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April 6, 2017

13

Where does $100 to USA For UNHCR Go?

by Anne Paddock

Commercials for USA for UNHCR televising the plight of refugees across the world have been playing on various networks lately. Showing refugees – especially children – at their most vulnerable is enough to make most people pick up the phone and make a donation but beware because the most recent financial information (IRS Form 990 2015) indicates that less than 60 cents of every dollar donated to this organization goes to THE UN organization that helps refugees.

USA (United States Association) for UNHCR (United Nations High Commissioner for Refugees) is a Washington, DC-based not-for-profit 501 (c) (3) that collects donations for the UNHCR – a separate organization that provides shelter, water, food, and protection for refugees through the United Nations (UN). UNHCR is also known as the UN Refugee Agency and is a member of the United Nations Development Group which is governed by the UN General Assembly. USA for UNHCR is a basically a charitable organization in the USA that that has partnered with UNHCR to solicit and collect funds for UNHCR.

In 2015, USA for UNHCR collected $47.4 million, of which $44.9 million were cash contributions, gifts, and grants while $2.5 million were non-cash donations (marketable securities, clothing, shoes, software). Expenses totaled $41.9 million (with $39.9 million being cash expenses and $2 million non-cash grants) which means the organization spent 89% ($39.9 million) of the total revenue collected ($44.9 million). The remaining funds went in the net fund balance (like a savings account) of USA for UNHCR.

Cash contributions and cash expenses can be analyzed two ways:  by category (program, management, fundraising, grants) or by line-item with the later providing more detail on where dollars were spent.

If you donated $100 to USA for UNHCR in 2015, how much of that donation went to the refugees? The short answer is that $59 of that $100 was given in grants to UNHCR (who deducts functional expenses before using the funds) while $21 was spent on fundraising, $3 on management, $6 on programs, leaving $11 in which the organization placed in savings, as illustrated below:

$100:  Contribution

-$  21:  Fundraising

-$   3:   Management

-$   6:   Program Expenses

-$  59:  Grants

-$  89:  Subtotal Expenses

$   11:  Amount Remaining to the Fund Balance (like a savings account)

If cash expenses are looked at by line item, the $100 cash contribution was spent as follows:

$100:  Contribution

-$   8:  Compensation and Benefits

-$   8:  Office

-$   6:  Advertising

-$   4:  Other Services, Legal, and Accounting

-$   2:  Royalties

-$   1:  Merchant Fees, Dues, Subscriptions, List Costs

-$   1:  Travel and Conferences

-$ 30:  Subtotal Functional Expenses

$  70:  Amount Remaining

-$ 59:  Cash Grants

$  11:   Amount Remaining to Fund Balance (like a savings account)

As illustrated above, the amount that goes to the UN for refugees does not change but the detail shows where the rest of the donation was specifically spent.

The IRS Form 990 (2015) also reveals the following information:

15 independent contractors received more than $100,000 in compensation, most of which appear to be telemarketing, direct mail, social media, list rentals, and advertising. The most highly compensated contractors were:

  • Gabriel Group of Earth City, MO:  $2.7 million
  • M&R Strategic Services of Washington, DC:  $1.9 million
  • Direct Donor Television of Bowie, MD:  $570,000
  • PMG of Columbia, MD:  $488,500
  • Names in the News of Oakland, CA:  $396,626

What the 990 does not tell the reader is:  how much the telemarketing and direct mail firms raised, how much they retained or were compensated, and how much USA for UNHCR was provided. So, if contributions were given to telemarketing companies, then the donation was further diluted before reaching USA for UNHCR.

Outside of grants, the organization’s highest expense is for compensation and benefits for the 88 employees.  $3.5 million was spent in this category in 2015 ($8 out of every $100) of which $1.4 million was provided to 7 staff:

  • Anne-Marie Grey, Executive Director:  $346,407
  • Franklin Guerrero, Sr Director of Development:  $208,603
  • Brian Reich, Director, Digital Hive:  $193,557
  • Charles L Anderson, Sr Advisor, Program and Strategy: $186,902
  • Edward McNeal, Director, Major Gifts:  $149,819
  • Jennifer L Patterson, Director, Communications:  $154,440
  • Abraham S. Fichman, Director, Finance and Business: $131,568

USA for UNHCR paid $855,231 in royalties in 2015 but the recipient is not listed, although it appears to be the UN, UNHCR, or an organization affiliated with the UN.

No first class, charter travel, companion travel, or fees to health or social clubs were paid.

At the end of 2015, USA for UNHCR had $19.8 million in assets with $15.4 million in cash and liquid investments followed by $3.1 million in receivables and $1.2 million in prepaid expenses. Liabilities totaled $8.9 million of which $8.2 million was due to UNHCR, leaving net assets of $10.9 million (which was up from $5.4 million the prior year). The increase in net assets by more than $5.5 million was because the organization did not spend all the cash donations.

In conclusion, USA for UNHCR appears to be primarily a fundraising organization for UNHCR, giving $59 of every $100 collected to UNHCR. For donors that want dollars to go further, then they may want to consider bypassing USA for UNHCR and making a donation directly to UNHCR. Unfortunately, the website for UNHCR provides a donation link right back to USA for UNHCR – an organization they partner with to raise funds.

To read the IRS  Form 990 (2015) click here.

13 Comments Post a comment
  1. Tom bayliss
    Sep 26 2017

    Was going to donate but not after seeing these obscene salaries, these people need to go get proper jobs

  2. ctaber
    Oct 25 2017

    My concern is why they are building a reserve of millions. I don’t have enough experience to know how the salaries of the executives compare with similar operations. I expect that these are in fact “proper jobs”.
    One may make a contribution direct to UNHCR, but as stated on that org’s website, such contributions are not tax deductible in the US, hence the need for the USA non profit.

  3. Oct 25 2017

    I would also be concerned that only $59 out of every $100 is getting to UNHCR.

  4. Bob Biem
    Dec 27 2017

    I began making a small monthly donation a few months ago but after reading this I am canceling it.

  5. Richard thomas
    Mar 7 2018

    Sounds like this is all a skam for these people to make big money for themselves and have no interest in really helping any one.in my opinion why dont people start taking care of the hungry and homless in the united states and fuck the U.N they are a joke anyway they also take money and dont do jack shit.a bunch of cowards.im tired of every one wanting us to help all these other countries.let them fix their own problems

  6. Jeffrey Nelson
    Mar 17 2018

    Obsene salarys, how is that justified

  7. Julian C Krumholz
    Apr 5 2018

    The salaries do not seem out of line to me as most non profits must pay a reasonably decent salary in order to attract skilled employees. These organizations must manage large budgets, fund raise, provide services to recipients based on their mission statement. Outrageous or obscene salaries go to most players in sports, entertainers, and even televangelists, but no one complains about them. Getting the donations to the person in need requires a good network of employees, working with many different governments sometimes in hostile conditions. Who among you would want to do that work and not get compensated adequately for it? I would bet most people who are commenting here, could not and would not be able to do this work.

  8. Apr 5 2018

    Julian: I don’t think the salaries is the big issue for this non-profit because they are not excessively high. The work for this organization is FUNDRAISING. They are simply a fundraising organization that raises money for UNHCR, who actually does the program services. Based on the information USA FOR UNHCR submitted to the IRS, the big issue appears to be that only 59% of the revenue collected went to UNHCR. And,when UNHCR gets the funds, they of course deduct their overhead costs. For me, I want more than $59 of my $100 donation to go to an organization that is administering assistance.

  9. Steve Daigneault
    Apr 12 2018

    What’s not apparent behind these figures is what it takes to start a fundraising program from scratch, and what the fundraising efficiencies are like for different kinds of fundraising (major donors vs. small-dollar donors). It’s less efficient to try and get a lot of small-dollar donors, but those kinds of programs can still raise a lot of money and help an organization make an impact on their mission. Starting a new fundraising program will be more expensive, because you have to build a file of donors, which means investing more in acquisition and marketing. Also, some of these firms are telemarketing firms, which typically have a goal of covering their costs, but as a result of their work, providing the nonprofit with new donors who they can they retain. I’ll also echo that these salaries are not that high if you compare them to the for-profit world. Why would we be OK with a CEO of a company that sells hamburgers making millions, and not OK with the CEO of an organization that tries to help homeless people from making several hundred thousand dollars? How are we supposed to attract the best and brightest to solve our world’s greatest challenges if we are going to nitpick salaries? Do we criticize private companies that invest millions into their sales/marketing divisions (that’s what fundraising is – sales/marketing)? I agree it’s important to have watch-dogs over non-profits, but we should be looking primarily at the IMPACT they are making. If an org could solve the homeless problem, or hunger problem, or cure cancer – they deserve much more than the relatively modest salaries they pay vs. the salaries at private enterprises. My 2c.

  10. Apr 12 2018

    Steve:

    1. The IRS Form 990 submitted by a non-profit shows historically what the non-profit has done (balance sheet) and what they did in the given year (the income statement and other supporting forms). USA for UNHCR has been around since 1989 (as stated on the 990) so after 29 years, they should be efficient. Giving $59 out of every $100 in revenue to UNHCR does not appear to be efficient.

    2. USA for UNHCR is not a telemarketing firm. Again, the post addresses USA for UNHCR, a fundraising organization in the USA for UNHCR. They used telemarketing firms but I don’t know any donor who wants a large portion of their donation to go to telemarketers…I be willing to guess they would prefer their donation to go help the refugees. I would argue it is always better to give directly rather than through telemarketers.

    3. No opinion or conclusion was made with regards to compensation. However, there is a big distinction between private companies and non-profits who are asking for private and public donations. If McDonald’s wants to pay their CEO millions, they earned the money to pay him or her. Non-profits don’t earn the money they use…they get it from donors and often the government (taxpayer dollars). Transparency is paramount. If they want donor dollars then they need to be transparent and use those dollars as efficiently as possible.

    4. I will have to disagree with you regarding looking at just the impact. The whole picture matters. Most non-profits do very good things but they could do so much better and that is the point of the post.

  11. Steve Daigneault
    Apr 12 2018

    RE: USA for UNHCR… they may have been established in 1989, but that doesn’t mean that’s when they decided to start a small dollar fundraising program. UN agencies are not setup to raise money from donor countries like the USA, and so typically have this kind of structure. UNHCR is far behind UNICEF on this, and they’ve been making an investment into ramping up their fundraising programs. Hence, why you see their efficiency lower than UNICEF.

    RE: telemarketing… My point was to illustrate there’s more to these numbers than what you can see on an excel sheet. It costs money to acquire a donor, but that doesn’t mean it’s not valid way to grow a donor base, to support an organization.

    RE: NGO vs. for-profit… yes, transparency is important. I’d argue there’s a lot more transparency behind NGO finances vs. for-profit entities.

    RE: efficiency… yes, I agree it’s important, but it doesn’t provide the bigger picture. For ex – Dan Pollata used to organize and manage AIDS Rides across the country. He got a lot of flack because the events he put on were very expensive. But he successfully recruited and engaged many millions of people into fighting the AIDS crisis. And – he raised 10s of millions of $$ – more than any of these rides ever generated – in net revenue for NGOs. Nonprofits – pressured to be more efficient – took over running these events themselves – and what happened? They collapsed – bc they didn’t pay the same salaries, they didn’t retain the best staff, and they didn’t invest in marketing – and so the events petered out. That relentless critique of efficiency in this case essentially meant that millions of $$ no longer go to support AIDS missions in various cities.

    Listen, I agree there are a ton of issues with nonprofits – I could go on – and I agree efficiency is important – but I would urge donors to look beyond the numbers. How do the figures compare to similar peer organizations – things like size, type of work (direct relief is much easier to raise money for than advocacy, for ex), brand awareness, etc all determine how efficient the org can be. Just as important – can you find examples of accomplishments – either in press (do a google search), or in the annual report? Read speeches, watch videos of their CEO, to get a sense of priorities, and leadership. There’s so much more than needs to be considered.

    I only say this to try and give people a bit more insight – I’m speaking as a fundraiser who’s been doing this for a long time – and I can tell you that people at nonprofits don’t just sit around and collect paychecks. And fundraising is incredibly difficult to do well. Efficiency is just one small part of the equation.

  12. Apr 12 2018

    In the interest of time and space, I will add:

    1. USA for UNHCR was established as a fundraising organization in the USA in 1989 so they’ve been fundraising for a long time and should be providing more than $59 out of every $100 to UNHCR;

    2. There are always multiple ways of looking at issues. The purpose of this post is to summarize a 100 page tax return filled with information so that donors understand better where their charitable dollar are spent from a financial point of view. The 990 is not an excel spreadsheet but a rather lengthy tax return that is often difficult for people to understand without an accounting background. However, it is one of the most helpful sources of information for donors to learn how revenue is obtained and spent.

    3. I urge donors to always look at financial statements and tax returns for a variety of reasons. There are many, many non-profits whose executives fly first class, have social club dues paid, and who quite frankly waste funds (for example, there are many non-profits who raise money only to give money to other non-profits, which further dilute donor dollars. United Way is a good example of this). Donors should always have the right to scrutinize the financials of non-profits who rely on private and public donations.

    4. Efficiency – which includes financial responsibility – is a big part of the equation. Most donors would not find it efficient to make a donation through a telemarketing firm who takes 20-90% off the top. I will argue all day long that it is more efficient for the donor to bypass telemarketers, do their homework (read a 990), and make a donation directly to an organization that utilizes funds responsibly and efficiently. With regards to your example of the AIDS, I would say there were serious issues beyond efficiency if the non-profit doesn’t exist anymore because there are a lot of non-profits operating inefficiently in this country.

    5. Financials provide a vast and very big picture of what an organization does with donor dollars. Donors should ALWAYS look at the numbers. They should also consider other factors but never disregard the numbers. The financials and public transparency requirements hold the non-profits accountable.

  13. A. E. Defort
    May 20 2018

    Why does our government and legislators allow this quasi-ethical, semi-honest operation continue? I think a religious order should be offered this franchise ( they make vows of poverty which benefits directly the recipients of the gift by eliminating operating expenses) I wouldn’t give them a dam (oooops!, I meant a dime ….. not even to the UNHR etc. agency which seems to be in cahoots with the non/Fiduciary guys. USAfor blah blah bula, BETTER get volunteers whose gift would be the service to which the organizers charge in salaries to the tune of yearly income of 6 figures! An eye opener….I would never give money to such organizations but would find a ‘local and serious charity making sure that at least $ 0.97 cents of my gift dollar actually reaches the intended recipients and $ 0.03 of the gift dollars are spent in overhead. We need a couple of native new nuns and religious brothers for those tasks AND the questionable overhead expenses. Thank you for the opp to express my views, AeD, MSW

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