Scientology's secular fronts: Trademark/royalty/license fees

Contents

• Royalties generated from Scientology's secular fronts
• Unidentified sources of royalties
• Methodology
• Source data

Royalties generated from Scientology's secular fronts

Scientology's secular fronts are known to pay royalties (also referred as "trademark" or "license" fees) in order to use L. Ron Hubbard's "tech" in their activities. As an example, Narconon centers are contractually obligated to pay 10% of their revenue (donations included, and before program costs!) to Narconon International:

Narconon International ("Narconon") itself must pay trademark license fees to Association for Better Living and Education ("ABLE".)

Scientology's secular fronts are sources of fresh funds, by mean of royalties charged for these "secular" activities, aside being also conveniently used for recruiting purpose.

How much royalties are generated through the activities of Scientology's secular fronts? Although the 990 filings are available, the task of figuring how much royalties are generated is made more difficult by the fact that many Scientology fronts are just intermediates that collect royalties on one hand, and pay royalties with the other, without generating any in a significant manner.

But this is not an impossible task, and according to the 990 filings of Scientology's secular fronts that have been collected so far, here are some answers:

	2007 (in progress)	2006 (almost complete)	2005	2004	2003	2002
Royalties generated from known activities	404,288	5,594,531	5,214,519	4,319,487	3,643,331	3,180,689
Royalties generated from unidentified activities	-3,734	3,229,187	2,785,043	781,851	810,845	530,815
Royalties generated overall	400,554	8,823,718	7,999,562	5,101,338	4,454,176	3,711,504
Royalties generated overall - growth from previous year	-95.5%	10.3%	56.8%	14.5%	20.0%

Unidentified sources of royalties

For each year for which we compiled data, there are always royalties for which the source can't be identified. Possible reasons for these unidentified sources of royalties:

• Not all 990 filings have been collected so far;
• These unidentified source of royalties might be Scientology-related entities located in other countries, for which we have no financial statements;
• Royalties are earned from entities which are not registered as charities. An example of this are private clinics offering Scientology's "Purification Rundown" procedure. Examples of such private clinics are BWell Clinic, Bio Cleansing Centers, etc.

Because of these reasons, it will hardly ever be possible to identify for sure all the sources of royalties. However, as can be seen, in 2005 there was a significant jump in royalties which source can't be identified — 36% of overall royalties — while the proportion of unidentified royalties in the previous years was fairly constant, at roughly under 20% of overall royalties.

What happened in 2005 to justify this sharp jump in unidentified royalties?

A first step is to figure under which Scientology umbrellas are these unidentified sources of royalties. To get there, we have to make a few reasonable assumptions:

• Narconon-related entities all send their reported royalty/trademark/license fees to Narconon International;
• Applied Scholastics-related entities all send their reported royalty/trademark/license fees to Applied Scholastics International;
• Association for Better Living and Education International ("ABLE") receives royalties from Narconon International, Applied Scholastics International ("ASI"), The Way To Happiness Foundation International ("TWTH"), and Foundation for Advancements in Science and Education ("FASE");

Given these reasonable assumptions, here are estimates for 2005 (2004 figures included for comparison purpose):

Although there are good hypotheses toward explaining why we can't identified all the sources of royalties, the sharp increase of these unidentified sources in 2005 is more difficult to explain. Further research is needed, but as of now, I am considering that some expenses on many Scientology entities were not reported as royalties, while the receiving entities reported these as royalties. More to come.

Methodology

To calculate the overall royalties generated from known activities (the 990 filings we have collected so far), we have to consider only the Scientology fronts which end up effectively paying royalties, and ignore entirely the entities which collects more than they pay.

To calculate the royalties generated from unknown activities, we have to calculate the difference between the aggregate royalties collected and the aggregate royalties paid. The result should be zero if the sources of all the royalties were known and documented.

To calculate the  overall royalties generated, it is simply a matter of adding the amounts of royalties from both known and unknown activities.

Collecting more financial data could allow to identify more activities where royalties are generated and thus reduce the "unknown activities" figure.

Since the most important fronts are included (ABLE, Applied Scholastics International, Narconon International, The Way To Happiness Foundation International), I think the figures we have for the "overall generated royalties" from the activities of the Scientology fronts worldwide should be close to reality.