Notes to the Statement of Income and Expenses

in Euros

9 Fundraising Income from individuals

Income from individuals includes structural and one-off donations from individuals as well as legacies.

Developments 2023

War Child aims to develop long-term relationships with individual donors to ensure stability in income and the continuity of projects. The large majority of the income generated by individual donors came from approximately 89,000 Friends, as War Child calls its structural donors. More information is provided in the “Where Our Funds Came From” section in our annual report.

War Child was the beneficiary of the Streamers online concert organized on December 26. This concert further added to the income from individuals.

The income from legacies and inheritances was in line with previous year, and thereby exceeded the budget by 84%. With this income being difficult to predict War Child takes a cautious approach to budgeting.

10 Fundraising Income from companies

Income from companies includes periodical donations from our Business Friends, one-off gifts from actions, donations in kind as well as restricted subsidies.

Developments 2023

In 2023 we raised € 3.5 million from the business sector, 20 per cent above our target for the year and 29 per cent above the income in 2022. It remains a challenge to secure long-term commitments from companies. Main business donors supporting us already for years with monetary funding are Rituals, who supported us with € 24,000 in-kind donations in addition to the € 255,000 in cash, and Tommy Hilfiger. Capri-Sun became a new donor in 2023.
We saw an increase of 73 per cent in gifts in kind compared to 2022 to a total of € 1.9 million, which was 184 per cent above budget. More than half the income from businesses comes from the value of donations in kind. War Child has a low cost policy and tries to find donors for every purchase it makes at head office. This ranges from free paper to free legal advice. Thanks to our good reputation that our donors recognize, we are quite successful in raising free goods and services. More information is provided in the “Where Our Funds Came From” section in our annual report.

11 Fundraising Income from lotteries

Income from lotteries consists of contributions from the Dutch National Postcode Lottery. Since 2009, War Child receives an annual unrestricted contribution and since 2014 we have received various contributions designated to specific projects.

Developments 2023

Income from lotteries has increased by 54 per cent in comparison with the previous year. The National Postcode Lottery contributes structurally to our organisation with an impressive €1.4 million. In addition, the National Postcode Lottery awarded War Child with an extra € 1.0m as donation linked to the Streamers online concert.

The Can’t wait to learn “Dreamfund”, which was awarded to War Child in 2019, was fully implemented by the end of 2023. More information is provided in the “Where Our Funds Came From” section in our annual report.

12 Fundraising Income from government grants

Income from governments includes income from individual governments, as well as from governmental bodies and from organisations that receive the vast majority of their funding from governments. In cases where the back-donor is a government and War Child has a contract with equal conditions with another party, this income is categorized as income from governments. All War Child’s income from governments is incidental, although part of the income is related to multiyear grants. All grants have an end date.

Developments 2023

The income from governments accounts for 40 per cent of War Child’s fundraising income. Income from governments reached € 20.0 million in 2023, which is 17 per cent below the government income of 2022 (€24.0 million). This reduction in government income was foreseen and actual income exceeded the budget for the year (€ 18.9 million) by 6 per cent.

With € 6.8 million, a decrease of 8 per cent compared to 2022, the European Commission was War Child’s largest donor in 2022. With € 5.9 million, an increase of 9 per cent compared to 2022, the Netherlands Government was War Child’s second largest donor. None of the donors exceed our guideline of maximum 15 per cent from one donor. War Child has this target in order to remain independent from any one donor and to maintain a well-balanced donor portfolio. The United Nations agencies continue to contribute to War Child's programmes in various countries through its subsidiaries and affiliates such as UNICEF, UNHCR, UNESCO, UN OCHA and the Education Cannot Wait fund. None of the individual United Nations affiliates reached the 15% of total income maximum.

13 Fundraising Income from affiliated parties

Income from affiliated parties includes the contributions of the 100% subsidiary War Child Deutschland gGmbH.

War Child Deutschland gGmbH fundraised € 11,899 of unrestricted income from sales and private donations, collected at galas and from corporates, to be used for our programs. In addition War Child Deutschland is raising restricted funds from German institutional donors which directly benefits our programmes.

14 Fundraising Income from other organisations

The income from other organisations includes income from foundations, educational institutions, religious institutions and associations. This is a mix of unrestricted as well as restricted funding.

Developments 2023

The income from other non-profit organisations in 2023 totalled €11.4 million which was an increase of 12 per cent compared with the previous year (2022: €10.2 million), yet 24 per cent below budget. The grants and donors are well diversified within this category. More information is provided in the “Where Our Funds Came From” section in our annual report.

15 Fundraising Income from Sale of Products

The income raised from sale of products are presented as net figures. The gross income is reduced by the direct costs and reported as net income. The net income raised from sale of products in 2023 totalled € 0.8 million. The gross income from the sale of products totalled € 0.8 million and the cost of goods sold were nil. This income was raised during special events for War Child, mainly through a large pyjama sale action from HEMA, as well as through selling of auction items, concert and event tickets. More information is provided in the “Where Our Funds Came From” section in our annual report.

Expenses

Total expenses increased by a total of € 1.2 million to € 50.1 million, an increase of 2 per cent (2022: €48.9 million). War Child’s aim is to spend at least 85 per cent of its resources on its objectives – project activities, preparation and awareness raising. In 2023 War Child met this target. The ratio of Expenses on the objective and sum of expenses was 84 per cent (2022: 89 per cent). The lower spending percentage on the objective was due to a combination of an increased investment in fundraising, and the expenses incurred for the realisation of War Child Alliance. War Child aims to spend maximally 4 per cent of its costs on management and administration. It did not reach this target (2023: 5 per cent; 2022: 3 per cent) due to the one-off transition expenses incurred for the realisation of War Child Alliance. Fundraising expenses increased to 11 per cent of income (2022: 8 per cent) because of an added investment in Face to Face fundraising.

Cost allocation of general expenses

One of War Child’s core values is transparency. In our annual accounts this translates to openness about where our funds come from and how we spend them. Specifically, we are transparent about the cost allocation of general expenses. War Child allocates most of its head office expenses directly to the relevant cost category, meaning that if and when possible, each expense is recognized under the relevant cost category. The expenses related to general management roles, such as the managing director, the director of Shared Operations, the Finance manager, the HR manager and the manager ICT are fully attributed to the cost category for management and administration.

As a result, a general cost allocation methodology is applied to general facility costs in the Netherlands only. The amount of allocated general costs is € 495,240 and includes amongst others office rent, furniture, cleaning, reception and canteen costs. The basis of the allocation is the distribution of salary costs of employees in the Netherlands, resulting in 23 per cent allocated to project activities, 16 per cent to preparation and coordination, 11 per cent to communication and awareness raising, 24 per cent to fundraising, and 26 per cent to general management and administration expenses.

Cost allocation of fundraising and awareness raising expenses

War Child’s events and activities for public engagement in the Netherlands may have a fundraising as well as an awareness raising component. The out of pocket expenses related to such mixed activities are attributed to each of the two categories on the basis of a percentage as justified by the objectives and activities of each mixed project. For each mixed activity, the project leader provides a justified weight of each component. For example, the costs of engaging the public face to face are split 75%-25% between fundraising and awareness raising. During those activities, new Friends are acquired and many individuals are being informed about the children affected by conflict.

The allocation percentages are consistently determined and applied in consecutive periods. If percentages change year on year, management justifies this based on a changed nature of the activities. All employees with a fundraising role are fully attributed to the cost category for fundraising.

Below is a table with the applied percentages and resulting amounts of awareness raising in our largest mixed projects. Some projects were not budgeted because at the time of planning it was unsure or unknown if those would take place in 2023. Vice versa, not all other projects in the budget took place in 2023.

16 Project activities

Expenses towards project activities are costs related to the implementation of War Child’s programmatic interventions. War Child's projects are amongst others providing psychosocial support, child protection, education and advocacy. War Child implements its projects itself as well as by partner organisations. Costs of project activities include expenses such as staff costs, materials purchased, location rent, transport costs and office expenses. Costs of the country offices are fully attributed towards project activities. Costs of the head office are attributed to project activities if the costs are directly related to implementing projects, which in most cases means that those expenses are funded by a grant. This includes our Can’t Wait to Learn and TeamUp programmes, as well as our research and development projects.

Developments 2023

Total expenses on project activities reached € 38.1 million in 2023, or 6 per cent below previous year (2022: €40.5 million) and 5 per cent below budget. Our budget for the year consists of ensured funding from signed grants as well as of ambitious projects that we will try to raise funds for in the various countries. In 2023, our fundraising targets were mainly achieved.

17 Preparation and coordination

Costs for preparation and coordination include for example costs for the evaluations of our programmes, security measures and security trainings, quality assurance, programme management from head office, travel to country offices, internal audits, logistics management and monitoring activities.

Developments 2023

The majority of costs for preparation and coordination originate in the International Programmes department at War Child’s head office. Total costs in 2023 have increased year on year by 10 per cent to € 1.8 million and are 23 per cent below 2023 budget (€ 2.3 million).

18 Awareness raising

Awareness raising includes the costs of raising awareness of people in general and of certain focus groups and networks in particular. Direct costs include those costs related to lobbying, War Child's website, conferences, campaigns and the awareness raising component of events and actions as described earlier under Cost Allocation.

Developments 2023

Awareness raising costs reached € 2.4 million, 70 per cent above 2022 (€ 1.4 million) and are 46 per cent above budget. These additional costs are caused by increased investments in face to face fundraising, and a large gift in kind supporting TV and Radio exposure supporting our ‘Don‘t Let War Last for Generations’ (Laat Oorlog Geen Generaties Duren) campaign.

19 Fundraising

Costs of fundraising are incurred for activities which aim to persuade people, businesses and other organizations to become Friends of War Child, to donate money or to enter into grant contracts with War Child.

Developments 2023

Total fundraising costs divided by total fundraising income in 2023 is 11 per cent (8 per cent in previous year). In 2023, total costs of fundraising increased with 29 per cent in comparison with previous year, and exceeded the budget by 17 per cent. The higher costs were caused by increased focus on face to face fundraising in 2023, as well as an increase in gifts in kind, among which TV and Radio exposure supporting our ‘Don‘t Let War Last for Generations’ (Laat Oorlog Geen Generaties Duren) campaign. The total amount of fundraising costs of € 5.3 million consists of costs for raising unrestricted funds –for example from our Friends-, restricted funds –for example from institutional donors- and investments in fundraising activities in War Child Germany.

War Child contributed to the operational costs of War Child Deutschland gGmbH, which is a legal entity of which the shares are fully owned by Stichting War Child.

20 Management and administration

War Child strives to spend as much on its objective as possible and it is continuously pursuing cost savings opportunities. On the other hand, it realizes that the lowest management costs are not necessarily desirable. Laws, regulations and donor requirements as well as risks of fraud and child safety contribute to a complex environment that require an adequate governance structure, a professional ICT infrastructure and an accurate administrative organisation and internal controls. If management and administration would not get proper attention, then the continuity of the organisation could be at risk.

War Child aims to keep its percentage for management and administration below 4 per cent. In the coming years War Child strives to keep this percentage as low as possible, since operational excellence and efficiency are an important part of its strategic objectives.

Developments 2023

The costs for management and administration in 2023 (€ 2.4 million) are 14 per cent above budget (€ 2.1 million) and are 89 per cent above the level of 2022 (€1.3 million). This increase is mostly due to the one-off costs incurred for transitioning to the networked organization, including setting-up War Child Alliance.

21 Financial gains / (losses)

Developments 2023

War Child does not invest the funds it is trusted with by its donors. Interest income is related to interest received on War Child's bank accounts. The year 2023 saw an exchange rate loss of € 149,109. This is mainly related to the revaluation of outstanding grant award and bank balances in US Dollar. War Child does not budget these gains or losses since those are unpredictable. War Child does not hedge this risk, but takes appropriate measures to mitigate the risk as far as possible. Also see the notes to the balance sheet.

Personnel costs

War Child’s total personnel expenses are specified below. The increase in costs of 1 per cent compared to 2022 is attributable to higher staff salaries compensating for inflation increases. About 47 per cent of total staff expenses originate in the Netherlands, while 26 per cent of our full time equivalent employees are located in the Netherlands. This is explained by higher average salaries. A large portion of the staff costs in the Netherlands are related to programme implementation, and those staff are funded by grants. The category other personnel expenses includes costs for amongst others commuting transport, insurance, training, recruitment, interns, canteen and team building.

Independent Auditor’s costs

War Child’s financial statements 2023 are audited by BDO Audit & Assurance B.V.. War Child determines the presentation of the auditors fee as the total fees for the examination of the financial statements based on the reporting period of the financial statements, irrespective of when the work is performed.

The audit fee for 2023 is quoted at € 166,738 including VAT. No other assignment were awarded to BDO in 2023.

Expenses from the global BDO group in 2022 totalled € 164,560 including VAT, comprising audit services only.

Attribution of expense

The above clarification of the attribution of expenses towards expense categories is in accordance with Annex 3 of the accounting guideline RJ650. The attribution towards cost types is done consistently throughout the years. War Child attributes expenses as per the following guidelines:

• • Contributions includes expenses by implementing partners;

  • Procurement includes all goods and services procured from third parties excluding outsourcing;

  • Outsourcing includes services that are rendered by third parties executing a normal business operation of War Child, not being the implementation of project activities. An example is the outsourced acquisition of donors;

  • Publicity includes advertising and visibility of War Child or its donors to the general public;

  • Staff includes all personnel expenses;

  • Housing includes rental, utilities and cleaning of office and accommodation;

  • Office includes IT, communication, small equipment and postal mail;

  • General includes bank costs, audits, value of gifts in kind and other general costs;

  • Depreciation equals depreciation costs.

Appropriation of the Result

On June 28, 2024, the Supervisory Board of Stichting War Child discussed the annual report and the annual accounts 2023. In accordance with article 8.1.a of the articles of association of War Child, the Supervisory Board adopted the annual report and the annual accounts of War Child, including the proposed appropriation of the result. The members of the Supervisory Board as per June 28, 2024, are Stef Oud (Chair), Raymond Cloosterman, Patrick Lodiers, Katja Kok, Aloisia Zwama and Milka Yemane.

The articles of association provide guidance about the appropriation of the result in stating that the foundation shall not keep more reserves than reasonably necessary for its continuity, as determined by the Managing Director. Art. 3.4: "De stichting houdt niet meer vermogen aan dan naar het oordeel van de directie redelijkerwijs nodig is om de continuïteit van haar werkzaamheden ten behoeve van haar doelstelling te waarborgen."

Events after the balance sheet date

No events have occurred between the balance sheet date and the date on which the Supervisory Board adopted the annual accounts, which would affect the 2023 annual accounts or the condition of War Child at the end of the financial year.

War Child and War Child UK agreed in 2023 to combine their program implementation and support activities in a new Foundation: (Stichting) War Child Alliance. As of January 1, 2024, War Child has therefore handed over its program implementation and support activities to War Child Alliance. War Child continues as a fundraising-focused entity, supporting the work of War Child Alliance.

The transfer of undertaking included all Global Programs, Research and Development and Program Implementation activities, as well as the support capacity for these programs. The handover, which covered all related assets and liabilities, employee contracts, and related reserves, was affected free of charge.

Insofar staff was made redundant due to merging the activities in War Child Alliance of both War Child UK and War Child, a severance provision has been taken into account in the 2023 financial statements of the respective entity.

The transfer of undertaking includes fixed assets EUR 0.1m, short term receivables EUR 3.4m, cash EUR 5.3m, provisions EUR 1.5m and short term liabilities EUR 2.4m. In addition, reserves are transferred to the amount of EUR 4.9m.

The activities handed over to War Child Alliance comprised EUR 31m of the year 2023 income and EUR 41m of the year 2023 expense of War Child. The impact of the handover on the year 2024 budget of War Child Holland can be derived from the 2024 budget of War Child NL. This impact is lower than the value of the income and revenue handed over since War Child NL will continue to be a primary recipient for existing donor contracts and for home donors, with War Child Alliance its implementing partner.