and another $13,939,793 in support of the company’s “public information and education efforts,” for a total program services outlay of $26,972,766, (p. 3), which only adds up to 63% of total expenses for the year, not 68%

But wait… there’s more! 

According to page 2 of the Form 990, the SPLC spent $9,674,637 on fundraising for the year, or 23% of its budget, putting it near the low end of Charity Navigator’s optimal fundraising expenses chart. However, the SPLC’s own auditors note that the company “incurred joint costs of $8,056,407 for educational materials and activities as part of fundraising appeals during the year ended October 31, 2014.”

“Joint costs,” the auditors explain, are “Activities and the production of materials which combine development, education, and management functions are allocated to the program and supporting services on the basis of the content of the material, the reason for its distribution, and the audience to whom it is delivered.”

For example, SPLC “management” spent more than $1,500,000 dollars in printing and postage costs last year, over and above what the education and fundraising wings spent. That makes no sense whatsoever until you realize that “Management” was merely holding that expense for “Development,” (pronounced: “Fundraising”). They’re not lying about spending the money, they’re just not excessively truthful over who spent it.

In short, “joint costs” are fundraising costs that are allocated to program service expenses. As long as the fundraising appeal contains an “action element,” it can technically be called something else. For example, when you receive a note from the SPLC saying “Hate groups are on the rise everywhere! Your financial support will help us fight hate,” you have received “educational materials” and a not fundraising letter. Get it?

When you add up the SPLC’s declared fundraising costs and its “joint” fundraising costs you come up with $17,731,044 dollars, or 42% of total expenses, which blows it completely off Charity Navigator’s charts.

So, if you deduct that $17 million in fundraising costs from the company’s annual expenses, as Mr. Dees promised he would when the Endowment Fund reached $100 million, it cost just under $25 million to keep the SPLC’s doors open last year.

At that rate, the Endowment Fund could support all programs for 12 years without raising another dime, but that doesn’t include the $22 million in tax-free interest generated by the fund, which would cover nearly everything without touching the principle. With a little of the “stewardship” the financial page brags about, the SPLC could carry on indefinitely without ever asking for another red cent.

Don’t hold your breath.

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