Where Does $100 to Save the Children Go (2021)?

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 $361 million by 2021 (compared to $324 million in 2020), which was done by saving revenue, not spending it.  Between 2019-2021 Save the Children added  more than $140 million to 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 30 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 – $645 million (or 71% of revenue) in 2021, most of which ($576 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 (2021) submitted by Save the Children to the IRS reports the following information:

Save the Children (STC) reported total revenue of $909 million (compared to $809 million in 2020 and $782 million in 2019).  Most of the revenue came from contributions, gifts, and grants with $398 million from the government and $493 million from others. However, $107 million of those contributions were non-cash contributions (primarily food).

Expenses totaled $881 million (including $2 million in depreciation) – so they spent about $28 million less than they raised. The expenses can be categorized as follows:

• $645 million (71% of revenue):  Grants
• $120 million (13% of revenue):  Compensation
• $ 48  million (5% of revenue):  Fees for Services (primarily fundraising and other fees)
• $ 21  million (2% of revenue):  Office-Related Expenses
• $ 21  million (2% of revenue):  Advertising and Promotion
• $ 14 million (2% of revenue):  Commodities and Freight/Supplies
• $  7 million (1% of revenue):  Other Expenses (no detail provided but primarily fundraising)
• $  4 million (less than 1% of revenue):  Community-Trained Labor
• $  2 million (less than 1% of revenue):  Travel and Conferences
• $  1 million (less than 1% of revenue):  Membership Dues

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

$100:  Revenue

-$ 71 :  Grants

 $ 29:  Revenue Remaining

-$ 13 :  Compensation

-$  5:  Fees for Services

-$  2:  Office-Related Expenses

-$  2:  Advertising and Promotion

-$  2:  Commodities and Freight

-$  1:  Other Expenses (no detail provided but primarily fundraising)

-$  1:  Community-Trained Labor, Travel and Conferences, Dues

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

 $   3:  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. 1,132 employees received $120 million in compensation which equates to an average compensation of $106,000 (compared to 1,462 employees receiving $111 million in 2020).  335 employees received more than $100,000 in compensation with the most highly compensated employee, Janti Soeripto, the President and CEO, receiving $582,432 (compared to 512,332 in 2020).

$48 million was spent on fees for non-employees for services including $22 million for “management” with no further detail provided and $15 million for “other” services. $11 million was paid to fundraisers, which warrants a short discussion.

STC held 11 fundraising events that raised $775,000. After deducting $756,000 of contributions (an IRS requirement), the net proceeds were nearly $19,000. STC spent $30,000 on rent/facility costs and other direct expenses, which means the organization posted a net loss for these events.

In 2021, 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 9 most highly compensated fundraisers raised $22 million and were compensated $6 million, netting STC $16 million, which basically means the hired fundraiser kept about 30% of the funds raised:

• RKD Group, of Richardson, TX raised $10.7 million and was compensated $900,000 resulting in $9.8 million for STC.
• Missionwired, of Washington, DC raised $3.5 million and was compensated $2 million resulting in $1.5 million for STC.
• MDS Communications Corp, of Mesa, AZ raised $2.3 million and was compensated $1.3 million, netting $1 million for STC.
• Thompson, Habib, and Denison, of Lincoln, MA raised $2.3 million and was compensated $230,000, netting $2.1 million for STC.
• Telefund, of Boston, MA raised $1.2 million and was compensated $150,000 resulting in $1.05 million for STC.
• Amerdial Inc., of N Canton, OH raised $1.1 million and was compensated $350,000, resulting in $950,000 for STC.
• Infocision, of Akron, OH raised $625,000 and was compensated $125,000 resulting in $500,000 for STC.
• Dialogue Direct, Inc of New York, NY raised $150,000 and was compensated $362,000 million resulting in a net loss of $212,000.
• New Canvassing Experience of Austin, TX raised $238,000 and was compensated $400,000 million resulting in a net loss of $162,000.

In summary, STC raises money worldwide to support their mission helping children. In the US, $900 million is raised annually with most revenue awarded in overseas grants.  $71 out of every $100 was awarded in grants in 2021.  $26 out of every $100 covers the organization expenses which is consistent with past years.  9 fundraisers raised $22 million and were compensated $6 million (about 30%), 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 to $361 million at year-end 2021 because STC spent less than they raised and also had unrealized gains on investments.  The bottom line:  STC awards about 70% of revenue in grants, spends about 25% on staff and organization expenses, leaving about 5% added to the general fund annually.

To read the IRS Form 990 (2021), click here.