Finance

Finance & Policies

Direct Relief’s long record of managing its resources in the most efficient manner possible has been a central part of the organization’s success in providing assistance to millions of people when they are most in need.
ICU Medicines in Direct Relief's warehouse (Lara Cooper/Direct Relief)
Emergency Medical Packs leave Direct Relief’s warehouse. (Lara Cooper/Direct Relief)

Efficiency & Accountability

Direct Relief’s financial practices are also why it has earned the continued recognition from non-profit rating organizations.

Since its establishment in 1948 as a public benefit nonprofit organization with a humanitarian health mission, Direct Relief has provided assistance to people and communities in need, without government funding or regard to politics, religion, race, ethnicity, gender, nationality, or any other classification.

Operating Revenue (FY20)
Donated medicines & services $1,826,370,000
Private cash contributions $171,252,000
Government grants & contracts $0
Total public revenue $1,997,622,000
Operating Expenses (FY20)
Programs $1,555,605,000
Administration $5,867,000
Fundraising * $2,953,000
Total operating expenses $1,564,425,000
Fundraising as a percentage of cash revenue (FY20) 1.7%

* Donation Policy on Fundraising Expenses

Direct Relief seeks to be efficient and frugal in all organizational activities, including fundraising activities. Since 2007, all of Direct Relief’s fundraising expenses have been paid by the earnings from a generous, unexpected bequest received that year and several other such legacy gifts since.

Because Direct Relief is able to cover its modest fundraising expenses in this manner, zero percent of donated funds go to the organization’s fundraising activities. Read more >

Donation Policy on Designated Contributions

Direct Relief has a strict policy to ensure that 100 percent of all designated contributions for specific programs and emergency responses are used only on expenses related to supporting that program or response. This is consistent with the requirement that charitable organizations honor precisely the clear intent of generous donors who responded to these tragedies and to preserve the maximum benefit for the survivors for whose benefit the funds were entrusted to Direct Relief. Read more >

Cash and In-Kind Contributions

In-kind contributions: To fulfill its mission and program objectives, Direct Relief has long sought partnerships with, participation of, and contributions of in-kind goods and services from businesses and organizations with particular expertise that is needed for humanitarian activities. In-kind contributions typically represent more than 90 percent of the organization’s total annual revenue and also entail other significant benefits.

Direct Relief’s core activities involve the functional role of medical distributor and was the first nonprofit organization in the U.S. to obtain the highest accreditation and licensing in all 50 states to distribute Rx medications. Consistent with this role, the majority of in-kind contributions typically include substantial inventories of prescription medications, vaccines, and medical supplies from manufacturers that Direct Relief, in turn, provides at no charge to qualified healthcare organizations for patients who need and cannot afford them and during emergencies.

Other in-kind contributions include extensive transportation and logistics services, a broad array of software applications and technology platforms, and expertise in numerous specific functional areas inherent in managing a global medical supply chain that must meet stringent regulatory standard, which exist even in emergency situations to which Direct Relief frequently is asked to respond and does.

The longstanding approach of inviting direct support for needed goods and services has benefits far beyond merely receiving donated goods and services. It has allowed broader public participation in humanitarian efforts by commercial businesses in many industries and both far more and higher quality goods and services than could be achieved by seeking only financial support from the public to purchase them.

In addition, the extensive contribution of goods and services allows for financial contributions entrusted to Direct Relief to be leveraged significantly.

Cash contributions: Direct Relief also seeks through and receives cash contributions, which are used to cover internal costs and for goods and services that cannot be obtained through in-kind donations and are needed to advance the organization’s mission.

Direct Relief’s financial statements must account for both cash and in-kind contributions that are entrusted to the organization. Read more >

Valuation of In-Kind Resources

When Direct Relief receives an in-kind donation, accounting standards require a “fair market value” to be assigned to the donation. Donations of medicines, medical equipment, and medical supplies have long been an integral part of Direct Relief’s humanitarian assistance programs. Consistent with the requirements Direct Relief must meet as an accredited distributor of prescription medicines, each product donation must be precisely recorded in very specific detail to ensure safety (for example, in the event of a recalled product,) product integrity (with regard to packaging and during transit) and avoid potential diversion.

In assigning a fair market value to the in-kind medical donations received, Direct Relief records on the date of receipt the wholesale acquisition cost of the unique product (manufacturer, dosage, packaging) that is published by an independent pricing guide and updated daily. The specificity required for inventory controls and auditing due to its accreditation and licensing ensures that the current, accurate pricing information meets all relevant accounting standards, as well as the spirit and purpose of disclosure, transparency, and accountability to the public. Read more >

Timing of Revenue Recognition and Expenses

When taking an annual snapshot at the end of a fiscal year, several factors can distort a realistic picture of Direct Relief’s (or any nonprofit organization) financial health and activities. One is the timing of donations being received and the expenditure of those donations, whether in the form of cash or in-kind medical products. Read more >

The Direct Relief Foundation and the Board-Restricted Investment Fund

In 1998, Direct Relief’s Board of Directors established a Board-Restricted Investment Fund (BRIF) to help secure the organization’s financial future and provide a reserve for future operations. The BRIF, established with assets valued at $774,000, draws resources from Board-designated unrestricted bequests and gifts, and returns on portfolio assets. In October 2006, the Direct Relief Foundation was formed and incorporated in the State of California as a separate, wholly controlled, supporting organization of Direct Relief. Effective April 1, 2007, assets in the BRIF were transferred to the Foundation. Read more >

Compensation Philosophy

The policy of Direct Relief is to provide compensation that is fair, reasonable, and consistent with compensation paid in the nonprofit sector for positions of comparable complexity and responsibility. The goal of this policy is to recruit and retain high-performing employees and to motivate, recognize, and reward excellent performance. Read more >

Direct Relief’s Federal Tax ID number is: 95-1831116.