Where Does $100 to Save The Children Go (2019)?

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 – $550 million (or 70% of revenue) in 2019 (compared to $634 million or 76% in 2018), most of which ($501 million) were international grants to  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 (2019) submitted by Save the Children to the IRS reports the following information:

Save the Children (STC) reported total revenue of $782 million in 2019, compared to $830 million the prior year – a drop of nearly $50 million.  Most of the revenue came from contributions, gifts, and grants with $327 million from the government and $432 million from others. However, $86 million of those contributions were non-cash contributions (primarily food).

Expenses totaled $751 million (not including $3 million in depreciation) – so they spent about $30 million less than they raised. The expenses can be categorized as follows:

• $550 million (70% of revenue):  Grants
• $108 million (14% of revenue):  Compensation
• $ 48 million (6% of revenue):  Fees for Services (primarily fundraising and other fees)
• $ 20 million (3% of revenue):  Office-Related Expenses
• $  8 million (1% of revenue):  Travel and Conferences
• $  8 million (1% of revenue):  Community-Trained Labor
• $  9 million (1% of revenue):  Advertising and Promotion

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

$100:  Revenue

-$ 70 :  Grants

 $ 30   Revenue Remaining

-$ 14 :  Compensation

-$  6  :  Fees for Services

-$  3  :  Office-Related Expenses

-$  1  :  Travel and Conferences

-$  1  :  Community-Trained Labor

-$  1  :  Advertising and Promotion

-$ 26 :  Subtotal: Compensation, Fees, Office, Travel, Labor, and Advertising

 $   4:  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.  1,603 employees received $108 million in compensation which equates to an average compensation of $67,000.  328 employees received more than $100,000 in compensation with the most highly compensated employee, Carolyn S Miles, the President and CEO, receiving $608,111 in 2019.

$48 million was spent on fees for non-employees for services including $18 million for “management” with no further detail provided. $14 million was paid to fundraisers, which warrants a short discussion.

STC held 9 fundraising events that raised $8.2 million. After deducting $7.9 million of contributions (an IRS requirement), the net proceeds were $300,000. Save the Children spent $1.8 million on rent/facility costs and $700,000 on other direct expenses, which means the organization posted a net loss of $2.2 million for these events.

In 2019, STC also used mail, internet, e-mail, phone, and in-person solicitations to raise funds. Of specific interest is the fundraisers – what they raised and how much they were compensated. The 10 most highly compensated fundraisers raised $9.3 million and were compensated $11.7 million, which resulted in a net loss of $2.4 million for STC:

• Dialogue Direct, Inc of New York, NY raised $2.5 million and was compensated $4.5 million resulting in a net loss of $2 million.
• New Canvassing Experience of Austin, TX raised $1.3 million and was compensated $2.9 million resulting in a net loss of $1.6 million.
• UP Fundraising Inc, of Toronto, Ontario, Canada raised $900,000 and was compensated $2 million resulting in a net loss of $1.1 million.
• Green Planet Sales Company of Moorestown, NJ raised $300,000 and was compensated $600,000 resulting in a net loss of $300,000.
• Ways Fundraising of San Francisco, CA raised $300,000 and was compensated $500,000, resulting in a net loss of $200,000
• APPCO Group US Inc, of New York, NY raised $500,000 and was compensated $300,000, resulting in $200,000 for STC.
• Anne Lewis Strategies, LLC, of Washington, DC raised $2.1 million and was compensated $300,000, resulting in $1.8 million for STC.
• Globalfaces Direct Corp Consulting, Inc., of Toronto, Ontario, Canada raised $400,000 and was compensated $200,000, resulting in $200,000 for STC.
• Grow Fundraising and Consulting, of Chevy Chase, MD, raised $100,000 and was compensated $200,000, resulting in a net loss of $100,000.
• Amerdial Inc., of N Canton, OH raised $900,000 and was compensated $200,000, resulting in $700,000 for STC.

In summary, STC raises money worldwide to support their mission helping children. In the US, nearly $800 million is raised annually with most revenue awarded in overseas grants.  $70 out of every $100 was awarded in grants in 2019.  $26 out of every $100 covers the organization expenses.  10 fundraisers were compensated nearly $12 million for raising $9 million, which obviously leads to questions about the effectiveness of their efforts. And finally, it is important to point out that net assets increased from $220 million at the beginning of the year to $266 million at year-end because STC spent about $30 million less than they raised and also had unrealized gains on investments.

To read the IRS Form 990 (2019), click here.