Financial Policy

Child Sponsorship Fund Management
At Grace and Hope we believe in using God's dollars wisely.  We account for every dollar spent.  We use a web-based accounting system designed for non-profit entities.  This system gives all board members access to reports needed to ensure fiscal responsibility.  One motivator for starting GHC was the desire to see more money reach children in need.  Given this desire, we take fiscal management very seriously.  

Our board of directors are volunteers. No sponsorship funds are used to pay these key people.  Administrative funds are used to pay staff dedicated to oversight and management of specific orphanages. 

We try to associate one sponsor with one child.  In some instances a donor can choose to participate in sponsorship.  In these cases, more than one sponsor can be assigned to a child.  Because we strive to develop a one child to one sponsor relationship, our sponsorship costs can be higher than other charities.  

The amount charged to sponsor a child in a particular orphanage is based upon the actual cost and the average cost within that area.  Sponsorship funds are divided into three categories: 1) Direct sponsorship, 2) Contingency, and 3) Administration.

Direct sponsorship costs vary from city to city. The cost is generally higher in larger cities.  These funds are paid to the orphanage on a monthly basis.  All funds are transferred electronically to the orphanage's bank account.  This transfer process reduces the possibility of mismanagement.  All funds are transferred after the foster care services have been provided.  No funds are paid in advance of services.  On average, the amount paid to the orphanage to cover foster care costs represents 80 percent of the total sponsorship paid by a donor.

Administration costs are kept to a minimum. The administration fund covers all costs associated with the administration, development, or closing of a foster care program.  This includes some staff salaries, travel, telephone, Internet costs, training material, computer use, office space, utilities, office supplies, insurance if needed, meeting rooms, meals at meetings with officials, and others as defined by the Board of Directors.  The administration funds are not specific to an orphanage but are used to provide oversight to all of the foster programs as a whole. Administration costs are covered by a 15% fee added to the total of the direct foster care cost and the contingency costs.

The contingency fund was designed to cover fluctuations in sponsorship. It represents funds remaining once direct foster care and administration costs are paid. These fund are used to: 1) provide foster family funds when sponsors stop donating,  2) Cover the cost of removing at-risk children prior to obtaining a donor, and 3) adding children to the foster care program.  Contingency funds are used in the order described.

The balance in the fund will grow until it equals the foster care cost  (i.e., the amount paid to the orphanage) associated with all the children in the GHC foster care at that orphanage for six months. In the event that a foster care program ends for reasons out of our control, the contingency funds give our staff up to three months to find alternatives before the children must return to the orphanage.

When the balance in the contingency fund exceeds the amount to cover the fostered children for three months, the difference can be used to add children to the foster care program while sponsors are being located. In some cases, children are moved into foster care with the expectation of finding a long-term sponsor. Many children who are at risk of prolonged illness, disability, or death will be moved without a pre-identified sponsor. Contingency funds are used to cover the costs of this child until a sponsor can be found. The expectation is that a sponsor can be found in three months.

Finally, the fund can pay the foster family cost for a child who  does not have a long-term sponsor.  This type of funding can occur when the excess will cover the foster family cost for 12 months. This child will be assigned to all of the individuals who sponsor children at this particular orphanage.  The contingency fund can only be used for the designated orphanage.  The use of the contingency fund at other orphanages requires the approval of  the involved sponsors and the Board of Directors.