TOO MANY HANDS IN THE POT PART TWO

How often have we seen a flourish of giving to famine relief efforts and natural disasters followed by a sharp decline in giving? Donor fatigue is the term for disengagement from global crises.

How often have we heard Christians say “the poor you have with you always,” as a justification, for why Christians don’t need to care about the hungry, the thousands dying of starvation?

If the Salvation Army is going to charge an allocation on my donation as it’s processed along at every step of the way they’re no longer getting my money!

What does the SA assess a 10% administration fee when processing donations to the mission field? (allocation – cost centers)

Allocation is the process of splitting certain expenses between internal activity centers (cost centers). Nonprofit organizations typically use allocated funds for ‘common costs’ on financial statements, including the Salvation Army. The use of allocations, the 10% administration fee is a method of recovering administrative costs in overseeing grants or contracts.

There are three primary reasons for wanting to allocate expenses:

·      In order to understand the true financial performance of each of one’s core activities, one needs to know the true cost of that activity. In addition to direct programmatic costs for each activity, such as salaries, there are other legitimate costs associated with each cost center’s activity such as rent, utilities, equipment, technology, travel, etc. Allocation is a method of assigning these other expenses to the activity, which then provides a more complete picture of all the expenses or the true cost of that activity.

·      Cost Recovery: It’s the importance of knowing the true cost of an activity to be able to analyze one’s business, in order to fundraise for the entire cost. This is true whether one is raising money from individuals, foundations, or through government contracts. By allocating expenses one can maximize the cost recovery from grants and contracts. If for instance the Salvation Army plans on recovering the full costs of their services for a contract with the City and County of New York, then they must allocate costs.

·      Using generally accepted accounting principles allows the Army to allocate certain costs to make it easier for the organization! When an organization buys office supplies for instance it might be difficult, tedious and costly to track which part of the organization is using the most pens. Cost center allocation provides a method to assign these costs to an activity center without being burdened by unnecessary paperwork and bureaucracy.

QUESTION

Is it ethical to drain a part of AN organization’s donation by almost 30% when most denominations exact only 10%?

Why are the Army’s administrative costs three times that of the Baptists and twice that of World Vision?

The Army’s structure is unique. The SA operates somewhat autonomously in 126 countries, however with a similar system of hierarchy and control.  While our administrative costs are exacted along the lines of organizations relying on autonomous extraneous ethical standards the Army does not follow this standard even though the cause and effect are the same.

The Army’s ethic, although giving full attention to the consequences (the most good) is grounded in an authority beyond the good of the act and the SA’s good intent. It’s based on the authority of the Lord Jesus Christ, not in an office or institution. Consequently the SA is locked into a rigid system that ensures exact control and integrity at every level of reporting. Typically when donating to a missionary field there are three allocations costs assessed, each at 10%: the donating Territory, International Headquarters and the recipient Territory. There is an Int’l. Secretary for each world region that is directly involved in overseeing the budgets and programming for each territory.

Are there any advantages in donating through one’s local SA?

Many major donors seek a tax deduction on their donations to recognized charities of which the Salvation Army is often their first choice. In the USA TSA is consistently voted America’s favorite charity. And to qualify as a deductible contribution the donation must be acknowledged in the country of the donor by the recipient. Most donations made directly to foreign offices of a charity do not qualify as tax-deductible donations.

The other obvious advantage is the facilitation of, and exchanges in communication ensuring the donation’s receipt in full and its usefulness.

Both are key concerns and are often the key in securing additional funding.

SNAFUS unexpected but intentional

All persons who have labored on the mission field can share horror stories of money and equipment that’s disappeared in thin air.

While assigned with 5 others to re-open the SA work in the former Soviet Union we had tons of humanitarian aid disappear from a secure military warehouse patrolled by security guards carrying Kalashnikovs and accompanied by snarling German Shepherds. (no real surprise) There was the one-day-old Lada auto proudly being driven by a British reinforcement officer and who for safety parked it inside her gated and locked car park. On her arrival at the car park the next morning her pride and joy had vanished. The gate had not been tampered with; the ingenious bandits had stolen a forklift and simply lifted the car over the 10 ft high fence.


And then there was the several hundred-foot long rail-convoy carrying produce and baby formula to a town where we’d established an HIV/AIDS support center for 238 toddlers and their families. The train departed Moscow for Volgograd and was never seen again.

We experienced more such frustrations; break-ins, hold ups, police shake downs, bribes at the border crossings, bank closures, etc. Yes, upsetting and would throw us off schedule, but the Russians depended on us. We were supplying hot meals to 90,000 seniors in Moscow daily through the SA established soup kitchens. The HIV infected children in Volgograd became ‘family’.  And their suffering became our focus – food, fighting western drug companies ‘dumping’ the drug AZT on the Russian market with kickbacks to government officials for turning a blind eye to the expired shelf life, and more.

It’s easy for those of us who’ve been charged with the same marching orders as Captain Paul Thistle to empathize. Coming home at night, well past the expected hour with reports to be updated, 4 and 5 day old faxes to be answered, apologies to staff whose wages were delayed, again… and the empty fridge because we’d not had time to stand in the 2 hour queues to buy a loaf of bread and sausage…

Yes, Dr. Paul we can well understand your frustration knowing what can happen when promised funds and equipment are delayed, pilfered and misspent!

END PART TWO,

Sven Ljungholm
Liverpool