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November 13, 2015

World Vision International: Revenue and Expenses

by Anne Paddock

World Vision International (WVI) is an evangelical christian humanitarian aid, development, and advocacy organization that works with children, families, communities, and organizations throughout the world. Established in 1977 by Walter Stanley Mooneyham, the then president of World Vision, Inc. (which was established in 1950 by Robert Pierce to meet the emergency needs of missionaries), WVI is a 501 (c) (3) religious non-profit corporation under the laws of California.

WVI is not required to file an IRS Form 990 because the organization is considered a church. Instead, WVI issues an Accountability Report annually which provides basic and limited financial information about the organization. WVI also makes available audited financial statements but these statements lack specific expense information of programs (total dollar figures to programs are provided as opposed to a breakdown of costs within the program) – a key to understanding where donation dollars are spent.

To better understand the revenue and expenses of WVI, four topics are analyzed below:

  • Revenue
  • Administrative and Fundraising Costs
  • Program Costs
  • Employee Information

Each of these areas provides a window (some more than others) into the revenue collected and revenue spent but none tell the full story singularly or collectively because WVI does not file the IRS Form 990 or reveal expense information of each program funded by contributions. That said, the information provided raises questions, as outlined below:

Revenue

The WVI Accountability Report (2014) reveals $2.8 billion in revenue was collected, of which $490 million (18%) were food and non-cash (gifts in kind) contributions while $2.31 billion (82%) was cash income.

The geographic source of all contributions were:

  • United States ($1 billion or 36%) – World Vison, Inc. (WV Inc)
  • Asia and the Pacific ($491 million or 18%))
  • Australia/New Zealand ($397 million or 14%)
  • Europe ($367 million or 13%)
  • Canada ($382 million or 14%)
  • Field Offices ($129 million or 5%)

The geographic source of the cash contributions – $2.31 billion – were:

  • United States ($746 million or 27%) – World Vision Inc. (WV Inc.)
  • Asia and the Pacific ($469 million or 17%)
  • Australia/New Zealand ($343 million or 12%)
  • Europe ($339 million or 12%)
  • Canada ($291 million or 10%)
  • Field Offices ($125 million or 5%)

The geographic source of non-cash contributions – $490 million – were:

  • United States ($291  million or 59%) – World Vision Inc. (WV Inc.)
  • Asia and the Pacific ($22 million or 5%)
  • Australia/New Zealand ($54 million or 11%)
  • Europe ($28 million or 6%)
  • Canada ($91 million or 18%)
  • Field Offices ($4 million or 1%)

The largest revenue source is through sponsorship ($1.354 billion to sponsor 3,411,861 children which equates to about $400 per child). Nearly half (48%) of the total contributions made to WVI were for sponsoring children. WVI does not provide specific information as to what portion of these funds were spent on services or goods to the sponsored children. Other private donations totaled $566 million (20%) while public donations were $394 million (14%). Food and gifts in kind were $490 million (18%).

What WVI does provide is a look at the US fundraising affiliate (World Vision, Inc. or WV Inc.) and the most specific financial information (via the IRS Form 990) on the arm that raises more than a third (approximately $1 billion of which 30% were non-cash contributions and 70% cash ) of total contributions ($2.8 billion) for WVI. In other words, the information on the IRS Form 990 for WV Inc. provides revenue and expense information on the largest (geographic) source of revenue for WVI, from which estimates for the whole organization (WVI) can be made based on extrapolation.

Administrative and Fundraising Costs

In 2014, WV Inc. reported $197 million (approximately 28% of the cash collected) in administrative and support expenses (of which $6 million was depreciation, a non-cash expense) 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

The argument that non-cash contributions also require time and should therefore be included in analyzing administrative and support expenses means that WV Inc. spent $197 million – about 20% of total contributions or both cash and non-cash contributions – in administrative and support expenses to raise $1 billion dollars in contributions. The remaining five regions collected a total of $1.8 billion ($1.6 billion in cash and $200 million in food and gifts in kind). If these regions were as efficient as the US fundraising affiliate (WV Inc), then $360 million ($1.8 billion times 20%) would have been spent to raise the $1.8 billion for a total of $557 million  ($197 million plus $360 million).

In the Accountability Report, WVI reports that $450 million was spent on administrative and fundraising expenses for the whole organization. If this figure represents all the administrative and fundraising costs of raising $2.8 billion, then the administrative and fundraising expenses reported by WV Inc -$197 million – to raise $1 billion is high compared to the other regions. $450 million less $197 million is $253 million – the amount of administrative and fundraising expenses that would have been spent to raise $1.8 billion in the remaining five regions. $253 million is 14% of $1.8 billion which begs the question: why are administrative and fundraising expenses on a percentage basis (20%) so much higher in the US than the rest of the world (14%)?

Program Costs

The Accountability Report states that $2.33 billion was spent on development, relief, and rehabilitative programs and $30 million on community education and advocacy. The largest missing piece of information is the administrative and support expenses for the development, relief, and rehabilitative programs. These figures are simply not provided but are needed to ascertain what portion of your donation is going to the needy. This is the link needed to truly understand where cash donations are being spent. Without program costs, only estimates can be made.

If 20% of the amount donated to a program is spent on administrative and support functions, then $466 million of the $2.33 billion would be spent on administrative and support, leaving $1.87 billion to the needy. If 30% of the amount donated to a program is spent on administrative and support functions ($700 million of the $2.33 billion) then $1.63 billion would go to the needy. Applying these estimates to the whole organization means that of the $2.8 billion collected, $2.33 billion was distributed to programs of which $1.63 – $1.87 billion could have been given to the needy or somewhere between 58%- 67% of the amount collected (or 58 – 67 cents of every dollar). But, again there is no way to know without program costs provided by WVI.

Employee Information

WVI is a huge organization with nearly 46,000 employees, of which 41,500 are full-time, 804 are part-time and 3,328 are temporary. The organization also had 23,000 volunteers. 33,211 employees are in field offices, 6,211 in VisionFund International, and 6,771 are in Global Centre and Support Offices (with the largest in the USA, Taiwan, South Korea, Australia, and Canada. 233 of these staff members received more than $100,000 in compensation but we don’t know how much over $100,000.

The Accountability Reports indicate Kevin Jenkins, President received 406 British pounds in 2013 and 415 British pounds in 2012. Using exchange rates at the time, Mr. Jenkins compensation was approximately $660,000. However, the IRS Form 990 submitted by VisionFund International reports Mr. Jenkins was paid more than $850,000 in 2013 and more than $775,000 in 2012 from related organizations.

WVI does not release the amount spent on employee compensation except for a few key employees and outside contractors (33 independent contractors received more than  $100,000 with the four largest given $12.3 million). If the average compensation package of full-time employees (41,500) was $25,000, then $1.1 billion was spent on employee compensation. If the average full-time employee compensation package was $35,000, then $1.5 billion went to compensation. Applying these figures to the big picture means that of the $2.8 billion collected, $1.3 – $1.7 billion is left for other administrative and support functions (rent, legal, accounting, fundraising, travel, etc) and the needy, or 46% – 61% (or 46 to 61 cents of every dollar).

In closing, the Accountability Report lacks key information needed to understand the finances of one of the world’s largest charitable organizations. The administrative and support costs of managing each program should be revealed to the public if the organization expects to be supported by public donations. Transparency should be front and center.

Click here to read the 2014 Accountability Report of WVI

Click here to read the 2013 Accountability Report of WVI

Click here to read the 2014 audited financial statements of WVI

Click here to read the 2013 audited financial statements of WVI

Click here to read the 2014 IRS Form 990 of WV Inc.

Click here to read the 2013 IRS Form 990 of WV Inc.

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