Daniel W. Elliot, CPA

  While almost every financial professional will tell you to diversify your portfolio, both investment and service or goods offerings, there are times where this can lead to higher Administration and Management costs in both for-profit and not-for-profit organizations. Most of us have heard the term ‘Span of Control’ being how many staff one person can effectively manage, a common quote being 5-7. This topic has such a high ‘It Depends’ factor, in my opinion this ratio is only valid for introducing the concept. Let’s consider a few examples. One program with 100 delivery officers may require one Manager and 7 assistant managers as Span of Control can be stretched from the commonly quoted 1:5-7 ratio to 1:15 if all persons are performing similar tasks requiring similar qualifications. Contrast this to an organization with 100 employees, 6 major areas, and multiple programs with distinctively different occupations and skill requirements. For example, an Assistant Warden Management Se...

  Federal, state/provincial, and municipal governments exist to enact and enforce laws which strive to ensure we remain a civilized society; they are also there to provide centralized common services and assist those who are legitimately in need.   In developed nations it is common to have a centralized pot of funds which members of society contribute to provide services such as civil protection including military, police, border, prisons, fire-rescue and healthcare. In addition to these public safety services, is infrastructure such as roads, water, and sanitation. Although there are many debates regarding providing the above more efficiently through forprofit sector, we will assume it would still require a central authority to collect and distribute funding to provide such services regardless of who in the end is delivering. In addition to civil protection and infrastructure, is social programs which is providing support and services to those members of society who are leg...

  Although there are significant differences between forprofit and not-for-profit entities when it comes to program and financial management, there are many similarities: First, forprofit delivers goods and services to make money for investors, where not-for- profit is there to deliver a good or service without an expectation of profit. However, they are both being paid for a deliverable, and if they do not meet expectations, payers may send their money elsewhere. Similar...but different. Second, from a financial management perspective, the requirement for not-for-profit organizations to have subledgers for each program is critical as funders expect you to manage and report on how you use their money; however, in forprofit, many organizations also do this in order to keep track of departmental or customer project costs. Examples include law or accounting firms who keep track of client revenue and expenses, and manufacturing firms who monitor revenue and expenses when constructing a...

  Before we start allocating funds and preparing to deliver our programs, we need to have a conversation about administration versus program delivery costs. While I appreciate the fact donors want their funds allocated to boots on the ground service delivery, there are costs to get there, and everyone needs to pay their fair share.   The first thing we need to do is clearly establish the difference between ‘program delivery’ costs and ‘administrative’ as many providers and funders battle over the fine line between the two. Believe me when I tell you, the line is fine.   An extreme view is ‘all costs are program related.’ Why do I say this? Simple, all costs occur for no other reason than delivering the program; for example, human resources personnel recruit, select, train, and pay staff who deliver the program, and if not for the program, neither the staff nor the human resources officer would exist. Accounting personnel collect contract payments, service fees, and do...

Can you imagine turning down a job because they have a pension plan? Recently I was working on the annual contributor report for a Defined Benefit Pension Plan. While the corporate world has traded these in favour of Defined Contribution Pension Plans to no longer deal with the headache and liability, there are many reasons why employees should want conversion as well. For those who are unsure of the difference: Defined contribution plans are where the employee and employer each make a contribution to a plan such as a Registered Retirement Savings Plan (RRSP) in Canada. The contribution is defined, for example 9% : 9 % of your salary, it is your fund to manage as you wish and is yours regardless of where you work. A Defined Benefit plan is similar in that you each contribute a portion, but the plan belongs to the employer, the terms dictate what your payment will be when you retire which is typically calculated based on age and years of service; these typically work fine when you stay ...