| FORM 990, PART VI, SECTION A, LINE 1 |
THE EXECUTIVE COMMITTEE CONSISTS OF THE OFFICERS OF THE BOARD OF DIRECTORS AND OTHER SUCH DIRECTORS AS DESIGNATED BY THE BOARD. THE EXECUTIVE COMMITTEE HAS THE AUTHORITY OF THE BOARD EXCEPT FOR CERTAIN ACTS THAT ARE RESERVED FOR THE FULL BOARD: A. TAKE ANY FINAL ACTION ON ANY MATTER THAT, UNDER THE CALIFORNIA NONPROFIT PUBLIC BENEFIT CORPORATION LAW, ALSO REQUIRES APPROVAL OF ALL OR A MAJORITY OF THE DIRECTORS; B. FILL VACANCIES ON THE BOARD OR ON ANY COMMITTEE THAT HAS THE AUTHORITY OF THE BOARD; C. ESTABLISH OR FIX COMPENSATION, IF ANY, OF THE DIRECTORS FOR SERVING ON THE BOARD OR ON ANY COMMITTEE; D. AMEND OR REPEAL THESE BYLAWS OR ADOPT NEW BYLAWS; E. AMEND OR REPEAL ANY RESOLUTION OF THE BOARD THAT BY ITS EXPRESS TERMS IS NOT SO AMENDABLE OR REPEALABLE; F. CREATE ANY OTHER COMMITTEES OF THE BOARD OR APPOINT THE MEMBERS OF COMMITTEES OF THE BOARD; G. APPROVE ANY SELF-DEALING TRANSACTION, EXCEPT AS PROVIDED IN SECTION 5233(D)(3) OF THE CALIFORNIA CORPORATIONS CODE (AND SET FORTH IN SECTION 5.17 ABOVE). |
| FORM 990, PART VI, SECTION B, LINE 11B |
DIRECT RELIEF'S CHIEF FINANCIAL OFFICER DISTRIBUTES A COPY OF THE FINAL VERSION OF THE FORM 990 TO ALL CURRENT BOARD MEMBERS, REQUESTING THEY REVIEW THE FORM 990 PRIOR TO FILING. THE BOARD MEMBERS ARE ASKED TO REVIEW AND ARE GIVEN AN OPPORTUNITY TO RAISE ISSUES AND REQUEST CLARIFICATIONS, IF ANY. ONCE THIS PROCESS IS COMPLETE AND BOARD APPROVAL IS OBTAINED, THE FORM 990 IS FILED. DOCUMENTATION OF THE DISTRIBUTION TO THE BOARD, AS WELL AS THE BOARD MEMBERS' RESPONSES AND QUESTIONS, IF ANY, ARE MAINTAINED BY THE CHIEF FINANCIAL OFFICER. |
| FORM 990, PART VI, SECTION B, LINE 12C |
WITHIN THIRTY (30) DAYS OF THE BEGINNING OF EACH FISCAL YEAR, ALL DIRECTORS, OFFICERS AND BOARD COMMITTEE MEMBERS MUST COMPLETE A DISCLOSURE FORM REGARDING POSSIBLE CONFLICTS OF INTEREST. DISCLOSURE IS ALSO REQUIRED OF A DIRECTOR, OFFICER, EMPLOYEE AND BOARD COMMITTEE MEMBER AT ANY TIME WHEN THE INTEREST OF SUCH PERSON (OR MEMBER OF HIS OR HER FAMILY) COULD AFFECT THE ACTIVITIES, PROPERTY, EMPLOYEES, OR SERVICES OF DIRECT RELIEF, OR INVOLVES ANY POTENTIAL CONFLICT OF INTEREST AS MORE SPECIFICALLY DEFINED IN DIRECT RELIEF'S CONFLICT OF INTEREST POLICY. WHEN A DIRECTOR, OFFICER, BOARD COMMITTEE MEMBER OR EMPLOYEE HAS A CONFLICT OF INTEREST OR POTENTIAL CONFLICT OF INTEREST IN A PROPOSED TRANSACTION, THAT INDIVIDUAL SHALL RECUSE HIMSELF OR HERSELF (I.E., LEAVE THE ROOM), AND SHALL NOT PARTICIPATE IN THE DELIBERATION ON THE MERITS OF THE PROPOSAL OR THE VOTE. IN ALL CASES, THE EXISTENCE AND NATURE OF THE RELATIONSHIP OR THE CONFLICT OF INTEREST DISCLOSED, THE INTERESTED PERSON'S RECUSAL, AND THE VOTE OF THE OTHER DIRECTORS IS REFLECTED IN THE MINUTES OF THE MEETING OF THE BOARD OR APPLICABLE BOARD OR OTHER COMMITTEE. |
| FORM 990, PART VI, SECTION B, LINE 15 |
THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OVERSEES ALL COMPENSATION MATTERS ON BEHALF OF THE BOARD OF DIRECTORS. THE COMPENSATION COMMITTEE REVIEWS COMPENSATION BENCHMARKING ANALYSIS AND MAKES RECOMMENDATIONS TO THE EXECUTIVE COMMITTEE REGARDING COMPENSATION PAID TO EXECUTIVE STAFF (CEO, COO, CFO) AND OTHER KEY STAFF POSITIONS AS THEY MAY DETERMINE ARE APPROPRIATE. THE BENCHMARKING REVIEW INCLUDES A COMPARATIVE ANALYSIS OF COMPENSATION PAID BY DIRECT RELIEF TO COMPENSATION PAID BY LOCAL, SECTOR, AND NATIONAL NONPROFIT ORGANIZATIONS AS WELL AS LOCAL FOR-PROFIT ENTITIES. DECISIONS REGARDING EXECUTIVE STAFF COMPENSATION ARE THE SOLE RESPONSIBILITY OF THE BOARD OF DIRECTORS. NO MEMBER OF THE STAFF, INCLUDING THE CHIEF EXECUTIVE OFFICER, THE CHIEF OPERATING OFFICER, OR THE CHIEF FINANCIAL OFFICER, IS A MEMBER OF THE BOARD OF DIRECTORS, AND THE BOARD OF DIRECTORS MAY NOT DELEGATE THE AUTHORITY TO SET EXECUTIVE COMPENSATION TO A MEMBER OF THE EXECUTIVE STAFF. COMPENSATION OF THE CHIEF EXECUTIVE OFFICER, CHIEF OPERATING OFFICER, AND THE CHIEF FINANCIAL OFFICER WAS LAST REVIEWED BY THE COMPENSATION COMMITTEE AND THE EXECUTIVE COMMITTEE OF THE BOARD OF DIRECTORS IN SEPTEMBER 2019. |
| FORM 990, PART VI, SECTION C, LINE 19 |
DIRECT RELIEF MAKES ITS GOVERNING DOCUMENTS, CONFLICT OF INTEREST POLICY, WHISTLEBLOWER POLICY, COMPENSATION POLICY, DONATION POLICY, FINANCIAL STATEMENTS, AND FORM 990 (THE LATTER TWO GOING BACK TO FISCAL YEAR 2001) AVAILABLE TO THE PUBLIC ON ITS WEBSITE. |
| FORM 990, PART VII, SECTION A, LINE 1(A) AND SCHEDULE J, PART II: |
THE COMPENSATION REPORTED IS FOR THE CALENDAR YEAR 2018, IN LINE WITH THE FORM 990 REQUIREMENTS OF REPORTING COMPENSATION PAID OR EARNED FOR THE CALENDAR YEAR ENDING WITH OR WITHIN THE ORGANIZATION'S TAX YEAR. STAFF COMPENSATION IS GOVERNED BY ORGANIZATIONAL POLICY, AVAILABLE FOR REFERENCE ON OUR WEBSITE AT (HTTP://WWW.DIRECTRELIEF.ORG/ABOUT/FINANCE/COMPENSATION/) EXECUTIVE STAFF (CEO, COO, CFO) COMPENSATION IS DETERMINED SOLELY BY THE BOARD OF DIRECTORS. THE CEO'S COMPENSATION WAS 100% PAID FROM FUNDS PROVIDED BY THE DIRECT RELIEF FOUNDATION. |
| FORM 990, PART VIII, LINE 1G - VALUATION OF IN-KIND RESOURCES: |
DIRECT RELIEF IS THE ONLY NONPROFIT HUMANITARIAN AID ORGANIZATION IN THE UNITED STATES LICENSED TO DISTRIBUTE PHARMACEUTICAL PRODUCTS IN ALL 50 U.S. STATES, AS WELL AS THE FIRST AND ONLY NONPROFIT HUMANITARIAN AID ORGANIZATION IN THE U.S. TO BE DESIGNATED AS A VERIFIED-ACCREDITED WHOLESALE DISTRIBUTOR BY THE NATIONAL ASSOCIATION OF BOARDS OF PHARMACY. DIRECT RELIEF IS AMONG THE LARGEST-VOLUME PROVIDERS OF MEDICAL DONATIONS TO ITS PARTNERS WORLDWIDE. DIRECT RELIEF'S PROGRAMS INVOLVE A WIDE RANGE OF FUNCTIONS, SEVERAL OF WHICH REQUIRE SPECIALIZED EXPERTISE AND LICENSING. AMONG THESE FUNCTIONS ARE IDENTIFYING KEY LOCAL PROVIDERS OF HEALTH SERVICES IN SUCH AREAS; WORKING TO IDENTIFY THE UNMET NEEDS OF PEOPLE IN THE AREAS; MOBILIZING ESSENTIAL MEDICINES, SUPPLIES, AND EQUIPMENT THAT ARE REQUESTED AND APPROPRIATE FOR THE CIRCUMSTANCES; AND MANAGING THE MANY DETAILS INHERENT IN STORING, TRANSPORTING, AND DISTRIBUTING SUCH GOODS TO THE PARTNER ORGANIZATIONS IN THE MOST EFFICIENT MANNER POSSIBLE. 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. IN ASSIGNING A FAIR MARKET VALUE TO THE IN-KIND MEDICAL DONATIONS RECEIVED, DIRECT RELIEF USES A CAREFUL, CONSERVATIVE APPROACH THAT COMPLIES WITH THE RELEVANT ACCOUNTING STANDARDS, AND THE SPIRIT AND PURPOSE OF DISCLOSURE, TRANSPARENCY, AND ACCOUNTABILITY TO THE PUBLIC. SPECIFICALLY, DIRECT RELIEF USES THE FOLLOWING METHODOLOGY IN DETERMINING THE FAIR MARKET VALUE OF IN-KIND MEDICAL DONATIONS: CONTRIBUTIONS OF U.S. FOOD AND DRUG ADMINISTRATION (FDA)-APPROVED PHARMACEUTICALS, BRANDED AND GENERIC, ARE RECORDED AT ESTIMATED WHOLESALE VALUE, WHICH APPROXIMATES FAIR VALUE, ON THE DATE RECEIVED, BASED ON THE WHOLESALE ACQUISITION COST (WAC) AS PUBLISHED IN THE TRUVEN HEALTH ANALYTICS REDBOOK, AN INDUSTRY-RECOGNIZED DRUG AND PRICING REFERENCE GUIDE FOR PHARMACEUTICALS IN THE UNITED STATES. FOR THE YEAR ENDED JUNE 30TH, 2018 THE ORGANIZATION ADOPTED A POLICY OF USING MONTHLY PRICING INFORMATION AVAILABLE FROM THE REDBOOK ONLINE SERVICE PROVIDED BY TRUVEN HEALTH ANALYTICS, AN IBM WATSON HEALTH COMPANY. WAC IS THE STANDARD USED BY MANY U.S. STATES AS THE FEDERAL UPPER LIMIT PRICING FOR DRUGS PURCHASED UNDER THE MEDICAID PROGRAM. IF THE WHOLESALE VALUE IS NOT AVAILABLE IN THE ONLINE REDBOOK SOURCE, THE WHOLESALE VALUE OF THE CONTRIBUTION IS BASED ON OTHER APPROPRIATE INTERNET PRICING SOURCES. ALTERNATIVE METHODS OF VALUING A DRUG DONATION WOULD RESULT IN A HIGHER VALUATION. FOR EXAMPLE, THE COMMONLY CITED AVERAGE WHOLESALE PRICE (AWP), WHICH ALSO IS PUBLISHED IN THE REDBOOK, IS APPROXIMATELY TWENTY PERCENT HIGHER THAN WAC FOR A PARTICULAR PRODUCT, ACCORDING TO THE REDBOOK. DIRECT RELIEF DETERMINED THAT WAC IS THE MORE APPROPRIATE MEASURE. BECAUSE PRICING DIFFERENCES EXIST FOR GENERIC AND BRANDED PRODUCTS, IT IS IMPORTANT TO NOTE DIRECT RELIEF APPLIES THE WAC VALUE TO EACH SPECIFIC PRODUCT'S NATIONAL DRUG CODE, WHICH RELATES TO THE SPECIFIC MANUFACTURER AND FORMULATION OF A DRUG. THIS DISTINCTION IS SIGNIFICANT BECAUSE IT REFLECTS, FOR EXAMPLE, THE LOWER PRICE (AND FAIR MARKET VALUE) OF A GENERIC PRODUCT RECEIVED THROUGH DONATION, COMPARED TO HIGHER-PRICED BRANDED PRODUCT. FOR NON-FDA-APPROVED PHARMACEUTICALS, FOR EXAMPLE, PRODUCTS MANUFACTURED FOR USE IN NON-U.S. MARKETS, THE ORGANIZATION USES INDEPENDENT PRICING GUIDES TO DETERMINE THE FAIR MARKET VALUE OF THE PARTICULAR MANUFACTURER'S SPECIFIC FORMULATION. THE SOURCES OF SUCH PRICING INFORMATION VARY, BUT RELEVANT INFORMATION MAY INCLUDE THE PRICE PAID BY WHOLESALERS OR OTHER THIRD-PARTY BUYERS, A PRICE NEGOTIATED BY AN ORGANIZATION (SUCH AS THE CLINTON HEALTH ACCESS INITIATIVE) FOR A PARTICULAR DRUG, OR OTHER SUCH REASONABLE BASIS. CONTRIBUTIONS OF MEDICAL EQUIPMENT AND SUPPLIES ARE ALSO RECORDED AT ESTIMATED WHOLESALE VALUE BASED UPON APPROPRIATE PRICING INFORMATION ON THE SPECIFIC ITEM LISTED FOR SALE IN TRADE PUBLICATIONS, THROUGH ONLINE INTERNET PRICING GUIDES, AND THROUGH ITS OWN PROCUREMENT HISTORY WHEN PURCHASING. SUCH VALUATIONS TYPICALLY ARE SUBSTANTIALLY LOWER THAN PUBLISHED RETAIL PRICES. THE ORGANIZATION VERIFIES THE REASONABLENESS OF THIS DISCOUNTING METHODOLOGY ON AN ANNUAL BASIS. CONTRIBUTED MATERIALS, PROVIDED TO THE ORGANIZATION'S PARTNERS AROUND THE WORLD, ARE RECORDED AS AN EXPENSE AT THE SAME FAIR VALUE AS THEY WERE RECOGNIZED UPON RECEIPT AS REVENUE. DIFFERENT PRICES OF SIMILAR PRODUCTS OR SERVICES IN DIFFERENT GEOGRAPHIC AREAS CAN CAUSE CONFUSION. THE SPECIFICS OF DIRECT RELIEF'S VALUATION METHODOLOGY ARE NOTED HERE IN RECOGNITION OF THE CONFUSION THAT CAN ARISE WITH REGARD TO THE VALUE OF CONTRIBUTED GOODS AND SERVICES. ONE SOURCE OF CONFUSION STEMS FROM THE SIGNIFICANT PRICING (AND THEREFORE VALUATION) DIFFERENCES THAT EXIST IN DIFFERENT PARTS OF THE WORLD FOR SIMILAR PRODUCTS. WITH REGARD TO PHARMACEUTICAL PRODUCTS, SIGNIFICANT DIFFERENCES EXIST BETWEEN A BRANDED DRUG AND A GENERIC EQUIVALENT FORMULATION EVEN WITHIN THE SAME MARKET, INCLUDING THE U.S. BECAUSE DIRECT RELIEF OPERATES ON A GLOBAL SCALE, SUCH DIFFERENCES MUST BE CONSIDERED AND REFLECTED IN THE ACCOUNTING AND REPORTING OF CONTRIBUTIONS. OF COURSE, SIMILAR PRICING AND VALUATION DIFFERENCES ALSO EXIST FOR OTHER COMMODITIES AND SERVICES BEYOND PHARMACEUTICALS. IN THE U.S., FOR EXAMPLE, THE COMMODITY OF WATER MAY BE THE EASIEST EXAMPLE, SINCE THE PRICE THAT IS PAID FOR THE SAME COMPOUND, H2O, RANGES FROM FREE IN A PUBLIC TAP TO SEVERAL DOLLARS FOR A "BRANDED" EQUIVALENT BOTTLED QUANTITY IN A HOTEL ROOM. BUT SIMILAR PRICING DIFFERENCES EXIST FOR SERVICES AS WELL. THE OUTSOURCING AND OFF-SHORING PHENOMENA REFLECT THAT EVEN HIGHLY SKILLED SERVICES--SURGERY, COMPUTER PROGRAMMING, RESEARCH CONDUCTED BY PH.D.S--ARE DONE AT VASTLY DIFFERENT PRICES IN DIFFERENT COUNTRIES. DIRECT RELIEF'S INTERNAL PROCESSES, INFORMATION SYSTEMS, AND PUBLIC DISCLOSURES ENSURE THAT THESE DISTINCTIONS ARE CLEARLY DOCUMENTED AND THAT THE ORGANIZATION'S FINANCIAL REPORTING PRECISELY AND ACCURATELY REFLECTS THE FAIR MARKET VALUE OF THE SPECIFIC ITEMS RECEIVED THROUGH DONATION. IF A LOW-COST GENERIC MEDICATION IS RECEIVED THROUGH DONATION, ITS VALUE IS PROPERLY RECORDED AS THAT OF THE GENERIC MEDICATION. IF A MORE EXPENSIVE BRANDED PRODUCT IS RECEIVED THROUGH DONATION, ITS VALUE IS SIMILARLY PROPERLY RECORDED AS THAT OF A BRANDED PRODUCT. AS NOTED ABOVE, DIRECT RELIEF HAS LONG SOUGHT THE CONTRIBUTION OF NEEDED GOODS AND SERVICES TO USE FOR HUMANITARIAN PURPOSES BECAUSE OF THE EFFICIENCIES AND OTHER BENEFITS THAT RESULT. THE ORGANIZATION AND, MORE IMPORTANTLY, THE PEOPLE IT SERVES, BENEFIT FROM THE LOWEST-COST, MOST EFFICIENT USE OF RESOURCES. SO TOO DO FINANCIAL CONTRIBUTORS, SINCE THEIR FINANCIAL CONTRIBUTIONS ARE NOT BEING USED TO PURCHASE GOODS OR SERVICES THAT CAN BE OBTAINED DIRECTLY THROUGH DONATIONS. THEREFORE, WHEN IT COMES TO ACCOUNTING FOR, DOCUMENTING, AND REPORTING ANY CONTRIBUTIONS, IT IS VERY IMPORTANT THAT WE GET IT RIGHT. A STRONG INCENTIVE EXISTS TO USE HIGHER VALUATION SOURCES, SUCH AS RETAIL PRICES, OR USE BRANDED PRODUCT VALUES FOR GENERIC DONATIONS. HOWEVER, WE BELIEVE THAT A CONSERVATIVE APPROACH PROVIDES THE MOST ACCURATE, EASY-TO-UNDERSTAND BASIS AND IS BEST TO INSTILL PUBLIC CONFIDENCE IN OUR FINANCIAL REPORTING. |
| FORM 990, PART IX, LINE 24A: |
THE $38,677,616 INVENTORY ADJUSTMENT WAS DUE TO THE REQUIRED DESTRUCTION OF EXPIRED DONATED PRODUCT. |
| FORM 990, PART X, LINE 15, OTHER ASSETS: |
DIRECT RELIEF ACCRUES THE AMOUNTS RECEIVABLE FROM DIRECT RELIEF FOUNDATION ON AN ANNUAL BASIS. THE BALANCE DUE AS OF JUNE 30, 2019 CONSISTS OF THE FOLLOWING: PRIOR YEAR APPROVED TRANSFERS (A) $3,518,407 CURRENT YEAR APPROVED TRANSFERS $2,495,620 ACTUAL TRANSFERS TAKEN $(3,897,714) TOTAL AMOUNT RECEIVABLE AS OF JUNE 30, 2019: $2,116,313 (A) APPROVED TRANSFERS THAT ARE NOT TAKEN BY THE END OF EACH FISCAL YEAR ARE CARRIED FORWARD TO BE TAKEN IN FUTURE YEARS. |
| FORM 990, PART XI, LINE 9: |
FY19 ACCRUED DONATED FREIGHT - UNUSED IN FY19 31,167. FY19 DONATED SUBSCRIPTION - UNUSED IN FY19 -43,399. DONATED SOFTWARE 25,632. |
| SCHEDULE B, PART II, COLUMN (D): |
THE NON-CASH PROPERTY LISTED ON SCHEDULE B REFLECTS PRODUCT DONATIONS RECEIVED THROUGHOUT OUR FISCAL YEAR. THE SOFTWARE USED TO PREPARE THIS FORM DOES NOT ALLOW FOR A DATE RANGE. |
Attach to Form 990 or 990-EZ.