Letter from CFO Richard K Trowbridge Jr

Richard Trowbridge Jr. and a child

2012 Finance Report

Save the Children USA's financial standing continues to remain sound, even through the biggest changes in our 80-year history.

In 2012, Save the Children USA completed the majority of the transition of our international field operations to Save the Children International (SCI), as part of our consolidation of operations with other Save the Children members worldwide into one global movement for children. This was completed while maintaining operating revenue and expense levels within 3 percent of previous year's levels.

2012 brought the second-highest level of revenue to Save the Children USA in agency history: $597.2 million, a 3 percent decrease from 2011. This level was maintained by raising more gifts from U.S. donors with our newly expanded portfolio of locations. This helped offset the loss of revenue from other Save the Children members, which now goes directly to SCI. Contributions and private grants accounted for $286.5 million, 48 percent of revenues, while U.S. government support, including its portion of Commodities, totaled $215.3 million, or 36 percent of revenues, an 8 percent growth from 2011.

Agency spending for the year totaled $617.5 million, an historic high, with significant spending of temporarily restricted funds raised in prior years for multi-year emergency responses in Haiti, Japan, Pakistan and the Horn of Africa. Approximately 30 percent of programmatic spending was related to emergency response activities, 25 percent for health/nutrition and 20 percent for education. We delivered $122.9 million in program activities through SCI and $396.4 million through Save the Children USA.

Save the Children USA experienced an unrestricted operating deficit of $3.6 million in 2012, due mainly to the challenging U.S. economy and the costs of transitioning our international operations to SCI. The transition costs are one-time events and will be offset by future efficiency savings in administrative costs. We also experienced a $16.6 million timing-related deficit in temporarily restricted funds from the spending mentioned above (timing differences of restricted surpluses in 2010 and 2011, followed by a deficit in 2012). This phenomenon also occurred in 2005-2009 with the Asia Tsunami emergency.

Unrestricted net assets totaled $111.6 million in 2012, up $3.4 million from 2011, but total net assets declined 6 percent to $182.9 million, due to the spending of temporarily restricted net assets. The overall net asset changes reflect endowment gift inflow, currency exchange, the operating deficit and an 11.5 percent overall investment performance (with 7 percent used to increase net assets).

In 2012, Save the Children USA directed 89 percent of overall expenses to programs – an important measure of financial health. For the past eight years, we have kept the private cost of raising $1 below 10 cents. And for the 11th year in a row, Charity Navigator gave us its highest four-star rating.

Save the Children USA enters 2013 financially sound and well positioned to move forward in expanding its one global movement for children.

Richard K. Trowbridge, Jr. Signature
Richard K. Trowbridge, Jr.
Vice President, Finance
Chief Financial Officer and Treasurer