1. Jim Raines, Ph.D. Collaborative Health & Human Services PA 412 Public Budgeting & Finance

2. Assessing Financial Health ~ What are our immediate financial strengths and weaknesses? ~ What are our long-term financial strengths and weaknesses? ~ Do our constituents perceive us as effective and efficient? ~ Effective – Adequate to accomplish a purpose, producing the intended or expected result ~ Efficient – Economical in terms of time and/or money CHHS

3. Immediate Concerns ~ Paying Bills (Rent/Mortgage + Utilities) ~ Staff Salaries (Payroll + Benefits) ~ Cash Flow (Receipts > Disbursement) ~ On track for making Budget ~ Wise Investments CHHS

4. Paying Bills & Staff Salaries ~ What is the ratio between assets and liabilities? ~ If many of the assets are soft (grant-related), then what is the ratio between hard assets (cash) and liabilities? CHHS

5. Cash Flow ~ Cash flow is all about Timing. ~ If grants only reimburse the organization for expenses, then the agency must front the money until reimbursed. ~ The longer the lag time between expenditures and reimbursement, the more liquid assets the organization needs to cover the lag time. CHHS

6. Tracking the Budget ~ Do the current financial results match the expected financial plan? ~ Variances are differences between what is expected and what is actual happening. ~ Tracking the budget each month allows the organization to either work harder to increase revenues or lighten up expenditures. CHHS

7. Investing Wisely ~ Goal: To get the best possible return on idle cash ~ Potential Investments: ~ Certificates of Deposits (staggered) ~ Treasury Bonds (more risky) ~ Corporate Bonds (even more risky) ~ Executive Director & Board Treasurer must always ask, “Could we have done better?” CHHS

8. Long-Term Concerns ~ Comfortable Liquid Operating Reserve? ~ Are Core Activities performing financially? ~ Are we Recovering Costs from key funders? ~ Do we have a sustainable Portfolio of Activities? ~ Are our Income Streams both stable and diverse? CHHS

9. Liquid Operating Reserves ~ Liquid Operating Reserve is unrestricted money the organization has accumulated over time beyond what it needs to pay immediate bills. ~ The size of your liquid reserve is a measure of strength or weakness – it’s your “rainy day” fund. ~ “Culture of scarcity” organizations may neglect to even budget for a reserve. ~ The Better Business Bureau recommends no more than 3x the current operating budget in reserves. CHHS

10. Are Core Activities Performing? ~ Any business needs to generate surpluses somewhere to maintain a small reserve for money-losing activities. ~ Administrative activities are generally money-losers. ~ Fundraising activities are generally money-makers. CHHS

11. Cost Recovery from Key Funders ~ Nonprofits need to correctly “price” their services so that they are neither too high nor too low. ~ Develop and monitor an Activity by Funding Source report. ~ Finding gaps allows leaders to make changes: ~ Renegotiate grant & contract budgets ~ Include certain uncovered costs in future proposals ~ Add earned income strategies ~ Contain uncover costs until additional funding is found CHHS

12. Sustainable Portfolios? CHHS Keep and strengthen Star activities Keep and build sustainability of Heart activities Keep and increase mission impact of $ activities Close or transfer STOP activities.

13. Making it Real: The Ice Bucket Challenge ~ Look up the ALS organization. ~ How much did they raise in 2014 from the Ice Bucket Challenge? ~ How did this compare to their normal annual budget? ~ What quadrant above would you place the funds raised? ~ What would you do with the funds given the viral nature of the promotion? CHHS

14. Income Streams ~ Conduct a multi-year historical analysis combined with current data to see shifts in priorities/power of key donors. ~ Declining revenues from some sources will mean the need to increase revenues from other/new sources. ~ No single source of funding should be greater than 50% of organizational funding. ~ Diversification across income streams means having a variety of sources (individuals, corporations, foundations, government agencies) ~ Diversification within income streams means having a variety of funders within each type above. CHHS

15. Effectiveness & Efficiency ~ Do we have enough cash to match temporarily restricted net assets? ~ Are we releasing funds from restriction as planned? ~ Is our overhead rate appropriate? ~ Are our fundraising efforts cost-effective? ~ Is our cost per mission output competitive? CHHS