- published in the August 2005 issue of the Charity Rating Guide & Watchdog Report

100% of your donation will go towards our free treatment programs,
0% will go towards overhead.

Many AIP members have seen the above language in solicitations from Smile Train, a charity that treats children born with cleft lip and palate. One may wonder how a group that spends about $45 to raise $100 (AIP recommends no more than $35 to raise $100), spends about $7.4 million or 30% of its cash budget on overhead, and receives a C+ from AIP, can make such a claim.

A note to Smile Train’s 2004 financial statement reports that some board members and others previously made donations specifically to cover overhead “so that all contributions received from the general public may be used for Smile Train’s treatment program.”

The problem with this reasoning is that any charity could ask a portion of their loyal supporters to use their donations to cover overhead. But overhead expenses will not disappear! Money is fungible, regardless of its source; what is spent on one function is not available for another function.

Smile Train’s 2004 audit shows that 99% of its $39.8 million fund balance is unrestricted. This means that Smile Train does have discretion to spend just about all of its reserves on programs and does not have to hang on to these funds for future overhead costs.

Bottom Line: More of Smile Train’s total donations could go towards treating children with cleft palates if the charity was operating more efficiently, regardless of whether or not some donors earmarked their donations for overhead.