Posts

Fund Development

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  As your organization grows, especially when it diversifies, your needs change; from layers of management to administrative requirements, to physical space, change can be overwhelming. While I can appreciate the fact you have needs, you are still limited by what you can afford; especially in the not-for-profit sector where funders are stuck on the 10% Administration figure. Recently, we have been discussing a fund development position versus our current system where managers are chasing new funds off the side of their desk. But what does that look like, and how do you pay for it if you still only get 10% Administration, and that goes towards those core support functions? Even if you focus on unrestricted donations, you want to ensure these are not merely paying for the Fund Development activity. While some literature on this subject calls for establishing a Return on Investment (ROI) formula, others suggest a 3:1 ratio where for every dollar you spend, you earn three. Extrapolatin...
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Serving the public is a real job

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  Like the for profit sector, the size and complexity of not-for-profit and publicly funded organizations vary from a small one program two person organization, to millions of dollars delivering a multitude of socially essential programs via hundreds of employees. For those who think the sector is optional, essential life changing services are delivered through these organizations, and decisions of significant consequence are made every day. For those who do not consider a publicly funded organization a business, as long as you are being paid for a deliverable, whether or not there are competitors who will take the work from you, it is a business with the only exception being lack of investors who are in their respective games to make money. When working in the federal public service as an accountant, I had it easy in although we had multiple programs to manage and account for, and they were large, we only had one funder with one set of rules, reporting templates and timelines; fur...
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Means to an end inverted

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  A significant difference between for profit and not-for-profit sectors is what I call ‘Means  to an end inverted’ where in the for profit sector, the thing you do is the means to an end  which is money, and in the not-for-profit sector, money is the means to an end which is  the thing you do. For those in the latter, not-for-profit is a business when you are being  paid for a deliverable, and even more so when there are other organizations competing  against you for the funds. Schools, service organizations, sporting clubs, emergency services, and social welfare  programs all have two things in common: they are mandated to provide a service, and they are accountable to those who fund them. Whether the program is paid for through federal, state/provincial or local taxes, or through donations, service fees, or membership dues, the concept is the same. The inversion of means to an end is important to understand for those who operate in the  not-...
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Year-end

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  Year-end brings accounting factors not often considered during the year when interim reports are generated. If you are performing the following tasks on a monthly basis, you are probably not doing it with a 10% administration fee.   Let’s start with depreciation of capital assets and the    corresponding amortization of donation revenue where applicable. While this is often performed once at year-end, you could calculate these at the beginning of the year and allocate during the period using reoccurring entries. Remember, though, you will need to consider additions and disposals which occur during the year. Next, many of you have bi-weekly payroll which means the first pay after year-end will include days which belong to the prior year requiring an accrual in old year and a reversal in new. Some systems are able to do this monthly if the feature is available and used correctly. From there, we reevaluate leave balances by program such as sick and annual, and adjust ...
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Funder Reporting - Sometimes it can be ridiculous

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The joy of multiple programs is multiple funders each with their own reporting requirements including level of detail, frequency, templates, portals, and restrictions. As the Director of Finance for a mid sized not-for-profit, I had over thirty programs funded by over a dozen major sponsors to contend with, and sometimes even the same funder has different requirements for each of their programs. Unfortunately, there are situations where certain funders assume they are the only program we are running; probably because they themselves despite having multiple deliverers, are only running one program. The result of this can sometimes lead to angst and increases administration costs of program delivery.   Before we get into the details of funder reporting, let’s have a discussion on why we are reporting in the first place.   When you tender a requirement for a contracted good or service, regardless if you are a for profit business or not, you review the bids for value for money...
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March Madness - Use it or lose it!

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 For those who have worked for government organizations at various levels, you may have heard the term ‘use it or lose it’ in the context of spending unused funds at year-end. The concept is you are given a budget for the fiscal year, and if you lapse funds, they will be returned to the Centre never to be seen again. In fact, some managers fear the following year budget will also be reduced because if you did not need that much last year, you probably don’t need that much next year either. Unfortunately, the above mentality leads to questionable decisions such as purchasing frivolous goods or services, as well as ‘business retreats’ on cruise ships. However, when  ́March Madness ́ is used to stock up on necessary items such as office supplies, rations for kitchens, or fuel for vehicles and equipment, it is generally acceptable. However, if the value of these types of ‘inventoriable’ items becomes excessive, accounting policies may require you to move the value of the product o...
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Forecasting can be a nightmare

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  As I attempt to finalize the new year budget, I recall the number of scenarios which can make the task daunting.   Working in the Social Services field of the not-for-profit sector, over 70% our costs are salaries and benefits, and ensuring these are well forecasted is critical otherwise affecting decision making therefore representing a significant risk to the financial health of the organization. You would think working in a unionized environment where salaries and benefits are clearly defined would make the task of forecasting and managing salaries fairly straightforward; however, a number of factors complicate this. First, not all benefits are available to all employees, or available right away; for example, the Health and Dental portion have a three month wait period, where the pension match wait period can be as much as six months. Each of these two packages cost over 9% of eligible salaries for the employer portion. The variance of forecasting full offering versus an ...
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