Where does your $1 to World Vision go?

World Vision – a Christian humanitarian organization – is one of the most complicated charitable entities to understand because many people believe that World Vision is one entity when in fact, there are many “World Vision” organizations under the legal umbrella of World Vision International (WVI) which was established in 1977 as a non-profit religious organization in California but whose executive offices are in England.

Because WVI is a “church,” they are not required to file the IRS Form 990 filed by most US-registered tax-exempt organizations although two of their subsidiaries – the US fundraising affiliate –World Vision, Inc. (WV Inc) which was established in 1950 – and the microfinance affiliate – VisionFund International – file a form 990 for the “benefit of its US donors.”

WVI collected $2.8 billion in 2014, $1.034 billion of which came from the US fundraising affiliate, WV Inc of which $311 million (30%) were non-cash contributions (food books, medical supplies, etc.) and the remaining $723 million (70%) in cash (primarily contributions, grants, dues, etc). To best understand the income and expense stream of WV Inc., non-cash revenue and non-cash expenses (contributions) need to be netted out of the analysis (both were basically the same with $311 million collected and $308 million disbursed), leaving an analysis of the $723 million in revenue as the focus of how the charity uses cash donations.

WV Inc. reported $1,026 billion in expenses (about $8 million less than they collected in revenue and goods). If the $308 million in non-cash contributions are deducted out, $718 million is what was spent, of which $6 million was depreciation (a non-cash expense) leaving $712 million spent as follows:

• $100 million (14%) for salaries, benefits, pension, payroll taxes
• $36 million (5%) for office, occupancy, IT, and repairs
• $26 million (4%) for other (no detail provided) expenses
• $20 million (3%) for professional fundraising and advertising
• $8 million (1%) for travel, conferences, meetings, etc
• $7 million (1%) for legal, accounting, lobbying, bank and investment fees
• $511 million (71.5%) was given to entities controlled by WVI outside the US while $4 million (0.5%) was allocated among 85 US non-profit 501(c) (3) organizations with some of the largest amounts to Jubilee Youth Ranch ($910,000), Sojourners – Religious Media ($370,000), Manor Brethren in Christ ($210,000), Stephens Children Foundation, Inc ($150,440), Lancaster Bible College ($150,000), Carter Memorial United Methodist Church ($111,000), numerous $100,000 donations to churches and ministries, and the Pittsburgh Opera ($49,550). The states where the most donations are made to non-profits are Washington ($1.3 million) and Pennsylvania ($700,000) followed by the District of Columbia ($390,000) and Oregon ($360,000).

Other interesting points include:

• $3.3 million was paid to 13 employees ranging from $203,000 to $521,000;
• 140 employees received more than $100,000 in compensation;
• 87 independent contractors received more than $100,000 in compensation including $8 million to Family Christian Stores for sponsorship, $6.7 million to Kaye Smith Business Graphics for marketing, $5.9 million to Russ Reid Company for marketing, $4 million to Targetcast TCM for marketing, and $2.5 million to Newsong Ministries for sponsorship.

WV Inc. claims on their website that “when you give $1 to World Vision, 60 cents goes right to local programs while 40 cents is invested in global systems.” However, a review of the organization’s most recent IRS Form 990 (representing the period between Oct 1, 2013 and Sept 30, 2014) reveals a $1 donation to WV Inc. was spent as follows:

$1.00:  Donation

-$0.14:  Salaries, Benefits, Pension, Payroll Taxes

-$0.05:  Office, Occupancy, IT, Repairs

-$0.04: Other unexplained Expenses

-$0.03: Professional Fundraising and Advertising

-$0.01: Travel, Conferences, Meetings

-$0.01:  Legal, Accounting, Lobbying, Bank, and Investment Fees

-$0.28: Overhead expenses

$0.72: Provided to Programs – mostly affiliates of WVI overseas

The above table indicates that approximately 72 cents of every dollar is given to “PROGRAMS“ which presents an additional  layer of overhead expenses – management, salaries, benefits, pensions, office, travel, accounting, legal, etc. – not reported on the tax return. For example, $511 million was disbursed to 36 international offices/affiliates of WVI for advocacy, economic development, education services, sponsorship, religious radio, christian services, and international relief. These funds were not given to disburse to the needy but taken (often in large amounts – $263 million, $238 million) and administered through the WVI program offices which have staff and overhead expenses not reported on the IRS Form 990. A more transparent and forthcoming reporting method would show how much revenue is used in each program for management, administration, office, fundraising, and overhead expenses, and then how much is provided to the needy in terms of financial assistance, goods, and services.

For US-based donations, WV Inc. donated about $4 million to 85 non-profit organizations in the United States. Each of these organizations (schools, churches, ministries, community foundations, opera, human service, leadership, and development organizations has their own set of overhead to cover which means a donation would have had more impact if donated directly to one of these 85 organizations than through WV Inc., which had its own overhead expenses to cover before disbursing funds to these organizations. These organizations received 72 cents of each dollar given.

The bottom line: 28 cents of every dollar donated to WV Inc is spent on the fist layer of administration and management. 72 cents is disbursed to programs which also have their own unknown administrative and overhead expenses. If we assume the program offices spend 20% of the dollars given to them on administration and overhead, then another 20 cents is spent leaving 52 cents for the needy  (half of your $1 donation) – but there is no way of knowing unless WVI or WV Inc releases the financial information of their programs.

In closing, it is important to note that WVI and its affiliates do good deeds but can this organization be more efficient and effective in using donation dollars? That’s the billion dollar question.

To read the complete 2013 IRS Form 990 (for the year October 1, 2013 to September 30, 2014) filed by World Vision Inc. click here.