All this attention on donated medicine got me wondering just how big the sector is.
There is a small number of charities receiving big volumes of medicine donated by the pharmaceutical companies. Those charities then get all those meds distributed to charity clinics and hospitals around the world. That is incredible work which is improving the lives of millions upon millions of poor people around the world.
So, how large is that sector? Here is a bit of research.
For the charities I’m aware of, plus those that have been in the news over the last eight years or so, plus those on the record as being opposed to AB 1181, I looked up their most recent 990 on their website. For a few of the charities there wasn’t a 990 visible (or at least I couldn’t find it) so I pulled the most recent 990 from the California Registry of Charitable Trusts.
Data tabulated below is:
- total revenue from 990 Part I line 12,
- non-cash donations from 990 Part VIII line 1g (referred to as gifts-in-kind or GIK), and
- disclosed amount of drugs and medical supplies on Schedule M line 20.
Amounts are converted to millions, then rounded.
Last column in the table is the dollar amount of drugs & medical supplies divided by total revenue. A higher percentage shows larger portion of income from donated meds, and thus a higher likelihood AB 1181 will have a bigger impact on the financials.
Only charities with over $20 million of donated meds and supplies are listed; charities below that level are excluded.
Summary of results
Table below includes 17 charities. Another 17 whose volume of donated meds is below $20M each are not listed.
I think there may be another dozen charities with donated meds in this sector. As I come across additional names and look up their 990s, this table will be updated.
For the not-for-profit organizations (NFP) listed, total revenue is about $8.9 billion, total donated items are about $8.1 billion, and donated drugs and supplies are about $7.5 billion.
The 17 charities not listed below have total revenue of about $4.4 billion, total GIK of about $930 million, and donated drugs and supplies of about $130 million.
For context, total donations to the charitable sector were a reported $410 billion in 2017. Ignoring the mishmash of years, the subset of the relief and development community (R&D) with large amounts of donated meds listed below received about 2.2% of the total contributions of NFPs.
Caution on interpreting the totals
We need to be careful of interpreting the number of $7.5 billion for donated drugs and medical supplies for at least three reasons.
First, there are more charities active in this sub-sector which are not yet listed. My wild guess is there may be another dozen. My further guess is those not yet listed will be at the lower end of this list, not in range of a hundred million or more.
Second, the total of $7.5B includes donated supplies, such as bandages, sutures, gloves, surgical tools, and all the other consumables you would find in a clinic or operating room. I have no insight about what portion might be medical supplies.
Third, an unknown portion of this is double counted. Under current accounting rules the charity receiving the donated meds can recognize revenue. If that charity is not able to fully distribute the meds to their network of contacts, the charity will pass the meds to another R&D entity who can then send the materials out to their network. Under current rules, the charity who ultimately distributes the meds to the end user can also recognize revenue. If the meds make another stop, the intermediaries are not suppose to book revenue.
The volume of meds legitimately recorded twice is not quantified. Identifying that volume of meds would be quite difficult to determine, if not impossible. I will make a completely wild guess (subject to revision at any time) that the amount counted twice is far less than one-fourth of the total and more likely one-tenth or less.
A few comments
Other thoughts on the data below.
Both Global Health Solutions and the related Task Force for Global Health Solutions are listed. If I understand correctly, one legal entity handles the donated meds and the other legal entity receives the cash contributions and does the work to process the meds.
The three charities subject to the high visibility C&DO from the California AG are included. Those would be Food for the Poor, MAP International, and Catholic Medical Mission Board.
Giving Children Hope was also subject to an enforcement effort by the California AG during 2019. As discussed elsewhere on this blog, the charity negotiated a $400,000 fine to settle the C&DO, which the charity points out was not paid with donor funds but was instead paid by their insurance company. In addition, the AG levied $10,000 of fines against 4 individuals, including $3,000 levied against the charity’s external accountant. This charity agreed to discontinue their donated medicine program.
One charity not listed since they have donated meds less than $20M was also sued by the AG. The charity is in litigation with the AG.
A large portion of the R&D organizations listed below are part of the Christian faith tradition which is one component of the religious community. There is a large portion of those who would consider themselves to be part of the evangelical community.
Only one charity is listed (that I can identify) from the Muslim faith tradition. Two more (I think) are included in the group below $20M which is not listed below. I have minimal exposure to that faith community, so I don’t yet know what other charities in that faith tradition may have large volumes of donated meds.
The vast majority of the 34 charities have their 990 available at their website,. For 6 of those 34, I could not find the 990s so went to the California Registry of Charitable Trusts website for the information. I couldn’t find a 990 for 2 of the charities so used their audited financial statements.
Some of the charities have a 990 that does not seem to be the most current filed. For example, seems there might be a more current report than a 2016 or 6/30/17 tax return available.
Listing of charities in the R&D sector with more than $20 million of donated medicine:
|total||Meds &||meds /|
|Global Health Solutions||2,619||2,619||2,619||100%|
|Task Force for GHS||86||–||–|
|Catholic Medical Mission Board||735||704||704||96%|
|Food for the Poor||942||802||536||57%|
|Operation Blessing Int’l||276||246||195||71%|
|Heart to Heart International||138||126||126||91%|
|Christian Aid Ministries||141||89||72||51%|
|Brother’s Brother Foundation||96||92||67||70%|
|Feed the Children||370||317||40||11%|
|Giving Children Hope (f/s)||34||33||32||94%|
|Medical Teams Intentional||53||27||22||42%|
|Total of above||8,865||8,126||7,477||84%|
You can double check the data if you choose, which was obtained from the listed locations. Full URL is probably not appearing on you screen, but the links should still work.