Monday, February 23, 2015

Things You Can Learn about The Clinton Foundation from Its Financial Statements

As Hillary Clinton and her presidential aspirations begin to take center stage in political discussions, some of the attention has focused on the Clintons' family foundation – many are already speculating about whether the foundation will prove to be a political asset or liability for Secretary Clinton.  While I can't speak to the politics angle, I do think it's worth considering what one can learn about the foundation and its activities from its financial statements. The following observations come from a review of the Clinton Foundation's GAAP financial statements (that reflect a consolidation of the Bill, Hillary, & Chelsea Clinton Foundation and its controlled entity the Clinton Health Access Initiative).

1. The foundation has seen substantial, though uneven, growth.
  • Total contributions were $199 million in 2013, compared to $58 million ten years prior.
  • Total expenses were $223 million in 2013, compared to $56 million ten years prior.
  • Year-over-year growth in contributions averaged 24% over the past ten years, ranging from -40% to 101%.
  • Year-over year growth in expenses averaged 23% over the past ten years, ranging from -22% to 115%.

2. The foundation is involved in a variety of initiatives, but most of the money is in one of them.
  • In 2013, nearly 2/3 (65%) of the organization's $197 million of program expenditures was focused in the Clinton Health Access Initiative, the remaining being split among the 10 other initiatives.
  • Of its unspent restricted net assets at the end of 2013, 60% were dedicated toward the Clinton Health Access Initiative.

3. Salaries and Benefits represent a growing part of the foundation's budget.
Before one simply chalks this up as an expansion of administrative pay, it is worth noting that the portion of salaries and benefits dedicated towards programming has remained relatively constant. Thus, this increase is better viewed as an overall a shift toward more labor-heavy approaches.

4. The organization has experienced some growing pains when it comes to financial reporting.
Over the last 10 years, the foundation has issued restatements twice (2004 and 2010) and switched auditors once (2013).

5. Despite substantial growth elsewhere, one program has shrunk in recent years.
The program is a partnership with UNITAID that seeks to secure discounted pharmaceuticals and medical supplies for distribution to particular countries. The program was once a primary component of the foundation's efforts (at least in dollar terms) but has since waned. In particular, since 2009 (the first year the foundation isolated the expenditures on its UNITAID partnership in its financial statements) the associated expenses have dropped noticeably.

6. The organization has largely spent resources as they come in, but that shifted in 2013.
  • For many years, the foundation showed only $250,000 in permanently restricted assets held in an endowment, while spending the preponderance of other funds that were raised (with expenses averaging over $175 million through the past ten years).
  • In 2013, the organization made a concerted effort to raise funds for a permanent endowment that can fund long-term projects. In that year, the permanent endowment jumped from $250,000 to $59 million. As of the start of 2014, 75% of that amount was pledged but not yet received by the foundation.

1 comment:

  1. This is a great post and it really highlights why businesses and charities both need the services of a professional accountant. It's not enough to simply report the numbers--you need to understand them in order to make intelligent decisions about the future. Too many small businesses worry too much about compliance and not enough about the information itself.

    Tim Norton @ Perfect Accounting Service