Where Does $100 to Save The Children Go (2020)?

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 “85% 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.  And, finally it is important to point out that Save the Children has accumulated $324 million by 2020, which was done by saving revenue, not spending it.  In 2019 and 2020, Save the Children put $28 million and $43 million, respectively in the general fund.  Writing that the allocation of these funds to the general fund is “program services” is a bit of a stretch.

Of prime importance is understanding 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 – $551 million (or 68% of revenue) in 2020 (compared to $550 million or 70% in 2019), most of which ($495 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 (2020) submitted by Save the Children to the IRS reports the following information:

Save the Children (STC) reported total revenue of $809 million in 2020 (compared to $782 million in 2019 and $830 million in 2018).  Most of the revenue came from contributions, gifts, and grants with $324 million from the government and $464 million from others. However, $81 million of those contributions were non-cash contributions (primarily food).

Expenses totaled $763 million (not including $3 million in depreciation) – so they spent about $46 million less than they raised. The expenses can be categorized as follows:

• $551 million (68% of revenue):  Grants
• $111 million (14% of revenue):  Compensation
• $ 42 million (5% of revenue):  Fees for Services (primarily fundraising and other fees)
• $ 20 million (3% of revenue):  Office-Related Expenses
• $ 16 million (2% of revenue):  Advertising and Promotion
• $ 12 million (1% of revenue):  Community-Trained Labor
• $  9 million (1% of revenue):  Commodities and Freight
• $  2 million (<1% of revenue):  Travel and Conferences

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

$100:  Revenue

-$ 68 :  Grants

 $ 32:  Revenue Remaining

-$ 14 :  Compensation

-$  5:  Fees for Services

-$  3:  Office-Related Expenses

-$  2:  Advertising and Promotion

-$  1:  Commodities and Freight

-$  1:  Community-Trained Labor

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

 $   6:  Remaining Revenue:  To General Fund

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. 1,469 employees received $111 million in compensation which equates to an average compensation of $76,000.  327 employees received more than $100,000 in compensation with the most highly compensated employee, Janti Soeripto, the President and CEO, receiving $512,332 in 2020.

$42 million was spent on fees for non-employees for services including $20 million for “management” with no further detail provided and $13 million for “other” services. $5 million was paid to fundraisers, which warrants a short discussion.

STC held 10 fundraising events that raised $2.2 million. After deducting $2.2 million of contributions (an IRS requirement), the net proceeds were nearly $0. Save the Children spent $340,000 on rent/facility costs and other direct expenses, which means the organization posted a net loss for these events.

In 2020, 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 $10 million and were compensated $5 million, netting STC $5 million.

• Dialogue Direct, Inc of New York, NY raised $800,000 and was compensated $1.1 million resulting in a net loss of $300,000.
• New Canvassing Experience of Austin, TX raised $800,000 and was compensated $1.2 million resulting in a net loss of $400,000.
• UP Fundraising Inc, of Toronto, Ontario, Canada raised $170,000 and was compensated $35,000 resulting in $35,000 for STC.
• Green Planet Sales Company of Moorestown, NJ raised $135,000 and was compensated $220,000 resulting in $85,000 for STC.
• APPCO Group US Inc, of New York, NY raised $320,000 and was compensated $390,000, resulting in a loss of $70,000 for STC.
• Anne Lewis Strategies, LLC, of Washington, DC raised $1.2 million and was compensated $600,000, resulting in $600,000 million for STC.
• Grow Fundraising and Consulting, of Chevy Chase, MD, raised $230,000 and was compensated $290,000, resulting in a net loss of $60,000.
• Amerdial Inc., of N Canton, OH raised $1.9 million and was compensated $300,000, resulting in $1.6 million for STC.
• Thompson, Habib, and Denison, of Lincoln, MA raised $2.9 million and was compensated $200,000, netting $2.7 million for STC.
• MDS Communications Corp, of Mesa, AZ raised $1.6 million and was compensated $900000, netting $700,000 for STC.

In summary, STC raises money worldwide to support their mission helping children. In the US, $800 million is raised annually with most revenue awarded in overseas grants.  $68 out of every $100 was awarded in grants in 2020.  $26 out of every $100 covers the organization expenses.  10 fundraisers were compensated nearly $5 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 increased from $220 million at the beginning of 2019 to $266 million at year-end 2019 to $324 million at year-end 2020 because STC spent less than they raised and also had unrealized gains on investments.