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42 CHAPTER 2 ■ Reducing Tobacco Use in the United States

BU D G E T

The American Legacy Foundation—and the truth® campaign—receive the
majority of their funding as a result of the Master Settlement Agreement
(MSA), which required the major tobacco companies to pay $206 billion over
25 years to compensate U.S. states for the cost of treating citizens with
tobacco-related diseases. The American Legacy Foundation was created out of
an MSA mandate that a national charitable foundation be created with the
mission to help “prevent diseases associated with the use of tobacco products
in the states.”
A National Public Education Fund provided approximately 74% of the
foundation’s overall funding through 2005. This means that approximately $300
million in annual payments from the settling states to the American Legacy
Foundation’s National Public Education Fund have been suspended, thus pro-
ducing a “funding cliff” that has dramatically affected the size and scope of the
foundation’s lifesaving programs.
Spending for the truth® Campaign reached a high in 2001, when the
promotional budget was between $90 and $100 million. For 2008, the
total promotional budget fell to between $35 and $40 million. Although
that sounds like a lot of money, in comparison to what the tobacco industry
spends it is actually very little. According to the Federal Trade Commission
(FTC), the tobacco industry spent more than $13 billion in 2005 to market
and promote its products in the United States alone—about $36 million
per day—roughly equivalent to truth®’s budget for the year. truth® can
never match that level of spending, so it strives to break through and be
more cutting edge in order to effectively reach teens. With declining budg-
ets, truth® is always looking for mutually beneficial partnerships that
allow the campaign to further extend its lifesaving work and reach more
teens.
The U.S. Centers for Disease Control and Prevention (CDC) is now (as of
2008) a key partner in further extending the reach of the truth® Campaign.
Through a three-year, $3.6 million matching grant from the CDC awarded in
2006, the campaign increased its advertising in 18 states and 41 cities, reaching a
broader range of youth, including young people in rural and surrounding
smaller communities that typically have less exposure to the campaign because
of low cable television penetration. The CDC renewed its grant with the foun-
dation for a second phase of truth® advertising, allowing even more rural teens
to be exposed to truth® advertising. A second component of the grant funds
youth prevention-related grants at the community level.