What methodology did ProPublica use to estimate fundraising and reserve percentages at St. Jude?
Executive summary
ProPublica derived its headline figures about St. Jude — roughly half of donations going to patient care and research, about 30% spent on fundraising, and about 20% flowing into reserves — by analyzing the hospital’s and its fundraising arm’s tax filings and financial disclosures, tallying revenues and classified expenses, and comparing transfers into investment/reserve accounts against total contributions [1] [2]. The newsroom supplemented raw IRS data with internal financial statements, industry benchmarks and interviews to contextualize reserve growth and fundraising costs [2] [3].
1. Data sources: IRS Form 990s, ALSAC disclosures and financial statements
ProPublica’s reporting is built on publicly available nonprofit filings — primarily IRS Form 990 returns for St. Jude and its fundraising arm, ALSAC, plus additional financial disclosures the organizations provided to regulators and industry analysts — which show annual revenue, expenses by category, employee compensation and balance-sheet items such as investments and unrestricted net assets that ProPublica used to trace donation flows [3] [1].
2. How ProPublica classified dollars into “care/research,” “fundraising,” and “reserves”
The investigation allocated dollars by examining where reported revenues were recorded as expenses (clinical and research program expenses versus fundraising and marketing costs) and by identifying transfers from operating receipts into investment or reserve accounts documented on the filings; ProPublica summed program-service spending and research costs as the “care/research” share, used fundraising and development line items for the “fundraising” share, and treated increases directed into investment or reserve accounts as the portion added to reserves [1] [4].
3. Calculating the reserve percentage and reserve-to-budget comparisons
To quantify the “20% to reserves” claim and similar ratios, ProPublica compared the amount added to ALSAC/St. Jude investment accounts in a given fiscal year against total contributions received in that period, and compared the total reserve balance to the combined annual operating budget of the hospital and ALSAC to express reserves as years of operating coverage — a method that produced metrics such as reserves equal to multiple years of operating costs and the finding that the reserve fund had grown substantially over several years [2] [1].
4. Cross-checks, context and additional evidence used
ProPublica bolstered its percentage calculations with trend analysis of reserve growth (for example, a 58% increase over five fiscal years and recurring transfers averaging hundreds of millions annually), by noting the composition of fundraising (including bequests accounting for ~20% of recent five-year contributions) and compensation data for ALSAC staff; those elements contextualized why large fundraising totals corresponded to large transfers into reserves and high fundraising expense ratios [5] [1] [6].
5. Limitations, alternative viewpoints and St. Jude’s responses
ProPublica’s methodology relies on how the charity classifies items on tax returns and internal statements; that creates exposure to differing accounting choices — for example, how organizations treat capital assets, internally restricted net assets or transfers between affiliates — and industry actors such as the hospital and ALSAC disputed the framing and stressed mission accomplishments while announcing expanded family support after the reporting [7] [2]. Independent analysts cited by ProPublica note that “healthy reserves” are typically one to two years of operating costs, which is the normative benchmark ProPublica used to judge St. Jude’s multiyear reserve level [8] [2]. ProPublica also referenced external comparisons (other children’s hospitals, Charity Navigator-style metrics) and third‑party calculations — such as an “alliance” method that deducts nonliquid assets and combines hospital and fundraising budgets to compute reserve multiples — to test the robustness of its conclusions [2].
Bottom line: transparent numbers, interpretation matters
The nuts and bolts of ProPublica’s headline percentages come from adding up what St. Jude and ALSAC reported taking in and then allocating reported expenses and documented transfers to reserves — a defensible, document‑driven approach — but the interpretation depends on accounting choices, what one counts as “operating budget,” and judgment about appropriate reserve size; ProPublica disclosed those methods and used external benchmarks and internal documents to support its critique even as St. Jude pushed back and provided additional context and policy changes [1] [2] [7].