Daniel W. Elliot, CPA

  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 ...

  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...