Transparency: A Growing Concern

With Presidential Candidates facing examination and criticisms surrounding their Non-Profit Organizations, viz., The Trump Foundation and Clinton Foundation, what better time, while interest is keen, for ANSWER provide a neat, clean summary of how your money is spent.

To compare our modest $250,000 budget to Clintons $250M makes our contribution look like a drop in the bucket, but when you compare it to Trumps 2013 accounting ($570,000 revenue and $918,000 expenditures), it is evident that 6-digit budgets need watching, too!

However, let it be known that our Exec director (Earle) receives no compensation, remuneration, or reimbursement for any of his work, travel, lodging or anything else, here or abroad. Secondly, our country director is Bal, not a foreigner with a 6 digit salary. He makes approx. $4000 per year. (Base Salaries for fulltime student helpers is approximately $1200). Plato (or Aristotlle) propounded that in a democracy no one should be making more than 4 times the minimum….sounds very democratic to me!

A word of Caution about comparing apples to oranges: USA Today (Dec 28,2012, B1-20) had a nice piece comparing watch dog evaluations of charities and found that some rated by Charity Navigator A+ may be rated D- by Charity Watch, and vice versa. It also revealed that BBB even sells their “seal of approval” to organizations for up to $15,000! There are many problems inherent: even if 100% cost effective, how do we evaluate effectiveness: The cost of medical services vs the cost of animal breeding? Is everyone truly receiving $ in need? Is the $ really helping, or is it simply wasted?

In addition, staffing can be included in project costs reducing the apparent size of the administration and increasing the apparent (but not real) funding of projects. This is one way organizations develop bloated budgets, become bureaucratic, and less efficient.  ANSWER keeps all staffing together, and includes all projects (like AAA, Social Welfare Club, etc) together with Educational costs.

Finally, one has to ask, why isn’t ANSWER ever listed among the Charity Watchdogs? And the reason is simply that most simply start with organizations whose budget are twice as large as ours.  We feel that it is better to be as cost-conscious as possible rather than doubling the price of a child’s education in order to be listed! In other parts of the world, where costs are higher, we would then qualify!

With this in mind, I have constructed by charts to simply and clearly display the income and expenditures in percentages. One can easily assess that our promise to use your sponsorship pledge exclusively for our children’s educational cost is evident in the 78% slices of pie in both charts. Included in this $190,000 price tag is a measly $8,000 used to fund SWC and AAA (3-4%) which we also consider a necessary part of their education.

Where do the Administrative Costs come from? Listed under Income is the 22% remainder of the pie, additional sponsor donations, individual donations, church and corporate donations, and the benefit. As you can see in the Expenses, we have two Administration Wedges: the Administrative costs in America (Lisa’s hours 9%) and in Nepal (5-8 staff salaries 8%, including student employees, office rent, utilities, equipment, etc) are the major players. We need two administrations because one does the intricate detailing of each student expenses in Nepal while Lisa does the accounting of donations here. As soon as we transition fully to our graduates funding the students entirely in Nepal, we will eliminate half of ANSWER Nepal’s administrative costs! Even so, by this calculation you can see that we are 85% cost effective to our donors (by deducting the amount raised by the benefit), but again, we remain 100% cost effective to our children’s sponsors.  Remember, no staff salaries are included (hidden!) in project costs which almost all charities do!

But what about the Earthquake Relief Fund (ERF) and the House Construction Project? As this is an ad hoc, temporary Project, we have been advised NOT to include this in the Program Budgeting but keep it independent. In doing it this way we can accurately compare our annual budgeting from year to year and we find that there has been only a 1% fluctuation in any part of the pie! Also, note that we have already given an accounting of this in an earlier newsletter and will give another accounting to you at year’s end.  To summarize, the ERF has now topped $110,000 and AAA is building homes at a little more than $10,000 each and have nearly completed 5 by now. We hope to build 5 more at least, including two more by years end.

I want to thank Sangeeta and Lisa for providing the figures from their accounting….the job they do, their strict attention to detail, has made it very easy to ferret out data. And please feel free to ask us anytime questions you might have. The way they keep track of hundreds of donations and thousands of expenses is mind-boggling!

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