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December 28, 2020

Where Does $100 to Save The Children Go (2018)?

by Anne Paddock

The Save the Children Fund is one of the most recognizable charitable organizations in the world. Established more than 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 – $634 million (or 76% of revenue) in 2018 (compared to $69% in 2017), most of which ($589 million) were international grants to 41 recognized charitable organizations. So, it’s fair to say the US organization is primarily concerned with raising funds to award grants overseas.

The IRS Form 990 (2018) submitted by Save the Children to the IRS reports the following information:

Save the Children (STC) reported total revenue of $830 million in 2018, compared to $760 million the prior year.  Most of the revenue came from contributions, gifts, and grants with $321 million from the government and $495 million from others. However, $133 million of those contributions were non-cash contributions (primarily food).

Expenses totaled $834 million (not including $2 million in depreciation) – so they spent $4 million more (less than a half of 1% of revenue) than they raised but they have more than $200 million in net assets so slightly overspending is not a big issue) and can be categorized as follows:

  • $634 million (76% of revenue):  Grants
  • $107 million (13% of revenue):  Compensation
  • $ 46 million (6% of revenue):  Fees for Services (primarily fundraising and other fees)
  • $ 20 million (2% of revenue):  Office-Related Expenses
  • $ 10 million (1% of revenue):  Travel and Conferences
  • $  9 million (1% of revenue):  Community-Trained Labor
  • $  8 million (1% of revenue):  Advertising and Promotion

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

$100:  Revenue

-$ 76:  Grants

 $ 24:  Revenue Remaining

-$ 13:  Compensation

-$  6:  Fees for Services

-$  2:  Office-Related Expenses

-$  1:  Travel and Conferences

-$  1:  Community-Trained Labor

-$  8:  Advertising and Promotion

-$ 24:  Subtotal: Compensation, Fees, Office, Travel, Labor, and Advertising

$   0:  Remaining Revenue

As illustrated above, the largest expense is grants with the majority awarded overseas in Sub Saharan Africa and Asia.  Compensation is the second largest expense.  1,683 employees received $107 million in compensation which equates to an average compensation of $64,000.  However, 258 employees received more than $100,000 in compensation with the most highly compensated employee, Carolyn S Miles, the President and CEO, receiving $558,769 in 2018.

$46 million was spent on fees for non-employees for services. $13 million was paid to fundraisers, which warrants a short discussion. The 10 most highly compensated fundraisers raised $10 million and were compensated $13 million, which resulted in a net loss of $3 million for STC:

  • $2.5 million raised by Donor Services Group, LLC, of LA, CA who retained $350,000, netting STC $2.150 million.
  • $1.7 million raised by Dialogue Direct Inc, of NY, NY, who was compensated $3.4 million, netting STC a loss of $1.7 million.
  • $1.6 million raised by New Canvassing Experience, Inc., of Austin, TX, who was compensated $3.2 million, netting STC a loss of $1.6 million.
  • $900,000 raised by MDS Communications Corp, of Mesa, AZ, who was compensated $850,00, netting STC about $50,000.
  • $700,000 raised by Ways Fundraising, of San Francisco, CA, who was compensated $1.5 million, netting STC a loss of $800,000.
  • $700,000 by Blue State Digital, Inc., of NY, NY, who was compensated $250,000, netting STC $450,000.
  • $650,000 raised by Up Fundraising, Inc., of Toronto, Ontario, Canada, who was compensated $1.6 million, netting STC  a loss of $950,000.
  • $600,000 raised by APPCO Group US, Inc., of NY, NY, who was compensated $1.5 million, netting STC a loss of $1 million.
  • $600,000 raised by Donor Care Center, Inc., of Barberton, OH, who was compensated $150,000, netting SSTC $450,000.
  • $100,000 raised by Grow Fundraising, of Silver Spring, MD, who was compensated $200,000, netting STC a loss of $100,000.

In summary, STC raises money worldwide to support their mission helping children. In the US, nearly $1 billion is raised annually with most revenue awarded in overseas grants.  $76 out of every $100 is awarded in grants.  $24 out of every $100 covers the organization expenses.  10 fundraisers were compensated $13 million for raising $10 million, which obviously leads to questions about the effectiveness of their efforts. And finally, it is important to point out that net assets declined by $20 million from $241 million at the beginning of the year to $220 million at year-end for two reasons:  a $15 million unrealized loss on investments; and because the organization spent a few million more than they raised.

To read the IRS Form 990 (2018), click here.

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