Making the best use of limited resources-A War Child case study

Introduction

One of the challenges facing every organisation today is how to make

best use of its limited resources. In any aspect of business, there should be no room for poor
use of resources through inefficiency, wasteful administration and poor co-ordination of
activities. Nowhere is this more true than in the case of a charitable organisation. Money
provided for good causes is at a premium – it needs to be used effectively because the
beneficiaries are in urgent need.

This case study examines how War Child, one of this country’s fastest growing
influential charities, ensures it works in an effective way.

Effective organisations are ones which have clear goals and overarching strategies.
They know where they are going and establish methods of ensuring that these
strategies are effectively put into practice.
War Child is an international aid agency dedicated to improving the lives of children
affected by war around the world. War Child is involved in relief work, such as the
delivery of emergency food and medical supplies into war zones or supporting those
who have been forced to flee their homes because of conflict. War Child is also involved
in developmental initiatives, such as the rehabilitation of war-traumatised children and
'education for peace' programmes. At the heart of War Child’s philosophy is the
realisation that the war-scarred younger generation is the key to a peaceful future.

The start of War Child

Most charity organisations start out as good ideas - someone recognises the need for
such an organisation and acts accordingly. For example, the organisation Shelter was
set up in 1966 to help the many homeless people on the streets. The Toybox Charity
was founded in 1991, by the Dyason family, who were horrified by a television
documentary showing the plight of some of the 250,000 children orphaned by civil war
in Guatemala. The charity has grown into a comprehensive rescue strategy for children
who live on the streets of Guatemala City.
 War Child was founded in 1993 by film makers Bill Leeson and David
Wilson as an emotional response to the plight of children caught up in the war in the
former Yugoslavia. Initially raising money through entertainment events and public
appeals, War Child set out to bring immediate material help to children of all ages and
ethnic backgrounds.

With a few old trucks and the help of a handful of unpaid volunteers, War Child began
delivering food, clothing and medical equipment to wherever it was needed most. It also
supplied musical instruments and CDs to young people and radio stations and initiated
a diabetic programme supplying insulin and blood testing equipment throughout Bosnia.
In all, thanks to significant financial support from the general public and the music and
entertainment industries, War Child provided millions of pounds worth of aid to the
former Yugoslavia. The Overseas Development Agency also provided grants to War
Child which were used to establish a mobile bakery.

Extending War Child’s remit

War Child has grown from a two-man organisation working out of a sitting
room in North London, into an international aid agency with offices in half a dozen
countries. As the fighting finally came to an end in the former Yugoslavia, the focus of
War Child’s work moved from short-term emergency aid to longer-term rehabilitation
and construction projects, the largest of which was the Pavarotti Music Centre in the
southern Bosnian town of Mostar.

'Pavarotti and Friends' concerts, staged in 1995 and 1996, helped fund the Pavarotti
Music Centre in Mostar, Bosnia-Hercegovina - a major rebuilding project which
refurbished a devastated school to provide a purpose-built therapy centre and bring
music and the arts to Bosnia’s war-traumatised children. The opening of the Centre in
 1997 was a fitting culmination to the first phase of War Child’s activities in Bosnia and
marked the beginning of a new chapter in War Child’s development.

Today, War Child is involved in numerous projects in over a dozen countries across four
continents. However, its fundamental goal remains the same - to advance the cause of
peace through investing hope in the lives of children struggling for survival in war zones
around the world. War Child interprets the term 'war zone' to include areas of current
armed conflict or where children are suffering from the devastation left by war.
Establishing aims

For any business organisation to be successful, it is necessary to

establish clear aims. Without clear aims, an organisation has no sense of direction and
will be unable to monitor and record the progress it is making.

The aims of War Child are to:

 focus public attention on the plight of children in war zones
 alleviate the suffering of children by bringing material aid into war zones
 support those children who have been evacuated to refugee camps
 initiate rehabilitation programmes once children return safely to their homes
- this includes identifying needs for capital reconstruction projects
 be instrumental in healing the psychological damage caused to children by their
experience of war.
The founders attempted to identify and prioritise the greatest needs of children in areas of
conflict and determine how best to help them. They incorporated this into the organisation’s
aims. War Child was established as both an implementing agency - funding, staffing and
operating its own aid programmes, such as medical programmes in Bosnia and West Africa and
the mobile bakery in Mostar – and as a grant-making trust, providing financial and logistical
assistance to dozens of other Non Governmental Organisations (NGOs).
The main advantage of this dual mode of operation is greater flexibility and a speedier response
to emergency situations. It also allows War Child to avoid some of the problems that often
hinder the work of the NGO community - when competition takes the place of co-operation and
duplication of effort (similar projects running in the same place) wastes resources .
Balancing the books - revenues and expenditures

Any well-run organisation must keep a detailed account of the

financial side of its operations. Not only must the organisation give the best value for
money for every pound that it spends, it must also make sure that it can always easily
cover its expenditures by its revenues.
A well-run charity therefore operates with the utmost respect for sound financial
housekeeping. It is only by operating in this way that the charity is able to give the best
value for money. For example, a charity which spreads its expenditures at random over
a range of good causes on a 'by request' basis might find that, by failing to prioritise its
aims and expenditures, it has no money left for the most important projects which might
be of a long-term nature. Careful control of an organisation’s finances is vital.

How War Child raises its revenues

War Child tends to concentrate on a fund-raising strategy of fewer, high profile, highly
profitable events, as opposed to numerous, small and less profitable events. Of course,
donations of any size are always greatly appreciated but the cost of employing extra
staff to co-ordinate numerous small events would outweigh the money raised from these
events (i.e. in economic terms, the marginal cost would be greater than the marginal
revenue).
High profile events fit well with War Child’s strong support base in the media, music and
entertainment businesses and add to War Child’s reputation for working hard to build
events which are fun and unusual, while at the same time raising money for a great
cause. Typical events include celebrity auctions, 'Pavarotti and Friends' concerts, the
Help CD (featuring top rock stars to raise funds for war children in the former
Yugoslavia) and Club Child, a recent innovation which involves a monthly club night in
London.

A War Child trading company – all charities are bound by law from making investments
involving anything other than very small risks - even if the investment promises higher
yields than 'safer' deals. The reasoning behind the law is that donations are not given to
War Child, or any other charity, for speculative purposes; rather donors expect their
money to be used directly to further the aims and objectives of the charity.
Consequently, War Child is in the process of setting up a War Child trading company.
This is a separate but associated commercial organisation, whose sole purpose will be
to sell merchandise, run fund-raising events and generally make money for War Child
Trust (the charitable arm of War Child).
 It is planned that the War Child trading company will be
established using start-up funds loaned or invested by corporate partners and donations
from commercial companies, thus limiting the charity’s financial liability.
Donors/sponsors will be rewarded by small dividends on their investments or interest on
their loans and the knowledge that the bulk of the profits from the War Child trading
company is going to War Child Trust.

How War Child allocates its expenditures

Making best use of resources means spending money in the best possible way. In order
to do this, it is necessary to establish a clear set of criteria which are determined by the
aims of the organisation.

Once projects are chosen, specific budgets are allocated. War Child’s project team
regularly meets to decide on the best way of allocating funds. The team must consider
both on-going projects and likely future commitments. By working through a network
of specialist NGOs, War Child can react swiftly and effectively to a wide range of
problems, whilst keeping the organisation’s administrative infrastructure to a
minimum. War Child is proud that its current administrative overhead is less than
5%. This is an important measure of efficiency.

Expenditures include material aid (food, medical supplies etc.), transport, staff salaries
and travel costs, administration and office expenses plus public awareness raising
campaigns. In addition to the project budget, War Child always keeps financial reserves
in the bank to cover a minimum of three months total running costs, as well as an
additional fund of £50,000 in case of unforeseen emergency. The southern Sudan food
airlift, for example, required £20,000 at very short notice to provide food to the areas
worst hit by famine.
Fundraising case study
 Recently, West Africa (and, in particular, victims and refugees
from the Liberian civil war) has become an important focus of War Child’s work. After
seven long years, the civil war in Liberia has reached an uneasy peace. The population
of Liberia has been decimated by mass killings and a whole generation of children have
had their lives completely disrupted by the war. They face a bleak and uncertain future,
ill-prepared for this new, peaceful phase in Liberia’s history.

War Child has reacted to the situation by establishing healthcare programmes, food
provision and clean water initiatives for Liberian refugees in Buduburam Refugee Camp
in Ghana, and plans are currently underway to establish a children’s village in Liberia.

The Pavarotti Liberian Children’s Village will be on the outskirts of Monrovia, Liberia’s
capital. It will be funded by proceeds from 'Pavarotti and Friends in Concert for Liberia
1998' and will provide educational, medical, cultural, recreational and sports facilities for
young people in Liberia. 'Pavarotti and Friends in concert for Liberia 1998' was the
latest event in a long period of co-operation between Luciano Pavarotti and War Child,
and featured Pavarotti, Stevie Wonder, the Spice Girls, Celine Dion, The Corrs, Jon Bon
Jovi and many more.
Conclusion

This case study has highlighted how important it is for any

organisation to have clear goals and strong financial accountability.

As an aid agency, it is essential for War Child to work in the most efficient way possible,
carefully controlling limited resources to help improve the lives of children affected by
conflict throughout the world.