Understanding Where Finances & Mission Intersect

Chart Your Strategic Course

Board Empowerment ……..

•Measure outcomes

• Consider long-term viability

Evaluate Mission

Effectiveness

• Ensure adequate resources

• Assure long-term sustainability

Ensure Financial Viability

Fiduciary Responsibility

Does this Board look familiar?

3

Reality

AND YOU ARE COMPLICATED

4

BOARD MEMBERS

HAVE LIVES

Boards don’t always plan well

5

How Do You Plan in a

Changing World? 6

"I always skate to where I think the puck

is going to be.“

- Wayne Gretsky

So how will you know where the puck is going to be if you don’t know where you are …

$(50,000) $(40,000) $(30,000) $(20,000) $(10,000) $- $10,000 $20,000 $30,000 $40,000

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

Mission Margin Matrix

Program 3Program 1

Program 2

Program 4

Fundraiser 1

Fundraiser 2

Planning Follows a Process

Mission Values

Vision Strategic Plan

Organizational Objectives Service Imperatives

The Role of Planning

Operations – beginning organization Functionality What is not working – how do we fix it

Organizational What do we need to grow Are our systems working

Visionary How do we move the needle How do we scale How do we affect transformational change

Step 1: Identify Core Business Activities

Step 2: Set & Map Mission Impact: a) Alignment with mission b) Excellence in Execution c) Scale or volume d) Depth e) Filling an important gap f) Community/constituent building g) Leverage

Step 3: Map Fiscal Impact:

a) Profit (Loss) b) Program Expense

Profit (Loss) = Revenue - (Direct Expenses + Allocated Share + Administration)

Step 4: Create Bubble Chart Impact & Profitability

High Alignment With Impact Statement

These programs require funding. Pursue opportunities for additional funding and/or cost improvements

These programs are self-sustaining. Invest and grow them.

Lower Alignment With Impact Statement

These programs are potential distractions. Find ways to improve them or reconsider participation

These programs generate income Pursue them unless they become a management distraction

Negative Positive

Financial Contribution

Measuring Organizational Impact & Sustainability

Time to measure impact

Determining Impact

Alignment with Core

Mission

Excellence in Execution

Scale/Volume

Depth

Filling an Important Gap

Community Building

Leverage

Alignment with Core MissionCongruent with an organization’s mission, while also contributing to the impact of the organization.

Excellence in Execution

How is the program executed, which can be evaluated through program evaluation data, feedback from clients, direct observations, staff performance evaluations, staff turnover.

Scale/Volume

Client utilization and number of services completed.

Depth

Level of impact on people involved, which can be measured through program evaluation data and logic models.

Scaling System 4 – Exceptional Impact 3 – Very Strong Impact 2 – Some Impact 1 – Not Much Impact

Filling an Important Gap

Filling a gap that is really important, which can be evaluated through reviewing competitors or asking constituents where else they obtain/could obtain that service.

Community Building

How the program helps build community around the organization, which can be evaluated through interview with community leaders, reviews of donor histories, and client surveys.

Leverage

The degree to which a program or business line increases the impact of other programs.

Program Criteria SummaryMISSION MAPPING

Program:

Criteria Rating 1 - 4 (2 is on x axis)

Notes

Mission Alignment Excellence in Execution Scale/Volume Depth Filling an Important Gap Community Building Leverage

Average

MISSION MARGIN MAPPING -- Net Profit

Profitability and Impact Scoring , Based on Fiscal Year Actual

Business Line /Program/Service Expenses Profit or Loss Mission Impact

Expenses should include direct expenses, allocation and administrative overhead

Determining Profitability

Mission Margin Matrix Table

Program Profit or LossRating

(1 lowest - 4 highest)

Program Expenses

Program 1 (40,000)$ 3.86 777,000$ Program 2 (5,000)$ 3.12 157,000$ Program 3 12,000$ 3.10 125,000$ Program 4 (7,500)$ 3.57 51,540$ Fundraiser 1 27,750$ 1.57 75,000$ Fundraiser 2 5,000$ 1.77 12,000$

Mission Margin Matrix As a Chart

$(50,000) $(40,000) $(30,000) $(20,000) $(10,000) $- $10,000 $20,000 $30,000 $40,000

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

Mission Margin Matrix

Program 3Program 1

Program 2

Program 4

Fundraiser 1

Fundraiser 2

Questions you should ask

1) What can you grow?

2) What should you reduce or eliminate?

3) Where are you at risk?

4) How do you mitigate risk?

5) Where can you collaborate?

6) Can your fundraising offset programs that are not funded?

7) What is the impact of reducing a program in terms of administrative allocation?

HOW CAN YOU MOVE THE MATRIX?

Trouble Ahead ……

How do you plan for contingencies?

Forecasting, Scenario Planning and Crisis Management all Look to the Future

Forecasting: Predicting the future based on extrapolating from the present

Scenario Planning: Series of “What If” exercises Strategic Planning exercises to test the viability of

alternative strategies Evaluate risks and potential upside to new strategies Plan if you lose major source of revenue – what

programs can be impacted and still maintain mission Plan if you receive an unexpected significant

contribution

Crisis Management – worst case scenario – “Plan B”

Revised chart with estimates

ORIGINAL UPDATED

28

Scenario Planning

Exercises: What if Program 1

revenue was $850,000 with $950,000 in expenses

What if program 2 doubled its size and saw twice as many people▪ Mission impact

would be higher▪ Cost would be 1/3

higher▪ Revenue would be

70% higher

Crisis Management

You have identified the X factor and it has happened. What does it look like and what are your options? Your major funding source has pulled the

plug The volume has dropped 70% on

Program 1 – moving it close to the line relative to mission

What Have We Learned?

Mission is critical – understand and review the impact you want to have

Finances can shift Forecast Plan by scenario’s Manage crisis well

Plan for the futureAlign collaborations well

“If you don’t know where you are going,

you are certain to end up somewhere else.”

Yogi Berra

Go Forth,Act Decent,Call Your MotherFrom Time to TimeSimcha Fisher

All rights reserved @ Danosky & Associates 2012

Danosky & Associates helps

non-profit organizations build

the capacity to move their

strategic vision forward with a

solid foundation and an army of support behind

them

Engaging philanthropy … empowering your cause

www.danosky.com info@danosky.com

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