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Adam Rothwell
- Wednesday, June 24, 2009
The Smile Train, which performs operations on kids with cleft lips and palates in poor countries, markets itself as a new breed of hyper-efficient charity. It claims you can change a child’s life forever for as little as £150. And it boasts that its overheads are less than one per cent of its total expenditure.But there’s a problem with many of these claims. In my view, they’re probably nonsense. Here’s why.
- The ‘less than one per cent overheads’ figure is simply untrue. Our profile of the Train shows that it spends roughly 40 (yes, forty) per cent of its income on marketing and administration. One lucky Train employee trousers £97,000 alone each year. How can we be so sure we’re right and the Train’s publicity is misleading? Simply because our figures are taken directly from the charity’s audited annual accounts, and the ‘one per cent’ figure on the Train’s website isn’t attributed to anything.
- It’s difficult to know what the Train is actually doing with your money. The Train’s annual report is amongst the least transparent I’ve ever read. According to this document, the Train has two sources of income: cash from donations, and cash from its parent charity in the US. It then spends 40 per cent of this on admin and fundraising. The rest then gets transferred back to the States, and to the parent charity. It’s very hard to find out what happens next – though the money does get spent on cleft operations at some point down the line. But the reason for these international bank-transfers is hard to fathom, without further explanation from the charity.
- It’s hard to find any evidence to back up the Train’s claim to be hyper-efficient. It is possible that a charity with 40 per cent overheads is efficient. But that sort of spending also needs some proper explanation. And although the Train’s website is extremely keen to make sweeping claims regarding the Train’s brilliance, it doesn't contain any evidence to back these up. The Train’s annual report is dreary and uninformative, and the website is devoid of footnotes or links to hard evidence.
Nerd corner: more on the Train's accounts
The Train’s accounts show that it received restricted donations of £4,374,311 from its parent charity, The Smile Train Inc., in the year to 30 June 2008. Note 9 in the accounts for this year show that these donations were restricted to be spent on “non-programme expenses, such as fundraising and support costs.” Note 10 elaborates on this theme. It states, “All funds donated by the public are designated to be donated to The Smile Train Inc. for inclusion in their direct charitable expenditure.” Aficionados of charity-accounting law will recognize, however, that these donations are merely designated rather than formally restricted – meaning that the charity may spend donors’ cash on anything it desires (within its objects), and is not legally constrained by the intention outlined in Note 10. This failure of the Train to restrict donors’ cash is perplexing.These notes also cause problems on a level above that of accounting procedure. It is possible to come to an understanding from the Train’s US website that the charity’s founders commit to paying for the charity’s overhead costs. This may account for the £4.3m restricted donation Train UK received in 2007-08. This may also explain why Note 10 mentions the non-binding designation applied to supporters’ gifts. But the reason for the international bank-transfers between the UK and US brances nonetheless remain a mystery. Even if the charity’s founders are paying the UK Train’s overheads (which is possible), this doesn’t make the charity efficient. It would still be the case that 40 per cent of the Train’s UK cash is spent on overheads – a figure which demands explanation, and an explanation which the Train fails publicly to provide.
Final thought: the realm of the possible.
To put the Train’s accounting in perspective, it’s interesting to ponder what the Train could be doing with donors’ cash. It is possible for the Train to take this money, send it to the US, and for the US charity to send it back to the UK, restricted to be spent on admin and fundraising. As I say, this may not be happening. But it could be – and until the Train becomes more transparent, we’ll never know if it is.Has there been any update or comment from Smile Train on Adam Rothwell's statement? I, like thousands others, would love to support this worthy cause but I have doubts about the overheads. Are there any UK based charities, who can reclaim tax, better placed? Seems to me that silence in this case is not golden.
I had just googled Smile Train because I was too lazy to get their details from my file. I have already given money for 3 operations and wanted to ask them about legacies in particular and volunteer work. Now I feel gutted to read all this but glad that it has stopped me from possibly making a 'grave' error!
I'm feeling like a fool after reading the info here, and checking some other things.....So far I have donated $2,000.00 to Smile Train....I could kick myself! I had been wondering about their fancy New York offices, all these gifts they send me, and just what was happening with the money I donate. I had no idea that some people involved with S.T. make thousands and thousands of dollars! I thought I was helping children....not making a few people rich!
I actually complained to the Charity Commission about Smile Train UK's work last year. I am little hazy over all the details, but I seem to recall that the guy getting the hefty pay check was the US CEO and Chair of the UK branch, which seemed a spectacular conflict of interest. Their fundraising program also seems to involve a massive advertising budget (the ads were in all the nationals seemingly every day). For an interesting article on the US charity see here: http://www.charitywatch.org/articles/smiletrain.html
On another note, sorry to see IG bite the dust.
Best,
David
Why would you want to support 'Smile Train' when you can support 'Operation Smile' who do so much better work and have better accounts and up to date info?
There is an obvious major difference between these two charities and I don't understand why anyone would want to support Smile Train... I shall explain below:
Smile train use the donations to PAY doctors, dentists etc to do the operations.... In comparison Operation Smile recruit VOLUNTEER doctors, dentists etc and uses the money from donations for hospital, equipment fees etc. Operation Smile doesnt use any money on advertising or marketing so its administration costs are lower and transparent.
Why would you pay a doctor to do these operations when you can support a charity who has volunteer doctors who actually care enough to give up their time to go to third world countries and do these operations? It just makes more sense to me
I emailed The Smile Train UK with my concerns about what I read on this site... I received a detailed reply back the same day and out of courtesy I will not repeat what was said here without the ladies consent (which I haven't asked her for yet)
I believe that she is preparing a response for this thread but in summary, I feel that I can trust the charity with my donation and I believe that there is nothing untoward going on with the way money is distributed; albeit not 100% transparent it seems more about the allocation of certain types of funding - you know what its like with these organizations, certain funds and grants received must be spent on certain overheads... the impression I got is that after grants and other funds which are pre-allocated to funding the publicity machine, the money received directly from the public is, as advertised, used almost entirely to fund the front line operation (if you will excuse the pun)
I hope that they (The Smile Train) will post here too to set the record straight.
Keep up the good work though (there's nothing wrong with raising these questions to keep 'charities' on their toes!)
Gary
I sent them the link weeks ago asking for some response. Beside short message telling me that matter has been forwarded to right person never got anything back. They don't seem to be bothered.
I have emailed Smile Train UK for clarification - sending them a link to this site...
I will be interested to receive their response.
I never thought the day would come when I said this - but Anon2 is absolutely right. As he says, charities aren't companies: they exist to make the world a better place. If the world could be made a better place by other organizations copying the Smile Train's lead (in its supposedly hyper-efficient way), then the Train owes it to them to reveal its secrets. Charities don't exist to perpetuate themselves or make money, like companies do. Which is one reason why charities must always be more transparent than than their commercial counterparts.
Adam, Intelligent Giving
@STSupporter
"Is it possible that the lack of information is designed to prevent other organizations from copying their design?"
If they have an efficient model, wouldn't it be more benficial to everyone if other organisations could copy it? this is a charity , not Coca Cola.
If they are raising funds in the UK, why should UK based potential donors have to understand the US way of doing things before making an informed decision ? The report Adam was attempting to follow is the UK one, which is available online. The US parent only sees fit to send out a written report to people who apply in writing; why not put it online, which would be far cheaper and reduce overheads further?
I agree with Adam here (rare event): it's smile train that is not showing the whole picture.
Perhaps you can persuade ST or ST UK to put a copy of its global report on the website, which would help answer the questions before they arise, rather than justify their apparent obscurity?
In the world of blogging, one can write anything they want.
I do wonder whether the author of this blog took the time to do all of his research, or did he simply take one piece of the puzzle and try to make a picture out of it?
Did Adam contact anyone at the headquarters in NY? To allow them to explain the situation providing a better understanding. Or simply to provide them the opportunity to comment (as all good journalists and reporters would).
Is it possible that the lack of information is designed to prevent other organizations from copying their design? Is it possible Adam just isn't familiar to how we do business in the US and was unable to follow the report.
Is it possible that Adam failed to look at the number of cleft effected people being helped by ST? How many surgeries have they performed? How many doctors have they trained? How many clinics and hospitals have they brought to US standards? With that information in hand, did Adam try to find another cleft charity with the SAME or BETTER results??
Adam may have some vaild points, we'll never know, however, because Adam didn't show us the whole picture, only one piece of the puzzle. Do your job Adam, and them I'll be willing to give you credit.
Tom,
Just type "cleft palate charity" into google and you get loads of charities you could support.
Rarry
I'm afraid that I don't know of any other cleft charities doing work like the Smile Train does. And as I say here, it is possible that the Train is good at what it does - we just don't know, and the charity doesn't appear to want to give us the relevant information.
However, we do profile a number of other international-development charities dealing with health issues - which you can read about here. After the big-name, all-purpose aid outfits, Medecins sans Frontieres comes out particularly well, according to our ranking.
Adam, Intelligent Giving
OK, this just upsets me. I want to give to a cleft lip charity specifically. You've told me not to support this one. Is there another one that's any good, because I haven't seen any others advertised and you don't recommend any others on the Smile Train page, or are you implying I should avoid them all?
People should be made aware when charities are not transparent; if charities want to use information such as 'less than 1% of...' then they must be 100% accurate.
It doesn't take many charities being 'economic with the truth' ,at best, dishonest at worst, to drive the reputation of all charities down in the public's mind.
Anon2, I take your point on this. There's always a potential problem to analyze a charity using just one year's data. However, the mismatch between the Smile Train's public pronouncements and its rubbish annual report made me so annoyed that I published this blog entry. I wouldn't normally want to take a charity to task like this, but the Train's attitude towards being transparent with its donors so shocked me that I made an exception!
Adam, Intelligent Giving
I agree that Smile Train seem keen to release only the minimum amount of information. You have to write to the US HQ for a copy of the full report, as even US Guidestar only gets a copy of their official return for 2007 (which is actually illuminating, in that they spend a great deal on printed information, compared to how much they spend on operations). And 1% certainly doesn't cover thir fundraising costs . If they are going to use global statistics to raise funds there, they should do a better job of global reporting and explaining their financial strategy.
BUT: this does highlight a limitation of IG's reporting approach (one bit of the charity, one year at a time). A charity thet invests in fundraising in year 1, hoping for e return in Year 2 and onwards, would seem hopelessly ineficient, however promising their approach. Similarly a charity that undertakes its fundraising through an associated body would seem more efficient than it is as a whole. perhaps something for your successor to chew over...
The amount of money this organization spends on marketing is outrageous. Their fundraising letters are essentially blackmail, saying that they'll never ask you for money again if you give them something. If you don't fork over they send letters about once a month with a picture of that poor child on the envelope to shock and disgust people. I have never seen any charity engage in such a despicable marketing campaign.