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November 16, 2018

Where Does $100 to Save the Children Go?

by Anne Paddock

The Save the Children Fund is one of the most recognizable charitable organizations in the world. Established nearly a hundred years ago in 1919, the organization is legally known as Save the Children Federation, Inc. in the United States, but is often simply referred to as “Save the Children.”

On the Save the Children website (www.savethechildren.org), the organization reports that “86% of all expenditures went to program services” with the key word being “expenditures.”  Expenses are normally analyzed as a percentage of revenue, not as a percentage of total expenditures because both parts of the equation – revenue and expenses – are important to understand how an organization is operating. Without revenue, it doesn’t matter how much of an organization’s expenditures were spent in a single category.  Both sides of the equation have to be considered.  In addition, most people want to know how their charitable contribution (which is revenue) was spent. In order to know this, an analysis has to include the revenue collected and the revenue spent.

In addition, it is very important to understand what an organization does. Save the Children in the US is one of 29 worldwide organizations that support Save the Children International, based in England, and are part of the Save the Children Alliance.  In the US, Save the Children’s largest expenditure is grants – $528 million (or 69% of revenue), most of which ($499 million) were international grants. So, it is fair to say the US organization is primarily concerned with raising funds to award grants overseas.

The IRS Form 990 (2017) submitted by Save the Children to the IRS reports the following information:

$760 million in revenue was collected, of which $420 million (or 55% of revenue) came from contributions and fundraisers, $322 million (42% of revenue) from government grants, and $16 million (3% of revenue) from investment income, capital gains, and service contracts. Nearly $67 million of the total contributions were non-cash contributions (i.e. food, drugs, medical supplies).

$720 million (or 95% of revenue) was used for expenditures (expenses) in four broad categories (grants, program services, management, and fundraising) or in specific line item categories (i.e. grants, compensation, travel, occupancy, fees for services, grants, advertising, etc). Both approaches are beneficial with the former providing a broad overview of how Save the Children spent revenue while the latter provides specific information on expenses across the board.

The unspent revenue -$40 million – was added to the net fund balance which grew from $183 million at the beginning of the year to $241 million at year-end. The reason the net fund balance grew more than $40 million is because the organization had $17 million in net unrealized gains on investments.

Expenses by Broad Category (Program Services, Grants, Management, Fundraising)

The $720 million in expenses were reported in the following categories:

  • $528 million (or 69% of revenue):  Grants
  • $ 96 million (or 13% of revenue):  Program Services
  • $ 57 million (or 8% of revenue):  Fundraising
  • $ 38 million (or 5% of revenue):  Management

Using the above information, $100 in revenue was spent as follows:

 $100:  Revenue

-$ 69:  Grants

-$ 13:  Program Services

-$ 82:  Subtotal of Grants and Program Services

$ 18: Amount Remaining

-$  8:  Fundraising

-$  5:  Management

$   5:  Amount Remaining:  To Fund Balance

As illustrated above, 82% or $82 out of every $100 received was used for grants and program services.

Expenses by Specific Line Item Category

The $720 million in expenses were reported in the following specific line item categories:

  • $528 million (69% of revenue):  Grants
  • $103 million (14% of revenue):  Compensation, Benefits, Pension, Payroll Taxes
  • $ 31 million (4% of revenue):  Fees (Management, Fundraising, Legal, Accounting, Investment, Lobbying)
  • $ 19 million (3% of revenue):  Office, Occupancy, IT, Insurance, Etc
  • $ 13 million (2% of revenue):  Community Labor and Training
  • $ 10 million (1% of revenue):  Travel
  • $ 10 million (1% of revenue):  Other Fees for Services
  • $  6 million (1% of revenue):  Advertising

Using the above information, $100 in revenue was spent as follows:

$100:  Revenue

-$ 69:  Grants

$ 31:  Amount Remaining

-$ 14:  Compensation, Benefits, Pension, Payroll Taxes

-$  4:  Fees (Management, Fundraising,Legal, Accounting, Investment, Lobbying)

-$  3:  Office, Occupancy, IT, Insurance, Etc.

-$  2:  Community Labor and Training

-$  1:  Travel

-$  1:  Other Fees for Services

-$  1:  Advertising

-$ 26: Total:  Compensation, Fees, Labor, Travel, Other Fees, and Advertising

 $   5:  Revenue Remaining:  To Fund Balance

As illustrated above, Save the Children spent the largest portion of revenue  (69%) on grants. $26 out of every $100 was spent on staff compensation, fees for services ($10 million of which is not detailed), office-related expenses, travel, and advertising.

In summary, Save the Children in the US is primarily engaged in raising funds to fund grants overseas. $69 out of every $100 in 2017 was awarded in grants. $26 was spent on the other expenses which support the organization, and $5 was placed in the net fund assets (savings).

To read the IRS Form 990 (2017) for Save the Children, click here.

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