CharityWatch REPORT
Issued October 2018

CharityWatch Analysts perform an in-depth analysis of charities' audited financial statements and IRS tax filings, and often review other documents such as state filings, annual reports, and fundraising contracts during their evaluations. Below are select notes that CharityWatch believes may be of interest to donors.

Any time an Analysts' Note refers to a charity's Audited Financial Statements or IRS tax form, CharityWatch encourages interested donors to obtain a copy of the referenced documents so that they may view the information in context. Please contact the charity directly to request a copy of any referenced document. Charity tax forms and audits may also be obtained from a number of online databases. For a list of sources, please visit our LINKS page.

Note(s)
CharityWatch's rating of Save the Children is for the U.S. based Save the Children Federation, a 501(c)(3) public charity (tax ID #06-0726487).


Although they are related entities and are included in the Save the Children 2017 consolidated audit, CharityWatch's rating of Save the Children does not include the financial activities of either the Save the Children Action Network (SCAN) (tax ID #46-5465189) or the SCUS Head Start Programs (Head Start) (tax ID #45-3672468). SCAN is a 501(c)(4) tax-exempt organization that was established in 2014 and operates exclusively for purposes related to the social welfare of children. Head Start is a 501(c)(3) public charity that began operations in 2012 and delivers early childhood development programming.

According to the Save the Children 2017 tax filing, Save the Children reports making a cash grant in the amount of $6,017,584 to Save the Children Action Network (SCAN), its related 501(c)(4) social welfare entity (IRS Form 990, Schedules I & R).

[Neither Save the Children Action Network nor SCUS Head Start Programs are rated separately by CharityWatch at this time.]
According to the Save the Children (SCUS) consolidated audit of December 31, 2017 (Note 1, Organization and Purpose):

"SCUS is a member of Save the Children Association (SCA), a Swiss membership organization. SCA currently has 30 independent, autonomous, nonprofit, private voluntary membership organizations that bear the name Save the Children or a related designation (the Members). SCA created Save the Children International (SCI), a United Kingdom based charitable entity, of which SCA is the sole member, and therefore, SCI is a wholly owned subsidiary of SCA.

"In 2011, SCUS, in concert with the 29 other independent Members, entered into a series of agreements to create a single global program delivery platform through SCI. Under these agreements, SCUS works with other Members through the SCI platform to deliver nondomestic programs to benefit children. ... The costs of implementing programs through the SCI structure are covered by program funds raised by SCUS (and other Members) and the allocation of administrative expenses among the Members.

"In addition to the program delivery platform and cost-sharing, SCUS and other Members agreed to transfer certain in-country program assets to SCI to facilitate the delivery of programs overseas. SCUS started to transition country offices in 2011. As of December 31, 2017, one country office had not yet transitioned to SCI. SCUS is working to transition this office to SCI."
According to the Save the Children (SCUS) 2017 tax filing (IRS Form 990, Schedule M), SCUS reports receiving donated in-kind goods on which it placed a total value of approximately $66.7 million, including approximately $45.9 million in donated food inventory.

SCUS also reports receiving donated services & use of facilities in 2017 on which it placed a total value of approximately $27.6 million (IRS Form 90, Schedule D, Part XI). According to the SCUS 2017 consolidated audit (Note 2(d)), approximately $26.2 million of the value consisted of "in-kind media and broadcast time in the form of public service announcements."

[Note: CharityWatch generally excludes the value of in-kind (non-cash) donations of goods and services from its calculations of Program % and Cost to Raise $100. More information on how grades are calculated and the treatment of in-kind donations can be found by clicking on "About CharityWatch" from the navigation bar and then clicking on "Criteria & Methodology".]
According to the Save the Children 2017 tax filing (IRS Form 990, Schedule O re: Part VI, line 5, "Did the organization become aware during the year of a significant diversion of the organization's assets?"):

"In April 2017, an unknown criminal hacker or hackers posing as a Save the Children employee fraudulently induced the organization to transfer $997,400 to an entity in Japan on the false pretext that the funds were needed to purchase solar panels for health centers in Pakistan. By the time that the fraud was discovered, in May 2017, the transferred funds could not be recalled, but Save the Children was subsequently able to recover $885,784 from its insurance carriers to mitigate the financial loss. In addition, Save the Children coordinated with the FBI, and through them, Japanese law enforcement to assist in criminal investigations related to this incident, and we have taken steps internally to strengthen cybersecurity and other processes to prevent cyberfraud.

"In a separate incident, Save the Children was provided with false bank account information for a vendor, resulting in a diversion of $9,210 to an account in Benin. Fortunately, this diversion was discovered in time for Save the Children's bank to recall $9,090 of the funds from Benin, resulting in a loss of only $120."
According to the Save the Children (SCUS) consolidated audit of December 31, 2017 (Note 14, Commitments and Contingencies, Government of Bolivia v. Save the Children (Bolivia)):

"SCUS is a cooperating sponsor with the United States Agency for International Development (USAID) in connection with USAID's Food for Peace (USAID/FFP) commodity distribution and monetization program in Bolivia. Due to a long unresolved disagreement between the Government of Bolivia and the Government of the United States and in contravention of bilateral agreements between the two governments, the Government of Bolivia began asserting claims in December 2008 of past due taxes on shipments imported by SCUS and other NGOs working with the USAID/FFP program. As of December 31, 2017, 64 separate claims related to shipments between 2002 and 2009, with a value of approximately US $16 [million] are pending before Bolivian courts. SCUS has filed objections and is defending each claim. As of December 31, 2017, no amounts have been accrued relating to this matter due to the uncertainty of the outcome."
According to the Save the Children (SCUS) 2017 tax filing, SCUS reports re: Business Transactions Involving Interested Persons (IRS Form 990, Schedule L, Part IV), a transaction in the amount of $108,013, described as "Compensation" and paid to Rosemary Trent, "Family Member - D Stoner."

[Daniel Stoner is reported as the former "AVP, Education & Child Dev.," according to IRS Form 990, Part VII.]
According to the Save the Children (SCUS) 2017 tax filing, SCUS reports re: Compensation, Supplemental Information (IRS Form 990, Schedule J, Part III):

"William Corwin received a severance payment of $20,267. This payment was included in taxable income..."

"Lump-sum payments (as a percentage of base salary) based on a combination of individual performance and organizational performance were made to eligible individuals. Schedule J, Part II, Column B(ii) ['Bonus & incentive compensation'] reflects these payments to Miles, Brandom, Carrazana, Klosson, Mood, Murdoch, Myers, Ridge, Seam, Taussig, Pollock-Berry, Shriver, Williamson, Corwin, White, Scolpino, Ramm, Langham and Clay."


According to IRS Form 990, Schedule J, Part II, the "Bonus & incentive compensation" amounts Save the Children paid to the reported individuals cited above range from $21,606 to $1,500, with reported total compensation amounts for those individuals ranging from $540,833 to $150,466. The amounts at the high-end of both ranges reflect the compensation for Carolyn S. Miles, President & CEO.

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