When Disaster Is Your Job

At World Vision US, CFO Larry Probus helps steer humanitarian aid and disaster relief to millions of people around the world.

The devastating earthquakes in Haiti and Chile earlier this year brought new attention to disaster relief and the nonprofit agencies that provide it. One of the largest such agencies is World Vision, a Christian humanitarian organization. Last year its U.S. branch spent over $1 billion in more than 100 countries, not just on disaster relief but also on efforts to help disadvantaged children by supplying basic needs such as clean water and medical care. Despite the recession, revenue for World Vision US grew 10% in fiscal 2009, to $1.2 billion.

But Larry Probus, senior vice president and CFO of World Vision US, says he and his colleagues are “not overly impressed” with the organization’s size. That’s because “there are probably at least 2.6 billion people in the developing world that need help,” he explains. “When you put it in that context, [we address] a very small part of the need out there.” (The nonprofit’s Website estimates that the organization provides aid to about 100 million people around the world.)

Before joining World Vision in 2003, Probus spent more than 20 years with Brown-Forman, a Louisville-based maker of premium spirits and wines. He says that were it not for a chance encounter with Mother Teresa in the 1990s, he likely would have remained at Brown-Forman until retirement (more on this below). He also serves on the Financial Accounting Standards Board’s Financial Accounting Standards Advisory Council, as well as the Standards Committee of the Evangelical Council for Financial Accountability.

Recently, Probus spoke with CFO about World Vision’s outlook for 2010. The following is an edited version of the interview.

How do you forecast and budget for responding to natural disasters, which are inherently unpredictable?

Well, you can’t forecast natural disasters. But what you can do is be prepared to react quickly. For instance, we have storehouses of emergency supplies that we can deploy within 24 hours of a natural disaster. We also know from experience what our role will be vis-à-vis other nonprofit organizations. We are typically focused on children, providing safe places for children who may have lost their parents, as well as essential food and shelter.

So when the Haiti earthquake occurred, we had teams of people immediately entering the country to supplement the 800 staff we already had there — to work with them to distribute food and water, and then put in place these child-friendly spaces. Now we’re working on providing longer-term housing and shelter.

Larry Probus quote

When a disaster happens, is there a decision process about whether or not you have the budget to get involved?

The Internet plays a key [role] in that. We communicate the need to our donors, and as those donations come in, we monitor them daily and can adjust our response accordingly. The more money that comes in, the more resources we can put into the field.

Was it hard to respond to Chile’s earthquake, given that it came so close after Haiti’s?

Yes, the response for donations was much lower for Chile. But the need wasn’t as great either, since it is one of the more-developed countries in South America.

Despite the recession, your revenue overall was up last year, largely due to government and corporate help.

That’s right. We get government funds largely through commodities from the U.S. government. We also get a large amount of gifts in kind; a lot of that is pharmaceuticals and school supplies and clothes from corporations. Finally, we have cash gifts that are primarily from individuals.

Does having an explicit Christian mission ever present a problem in working with companies that might want to be more neutral?

It can, [but] generally no. We’re very clear that we serve everybody according to their needs, so we make no distinction on a faith basis for that. The way we view the world is that people should give to those organizations that do the best job; that are the most effective. The faith-based component is important for the people who work here, because just about everybody is here because they feel called to serve. But I think that’s what gives us the ability to be effective.

As a CFO, how do you measure effectiveness?

I’ve come to learn that the appropriate measurement is how many lives are changed as a result of our work. That’s a very difficult thing to measure, so most people gravitate to some other metric like the overhead rate. What we have been trying to do is measure objective metrics on the overall welfare of children. For instance, when we go into a community we will measure how many children are inoculated, how many have stunted growth, how many children in school, how many have access to clean water within one kilometer, and so on. Then we measure those again 5 years later, 10 years later, 15 years later. One challenge is that there are lots of things going on in those communities other than just World Vision, so it’s not always the case that the changes are solely due to our work. But it’s still the right thing to do.

Speaking of overhead costs, yours dropped 2% last year to 11%, a historic low for World Vision. How are you getting those costs down?

Like many nonprofit and for-profit organizations in the past 18 to 24 months, we’ve had some significant cost-containment measures. We have not had any merit [pay] increases for our employees for two years. We had a [layoff] that amounted to about a 5% reduction in positions about a year ago. We’ve reassessed all of our discretionary spending and reduced the amount of travel. Sometimes it takes a significant shift in economic conditions to make you do things differently than you have in the past.

You came to World Vision in 2003, but a much earlier encounter with Mother Teresa influenced your decision to join the organization. Tell me more about that.

In the early and mid-90s, I was working for Brown-Forman in India. I started traveling there with a colleague to do focus-group interviews. On one of those trips, in Calcutta, we got to spend about 10 or 15 minutes chatting with [Mother Teresa]. I was struck by how one person really had made a huge difference in a lot of people’s lives there.

After that trip, there was a period of time where I did a lot of soul searching and actively wondered if there was something else I should do. It was years after that when [World Vision CEO] Rich Stearns called me and said he was looking for a CFO. And I was reminded of that visit.

What was your biggest challenge coming to a nonprofit after spending decades in the for-profit world?

One of the biggest challenges was understanding the end-to-end economic chain for World Vision’s work, from the time a dollar is raised until it’s spent in the field. The question I get asked most often as a CFO is: How much of my dollar gets to my child or my community? There isn’t a simple answer, because it depends on your definitions. One answer is 89 cents — $1 minus overhead costs. But some people literally want to know: “If I give you a dollar for my sponsored child, how much of that dollar gets to my child?” We actually don’t give money to children or to their families, so another answer is zero. But what they really want to know is how much of that dollar gets to the community of my child and how it’s used.

So how do you answer it now?

A key question for us is: How do you get the most value out of a dollar? The simplest answer would be to get more money to the budgets of the local communit[ies]. That’s the right answer sometimes, but not always. It’s sometimes a better investment to hire a doctor who works at a national office, not in the local community of any given child, who can travel all around that country. Or we [sometimes] take a portion of the sponsorship funds and invest in a drilling rig for an entire country, which then drills fresh-water wells in the local communities where we work.

But what you want to measure ultimately is the benefit that the children receive, and not necessarily how many dollars go into the local community.

What are your main projects for this year?

We are embarking upon a major expansion of our water-access initiative, with the objective of bringing fresh water to every community we work in. Ideally what you want is for people to have access to clean water within one kilometer. It’s a big undertaking.

[I recently spent] some time in Africa — Ethiopia, Ghana, and Mali — with a major donor, and we were inspecting all of our water drilling rigs. I’ve been trying to make decisions on how many new ones we should invest in and where they should be deployed for the most benefit. There’s no way to do this job without having some level of direct involvement in what we do on the ground, which is a challenge because we’re spread all over the world and in some of the hardest places to work in the world. I was literally in Timbuktu, so if you’ve never been there, I can tell you it is almost at the end of the earth. But there’s no substitute for that.


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