Wednesday, July 24, 2013

Five Observations from the 2012 Livestrong Financial Reports

The Livestrong Foundation has now released their 2012 financial reports.  Their audited financials and form 990 are available here.  The big picture is that they seem to be weathering the storm.  Given their reliance on royalties and corporate support however, 2103 may be the more difficult year.  Below are five initial observations from viewing the financials.

  1. Gifts from Movember ($4,563,944) and RadioShack ($3,182,885) helped cushion the blow, especially from a PR standpoint.  The official word will be that their donations only dropped 8% from 2011 to 2012 (from 990).  However, absent these two gifts, the drop in donations would actually be 39%.
  2. Given their heavy reliance on licensing fees, perhaps a more troubling development for them is that royalties and licensing fees dropped 35% in 2012. This is prior to the announcement that Nike was dropping their affiliation with Livestrong, so expect further declines in 2013.
  3. Livestrong's practice of consistently spending less than they bring in has helped.  Despite the revenue declines, they were actually able to increase expenses without seriously digging into net assets.  This was further helped by the large net asset balance they have accumulated over time, which generated investment income of $4.6 million.
  4. They have tilted their expenses a bit more toward grants and away from advertising and legal costs, but not substantially.  Their basic business model has actually stayed quite steady.  To the extent they have changed, it seems to be more in their more clear marketing of what they offer (and what they don't).
  5. Finally, one must mention that their form 990 lists Lance Armstrong once, as a current director. He was a director at the onset of 2012, which led to his inclusion.  In the future, his name will likely be gone from the filing entirely. Amazing for an organization whose previous financials were filed as "The Lance Armstrong Foundation".

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