Top 25 Philadelphia-based accounting firm ParenteBeard has made its list—and checked it twice—of all Santa’s expenses ahead of this holiday season.
In balancing the books of the largest imaginary nonprofit in the world, Santa, Inc., the firm’s financial experts found that the North Pole-based organization’s annual operating costs would amount to more than $42 billion.
“Children around the world are dazzled by Santa Claus and many parents are asked exactly how Santa’s workshop operates,” said Jeffrey Ferro, ParenteBeard president, in a statement. “As experts, we thought why not determine what it would cost to run Santa’s North Pole operation.”
A breakdown of ParenteBeard’s by-the-numbers analysis:
Gift production: $39.5 billion
ParenteBeard determined there are approximately 526 million kids under the age of 14 who presumably celebrate Christmas and estimated an average $75 value for each gift, costing Santa, Inc. roughly $39.5 billion to produce one gift for every child.
Employee costs: $2.77 billion
Employee Salaries: $2 billion
Then, ParenteBeard reviewed the cost of employing the elves. Without knowledge of the number of elves needed to produce a world’s supply of toys, never before revealed, the firm speculates Santa would need 50,000. ParenteBeard then discovered the average salary for a toymaker in the United States to be $35,859 and, after adjusting for “Santa’s kindhearted spirit,” estimated he pays annual salaries of $40,000, adding up to $2 billion.
Health benefits: $773 million
The firm calculated that the average health care plan for an employer the size of Santa, Inc. to work out to $15,475 per employee, assuming they were on a family plan.
Electricity costs: $98 million
Assuming that Santa Inc.’s workshop is double the size of the world’s largest manufacturing plant, ParenteBeard estimates that 8.6 million square feet of space would have to be powered, meaning 95.1 kWh of electricity per square foot annually. The cost of electricity per kWh in the country’s northernmost city, Barrow, Alaska, is $0.12, the firm discovered, amounting to an annual bill of $98 million.
Reindeer costs: $54,000
By comparing reindeer to horses, based on similarity of food and veterinary bills, ParenteBeard calculated an annual ownership cost of $6,000 per reindeer.
Total Cost to Operate Santa, Inc.: $42.3 billion
Once ParenteBeard arrived at the final operating cost, the firm determined that Santa, Inc. would likely be incorporated as a private foundation. If this nonprofit status was achieved, the firm has two recommendations: avoid self-dealing and impose salary limits.
“Although nonprofits are tax exempt, they still have risks to consider,” stated Julius Green, practice leader for ParenteBeard’s exempt organization tax group. “Santa still needs to be careful about how he distributes payments and how he runs his operation. Hopefully, he has a trusted business and tax advisor he can rely on.”
A full breakdown of ParenteBeard’s Santa, Inc. audit and the sourced information is included in the graphic below.