Wednesday, September 10, 2014

Livestrong's 2013 Financial Statements

Though much of the media spotlight on Livestrong has faded since the ignominious departure of Lance Armstrong, it remains an important charity focused on improving the lives of those with cancer. Since its rise was largely precipitated by positive publicity, however, many (including myself) have wondered what its future will hold. With the release of the organization's 2013 financial statements this week, we finally get a first real glimpse of how the Lance Armstrong scandals have affected the organization. Here are a few noteworthy items:

1. Livestrong's revenues dropped substantially after Lance Armstrong's January 2013 public confession, with total revenues down by 40.5% in 2013
  • Total contributions were down 25.8% (despite an over $6 million gift from Movember)
  • Royalties & licensing fees were down 58.9%
  • Special events (net) revenues were down 77.8%
  • Program merchandise and services sales (net) were down 84.7%
2. Livestrong's expenses were also curtailed but to a lesser degree, with total expenses reduced by 20.1%.
  • Salaries, wages, & benefits were down 6.4%
  • Legal and professional fees were down 18.9%
  • Advertising was down 2.8%
  • Grants were down 32.9%
  • Public awareness expenses were down 58.3%
  • Other expenses were down 15.4%
3. Despite the net loss of $6.9 million in 2013, the organization still maintained a net asset balance at the beginning of 2014 equal to $99.7 million, $64.7 million of which was unrestricted and undesignated. This suggests the organization could continue such losses for some time without running out of unrestricted funds. With the recent announcement that Livestrong has pledged $50 million to the University of Texas, however, something has to give.  That news portends a very thin financial cushion remaining – time will tell whether that pledge signaled a new financial strength for the organization or an effort to unwind its net assets and scale down continuing operations.

Wednesday, September 3, 2014

After the Ice Bucket Challenge: What to Look for in the ALS Association Financials

As the viral fundraising success of the Ice Bucket Challenge winds down, many have shifted their focus to inquire about how the ALS Association will make use of the windfall. For an organization that began the year with $20 million in net assets, the infusion of $100+ million of unrestricted cash represents a serious opportunity. Though there will be much speculation in the interim, I suspect our first real glimpse of their chosen strategy will come with the release of their next financial statements (year ended 1/31/15). Here I briefly describe what to look for.