Revenue for Livestrong dipped last year, led by a drop in license fees and a decline in contributions, according to its most recent tax filings. The sale of Livestrong bracelets also dropped by almost a million last year, down some 30 percent, while donations are off by 7 percent so far in 2013.
Livestrong officials hosted a conference call with media to present the Austin, Texas charity’s annual tax Form 990. Filing the Form 990 is a requirement by the Internal Revenue Service (IRS) but a conference call about it is rare among charities.
“We think it’s a valuable requirement that people provide information on how they’re doing and what they’re doing,” Chief Financial Officer Greg Lee said in a conference call with media. “It’s an opportunity for us as an organization to be fully transparent about activities and where money goes,” he said.
Among the highlights of the Form 990:
- Total revenue was down 17 percent, from $46.8 million to 38.77 million, and 8 percent compared with 2010’s $42.3 million.
- Contributions/grants were down 8 percent, from $24.67 million to $22.68 million, and down 24 percent from $29.7 million in 2010.
- Contributions from Movember were nearly $4.5 million, almost $2 million more than the previous year’s $2.64 million.
- Revenue from license fees – which comprised more than a third of last year’s revenue – were down 35 percent, from $15.8 million to $10.3 million.
In a two-page overview accompanying the Form 990, Lee reported total revenue of $48.2 million for 2012 and $48.8 million in 2011. The differences between the 990 and annual report come down to how the IRS form recognizes in-kind contributions and realized gains. Livestrong officials said the number of contributions was up 3.5 percent in 2012, to almost 200,000.
The Form 990 presents subsets of revenue but is not intended to be a complete economic picture, Lee said. About $3.4 million in in-kind contributions received but excluded from the tax form except for Schedule D.
“Accounting rules require us to report something like free water bottles for races, showing it the in-kind value of that contribution. If we didn’t get that free, we’d have to buy it,” Lee said Another $3.5 million in investment gains are again reflected on Schedule D but not required to be included in the tax form.
The cancellation of the New York City Marathon a week after Hurricane Sandy devastated the region caused about $750,000 in revenue to be deferred to 2013. Under accounting rules, Lee said that because of the cancellation, registrants are allowed to participate this year.
Through April of this year, revenue was running about $16.4 million, compared with a budgeted $17 million. A vast majority of fundraising efforts occur in the last half of the year. The total number of donations was down about 7 percent and revenue was down about $600,000. Lee said the charity feels good about those figures “given the headwinds” faced in recent months.
The dip in license fees was attributed to a unique, one-time payment of about $2.5 million from Demand Media, Inc., related to its public filing. The company runs Livestrong.com, the for-profit web partner of Livestrong. Demand Media was almost half of the year-to-year difference in fees. In 2010, license fees were $8.9 million, almost 16 percent less than they were in 2012. Nike earlier this year announced it would stop producing Livestrong merchandise after its current partnership expires this year.
Another roughly $1.7 million of license fees in 2012 were related to a decline in portfolio value in its agreement with American Century. There were several other relatively minor agreements that affected license fees, Lee said. In 2011, license fees total about $10.3 million, which was up from $8.9 million in 2010.
The sale of Livestrong bracelets dropped from 3.139 million in 2011 to 2.175 million in 2012. Sales are down almost 5 percent so far this year, and projected to decline about 14 percent in 2013. Highlights of the expense side of the 990 included:
- Total expenses were up from $31.7 million to $38.2 million last year.
- Legal fees continued to rise, to $962,964 last year, up 17 percent from $824,198 the previous year, and up 32 percent from 2010’s $732,512.
- Advertising and promotion was up 25 percent, from $3.2 million to $4 million, and almost double the $2.1 million in 2010.
- Public awareness decreased by two-thirds, from $2.5 million to about $800,000.
The majority of nearly $1 million in legal fees is for the trademark enforcement of the Livestrong brand in 60 countries. “That requires a significant effort to continue to monitor registered trademark and enforce the valuable brand that we have,” Lee said. Some legal fees were attributed to external fees on reviewing contracts for such things as license agreements.
Livestrong officials said the charity continues to invest in cancer initiatives and programs. Government relations was an especially active area — up from $219,000 to $1.6 million last year because of efforts related to Proposition 29, the California Cancer Research Act, which would have imposed a cigarette tax to fund cancer preventative measures. Lee said this expense category will fluctuate depending on the year, being more active during key election years or when ballot initiatives are proposed.