Unpacking the HSUS Gravy Train (2010 Edition)

Less than ten months ago we wrote, on another website, an essay that would form the basis for the whole HumaneWatch project (which launched about 7 weeks later). In that piece, we explored the basics of what the Humane Society of the United States reported in its federal income tax return for the 2008 tax year.

Yesterday we published HSUS’s 2009 tax paperwork. As of this writing, HSUS hasn’t yet released it on its website—although it was filed with the IRS in the first week of September, six weeks ago. (Update: A few hours after this article was published, the 2009 tax return magically appeared on HSUS's website. HSUS also removed its tax returns for years prior to 2007, but fear not—we've got 'em all in the HumaneWatch document library.) The popular Guidestar nonprofit tracking service doesn’t have a copy yet either. We got ours from one of the (literally) dozens of U.S. states that require it from charities that want to keep their fundraising licenses.

So HSUS is in no hurry to keep its donors informed about its balance sheet, but fundraising regulators get speedy delivery from the accountants at 2100 L Street. Small wonder.

Perhaps at HSUS’s official Annual Membership Meeting—held this Friday, October 22 at 8:30am at the JW Marriot Hotel, 1301 Pennsylvania Avenue NW, Washington, DC—someone will ask Wayne Pacelle about the observations we’ve made below. If you’ve given $25 to HSUS in the last year, you’re eligible to attend. (Drop us an e-mail first, please, if you’ll be in Washington, DC on Friday and you plan to show up.)

HSUS’s bottom line for 2009 will sound familiar to veteran HumaneWatchers: The group sucks millions of dollars out of local communities, by raising money from unsuspecting Americans who believe it’s related to their local pet shelter (it isn’t) or that it gives a substantial portion of its money to hands-on dog and cat rescues (it doesn’t). Instead, HSUS hoards its money, or funnels it to a variety of affiliated organizations it controls. These include Humane Society International (HSI), HSI/UK, HSI/Canada, and Humane Society University, to just name a few.

It’s a tired story of corruption and cynical misdirection. But the 2009 tax return itself provides a fascinating look inside the HSUS machine.

Here are our initial observations, in no particular order:

• HSUS collected $97.0 million in donations last year and spent $22.3 million on fundraising. In other words, 23 cents of every dollar HSUS took in went right back out the door to raise more money.
• Wayne Pacelle, HSUS’s tel-evangelical vegan activist CEO, now has an annual compensation package worth $269,180. (He got a 6.6-percent raise over 2008.) Including Pacelle, 29 of HSUS’s 629 employees are six-figure earners. In total, HSUS spent $35.8 million on salaries and benefits last year.
• HSUS continued its lavish retirement spending in 2009, contributing another $2.59 million to its executive pension plans. All told, HSUS’s pension fund has grown by more than $11 million since Pacelle became CEO nearly seven years ago.
• HSUS squandered $7.3 million of its donors’ money in the stock market in 2009, selling $107.2 million worth of securities for $99.9 million.
• HSUS had $160.5 million in assets, including $24.8 million in cash, at the end of 2009.
• HSUS sent its membership magazine (All Animals) to just 450,000 people in 2009. This is a far cry from the 11 million it claims to represent. The 2009 tax return affirms that anyone who donates $25 is a “voting member” who can help elect or re-elect Board Members. HSUS uses All Animals magazine to distribute ballots to its members, which means that there are no more than 450,000 HSUS members in the world.
• HSUS claims it reached “850,000 kindergarten to 6th grade students” in 2009 through its propaganda newsletter, KIND News.
• Seventy percent of the “grants” HSUS made to outside organizations in 2009 went to its own affiliates. HSUS gave more money to just two of its political ballot-committee front groups (those in Missouri and Ohio) than it did to pet shelters. More than one-third of HSUS grants went to Humane Society International, a closely related HSUS affiliate.
• HSUS shared less than 1.7 percent of its $121.7 million budget with organizations it doesn’t control. We’re still analyzing the grantees to determine which are real pet shelters or rescue groups, but it appears that HSUS’s support of such organizations (yet again) accounted for less than 1 percent of the overall total.
• HSUS’s biggest expenses in 2009 were for direct-mail and online marketing costs, not animal care. It paid $7.70 million to an online direct-marketing firm called Euro RSCG Edge,and another $8.21 million to the Quadriga Art direct-mail company. On the bright side, HSUS “only” paid the Arizona Lockbox & Fulfillment company $2.77 million to count its donors’ money last year (down from more than $4 million in 2008). A Virginia printing house was paid $1.56 million, and the scandal-plagued Share Group telemarketing firm kept $1.84 million of the $1.92 million it raised on HSUS’s behalf—a return of barely 4 percent.
• HSUS now has “state directors” (read: regional lobbyists) in 36 states.

We also found it interesting that HSUS claims it “makes copies of its certificate of incorporation and bylaws available to members free-of-charge, by mail, upon request.” So if you’re a “Buyers’ remorse HumaneWatcher” who wouldn’t mind writing HSUS for your copy, please forward it along to our Post Office Box so we can add it to the HumaneWatch document library.

There's more to discuss about this lengthy document, including the complicated relationship between HSUS and its many legal affiliates, and just how much of HSUS's "grant" money went to real humane societies. Stay tuned.