A Little Peek at the Books
About 40 of the 50 United States require nonprofit organizations to apply for special licenses before they can raise money from the states’ residents. Usually administered by the Attorney General or Secretary of State, these applications are cumbersome, expensive … and a fantastic source of paperwork if you’re researching the applicants. Especially now that most state governments are putting tons of documents online, in the interest of satisfying “sunshine” and “transparency” laws.
West Virginia is one of those states with a Consumer Protection statute that requires a fundraising license. One of the Humane Society of the United States’s many affiliated organizations (the Humane Society Wildlife Land Trust) has had such a license for the past decade. And, lo and behold, the office of West Virginia’s Secretary of State recently put its charity filings on the Interwebs.
Part of the application process in the Mountaineer State involves submitting a report (prepared by an outside accountant) verifying that the organization’s books are in good shape. This is typically done as a way of making sure individual donors aren’t getting ripped off by a fly-by-night “charity” looking for a quick score. (And the animal protection world has certainly had its share of those.)
So when the Humane Society Wildlife Trust’s West Virginia license came due for annual renewal during the last decade, HSUS’s Chief Financial Officer usually submitted a copy of the “Consolidated Financial Statements” for HSUS and its entire network of affiliated groups. (For some reason, the 2004 audit wasn’t provided.) And since the West Virginia Secretary of State is sharing all the documents, they’re now part of the public record—and part of the HumaneWatch document library.
These reports, as you might expect, are full of multi-million-dollar figures and broad-stroke financial categories. But here are the details that caught our eye in the most recent filing (2008). There’s a lot of stuff here, so take your time reading:
- Page 3: HSUS got control of $306,409 in assets when it took over the Association of Veterinarians for Animals Rights—later renamed the Humane Society Veterinary Medical Association.
- Page 4: Out of the $4.86 million HSUS spent on “field and disaster response programs” in 2008 (remember Katrina?), $3.27 million—that’s two-thirds—was spent on “mailing costs.” By comparison, HSUS barely spent $310,000 on contributions to needy humane organizations. (That’s less than it allocated to postage!)
- Page 5: During 2007 and 2008, HSUS’s “cash and cash equivalents” fluctuated between $50 million and $63 million. Which makes it very hard to argue that the organization ever had an immediate need to go into the infomercial-fundraising business.
- Page 8: HSUS reported that the one-year value of the free advertising it got via radio, TV, and newspaper Public Service Announcements (PSA) was over $5.4 million. And this despite the fact that HSUS, with tens of millions in the bank, could easily afford to pay market rates for ads.
- Page 11: Despite all its wealth and financial savvy, HSUS managed to lose $19.8 million in investments related to its endowment during 2008. (We wonder which million Americans’ donations were squandered in a down market.)
- Page 13: HSUS owns office furniture and equipment whose cost adds up to—take a deep breath—more than $7.1 million, and automobiles worth over $1.3 million.
- Page 15 (this is our favorite nugget): Employees hired after January 1, 2008 “are not eligible to participate” in HSUS’s pension plan. You read that right, all you new HSUS worker bees. Wayne Pacelle and the HSUS Board have ensured that the pension slush fund (which HSUS continues to fund) will only be available to long-time workers and the upper crust of HSUS muckey-mucks. At the end of 2008, the HSUS pension fund held over $15.5 million.
- Page 20: HSUS got control of “approximately $7.5 million in net assets” when it took over the operation of the SPCA of Broward County, Florida.
- Page 22: We now know why Humane Society International (HSI) is insolvent. HSUS appears to have raided the organization and redistributed its assets. In 2008, HSI transferred $4.7 million to HSUS, $6.3 million to the Fund for Animals, $1.4 million to the Humane Society Wildlife Land Trust, and another half-million dollars to the Doris Day Animal League. The shedding of more than $13 million left HSI $11 million in debt.
All of that—and more—can be found in HSUS’s 2008 Consolidated Financial Statements. We’ll be going through the previous years’ reports soon, but you’re more than welcome to beat us to it. Here are all the documents: