Dear Friend,

I could have sent you horrible photographs of starving children, but I don't think you need to be shocked into helping little children . . . Two-year-old boys looking like living skeletons . . . Tiny babies . . . helplessly blind from a lock of Vitamin A . . . Money is desperately needed. . . .

Thanks to emotional letters such as this, an Alexandria charity has raised nearly $1 million in the last two years -- money it promised to spend on packages of high-protein foods for malnourished children around the world.

Yet, according to its own figures the charity, Children's Aid International, has spent less than 7 cents out of every dollar it has raised on food for children.

The rest, received in response to the 20,000 letters a month the charity sends to homes around the country, has been paid out in management fees, salaries and for the charity's sophisticated direct-mail campaigns. According to one estimate, 25 cents out of every dollar went for management fees, 51 cents for fund-raising and 17 cents for other administrative costs.

Those percentages are based on figures supplied by Children's Aid officials. When pressed for details of the charity's spending during the past two years, officials say they cannot provide many specifics. The Council of Better Business Bureaus, which reviewed the charity's books, described the organization's records as imprecise.

At one time, the charity had agreed to give two-thirds of its receipts to a Northern Virginia firm that provided it with a mailing list.It also paid a Washington management firm run by a friend of Children's Aid president Conald L. Miller $71,669 to manage overseas donations that totaled only $19,032.

The amount of money Children's Aid spends on fund-raising is high in comparison to that of many established charities. The United Way of the National Capital Area, for example, spends less than 7 cents of every dollar on fund-raising. Approximately 89 cents of each dollar goes to member agencies, and about 4 cents goes to overhead and related expenses, according to a spokesman Robert Wiesinger.

The local United Way, which last year raised $23,541,489, uses very little direct mail to raise money, relying instead of contributions made by individuals contacted at their work place, Weisinger said.

To some charity regulators, the troubles of Children's Aid illustrate the difficulty local officials are having policing the increasing number of worldwide charity groups that are drawn to Washington. The charities have been attracted to the area by the hope of obtaining funds from the federal government, some officials say.

"The prestige of the Washington area and the aura of international events" lure others, according to Carol Camarano, an Alexandria consumer affairs official.

Whatever the reason, there is no dispute that charities have become big business in the Washington area. "Our applications have increased by 25 percent this year," said Joe Richards, chief of a licensing section of the District government. "Currently we have 138 charities licensed to solicit in the District, but by this time next year we may have as many as 400."

Troubled by Children's Aid's high overhead costs and a lack of precise information, New York, Pennsylvania and Maryland authorities have blocked it from soliciting in their states. An agency that is supposed to regulate charities in the Virginia suburbs has complained about a dearth of information on the charity's operations.

Children's Aid officials concede that their charity's professional mailings avoid mentioning the cost of running the organization -- costs that its president, Miller, blames on high start-up expenses.

"There is a lot of false information floating around," complained the 61-year-old Miller, a Washington public relations man who worked previously for another area charity, the Korean Dultural and Freedom Foundation, which encountered similar problems.

Critics of the Alexandria charity, Miller said in an interview, "have the erroneous presumption that all we do is raise money and give it away."

What Children's Aid attemptts to do with its two-member staff located in a small office near the George Washington Parkway is "involve people who are receiving the help in the helping process," Miller said. That means, he said, establishing "structures" in backward areas of the world in which poor people can help themselves, using what the charity calls "Nutri-Paks" of mung beans, dried fish and rice.

Figures the charity is willing to provide show that in the 12 months ending July 31, 1978, it raised $283,771 in cash contributions and spent $191,345 to do that.

The figures say that $19,032 of the $283,771 in contributions was spent on direct aid to children.

The charity claimed administrative costs of $63,858 and legal expenses of $25,000, funds it used to explain its operations to critical charity regulators in New York and Pennsylvania. What makes the charity's fiscal 1978 financial report confusing is that, according to the Better Business Bureaus, it listed as income $100,000 that it had not received.

According to Miller, the charity ended that fiscal year with a debt of $110,802, a deficit he said would be erased during fiscal 1979. An audited report on that period should be available within a week or two, he said. It will show increased fund-raising and decreased cost. "We are continuing to gain acceptance for our program," he said.

Pennsylvania authorities, however, have blocked Children's Aid from further solicitations there saying it must spend no more than 35 percent of its income on fund-raising to qualify for permits under laws there. The Pennsylvania laws are among the most strigent in the nation.

In Virginia and the District, for example, all a charity must do in order to solicit funds is to file an annual audited financial statement. Maryland authorities, who this week directed Children's Aid to stop fund-raising there, cited a 1976 law allowing charities to spend no more than 25 percent of their income on fund-raising.

(The Maryland law was an out-growth of scandals involving the Pallottine fathers, a Baltimore's Catholic order of priests that raised millions of dollars through direct-mail appeals and spent much of the money on real estate and other ventures).

Miller, a ruddy-checked man who worked briefly at The Washington Post in 1946 following a four-year stint in Navy intelligence, said the charity plans to file reports with Maryland and Virginia authorities this week. The reports should remove questions about the validity of Children's Aid solicitations in those states, he said.

The charity executive also dismissed questions raised by a recent Better Business Bureau report. The report said that at various times the bureau's representatives were told that either 43, 60 or 80 children were enrolled in the charity's "sponsorship" program. Children enrolled under that program are supposed to receive $3,113 a year in "Nutri-Paks," health care, school fees, vocational training and spending money.

Miller said the Better Business report fails to recognize that some children were entering the program at the same time that others were dropping out. He also rejected the bureau's charge that the charity's information was misleading.

"With some more time we will be able to lower our overhead costs and raise the amount we spend on services, "Miller said.

The problems now being encountered by Children's Aid Interntional are similar to problems encountered several years ago by another charity Miller worked for, the Korean Cultural and Freedom Foundation.

The Korean group, headed by retired Korean CIA intelligence officer Pak Bo Hi, was banned in 1977 from raising funds in New York state after an audit revealed that it was spending only 7 cents of every dollar for charitable purposes. Most of the 1.5 million went to the fund-raisers themselves, according to the audit. The Richard A. Viguerie Co., a well-known politically conservative direct-mail firm based in Northern Virginia, received $920,302, and a public relations firm head by Miller received $58,756, according to the audit.

To manage its programs, Children's Aid in 1978 paid $71,669 to the International Development Council, headed by Miller's longtiime friend, Arthur Ulin. Miller and Ulin were formerly associated in fund-raising activities for the Korean Cultural and Freedom Foundation.

Ulin was in Europe this week, but Charles W. Bills, who is also Ulin's attorney, confirmed the Miller relationship.

"I wish our costs were lower," said Miller who added that he no longer accepts the $24,000 annual salary from the Alexandria charity he received last year. "I am independently wealthy," he said.

Miller also is head of Washington based Braddock Publications Inc., which publishes lists of federal office holders.