Tools For Success: Financial Management in Challenging Times

Nonprofit Finance Fund
Tools for Success: Financial

Management in Challenging Times
Presented by
Michael Kass
Senior Consultant
Nonprofit Finance Fund
Presented for
R.E.A.L. Experience Workshop
May 24, 2012
nonprofitfinancefund.org
2011 Nonprofit Finance Fund
Agenda
Welcome & Introductions

Nonprofits in a Post Recession Economy
Tools for Planning & Sustainability
Case Study
Wrap Up
www.nonprofitfinancefund.org
2011 Nonprofit Finance
2011
FundNonprofit
Finance Fund
Nonprofit Finance Fund (NFF):

Where Money Meets Mission
Dedicated to keeping nonprofits in balance and in
business.
Serving thousands of nonprofit and funder clients
since 1980
$280 million in loans; over $1 billion in capital leveraged

for nonprofits
500+ Nonprofit Business Analyses; 200+ nonprofit

finance workshops
Formed hundreds of strategic partnerships to advance

nonprofit sector
Nationwide network of experts in nonprofit finance
Lending
Financial consulting services and workshops
Financial advocacy across the nonprofit sector
[NFF is]
arguably the
most influential
voice in the
ongoing effort
to reshape
thinking and
practice about
nonprofit
capitalization.
The Nonprofit
Times
Serving nonprofits nationwide from eight local offices
Northeast: Boston, New York
Mid-Atlantic: Philadelphia, Washington, DC, Newark, NJ
Midwest: Detroit
West Coast: San Francisco, Los Angeles

The NFF Triangle
Mission and Program

What you do, and how
you do it.
Capacity
Capital
The people, space, and

processes that allow you
to do what you do.
What resources and

assets you to have to
work with.
Agenda

Case Study
Wrap Up
2011
FundNonprofit
Finance Fund
Rules of FOR-PROFIT Finance
In the for-profit world,

Customer buys the product.
Price includes the full cost of
12-ounce latte = $3.00
Overhead
& Profit
74%
doing business.
Overhead and profits are
seen as necessary and

regular part of the business
Direct
Cost
26%
(77)
Source: Matt Milletto, Vice President of

the American Barista & Coffee School
Rules of NONPROFIT Finance
Nonprofits exist for a reason:
Rarely an obvious commercial return

Quality considerations make economies of scale elusive
Client often does not pay or pays partially for the
product (e.g., homeless do not pay per night for shelter)

Nonprofits rely on third parties (donors and funders) to
subsidize the cost required dependency

Donors and funders want most of their contribution to go
directly to the people served

Overhead and profits are often seen as unnecessary and
unrelated to achieving the mission

Mission Support (Subsidy) Business

Since nonprofits can rarely charge prices sufficient to cover
the full cost of their core mission programs, they require
support businesses (a.k.a the subsidy business)
Common subsidy businesses include:
Sweat equity (underpay, overwork, low benefits, use of
volunteers)
Fundraising
In-kind contributions
Investment income
Real estate (rental income)
Earned income ventures
When program growth or change occur, one of two things

happens:
more subsidy; OR
financial chaos
Surplus Size Matters:

Breaking Even is Never Enough
Like any organization, nonprofits need to cover
the full cost of delivering programs
This is the Title
This is the
Tax Status
vs.Subtitle
Business Model
Full Costs > Operating Expenses
Full costs include:
10
Operating
Expenses
10
Debt
Principal
Working
Capital
10
10
Fixed Asset
Additions
Depreciation
10
Reserves
10
8
Focus, Focus, Focus

Revisit your mission and define your priorities:
Which activities are core to your mission?

Are they positive financial contributors or do they need
subsidy from other programs?
What is non-negotiable in your budget?
Once you define what is core to your mission then

define programs as:
What we MUST do
What we SHOULD do
What we WANT to do
Make Mission-Driven Decisions:

The goal is to ensure you stay afloat to serve the community.
This may mean partnering with other complimentary
organizations or making tough business decisions
Agenda

Case Study
Wrap Up
2011
FundNonprofit
Finance Fund
10
10
A Planning Continuum
Financial & Organizational Assessment

Explore strategic
partnerships,
collaborations,
mergers
Scenario
Testing
Cash Flow
Planning
Debt
Consulting
and
Access
to Capital
Program
Profitability
Analysis
11
What is a Budget and Why Does It

Matter?
A budget is an organizational plan for a
stated period of time, expressed in dollars
Budgets help to:
Allocate resources
Provide a road map

Allow the organization to monitor progress
Our needs are

unlimited, but
our resources are
limited. Thats
why we need a
budget.
Increase focus
Set and clarify goals
Bruce Bonner, COO,

Childrens Literacy
Initiative
12
How the Budget Relates to

Other Financial Statements
Statement of
Activities
Statement of
Position
Revenue
Assets
Earned
Contributed
Liabilities
Expenses
Revenue
Expenses
Personnel
Professional
Occupancy
Support
Interest
Net
Assets
Surplus / Deficit
Where youve
been
Budget
Surplus / Deficit
Where you are
now
Where youre
going
13
Sample Budget (Original)

Budget: Sunrise Advocacy
FY2012 Budget
Income & Support
Program Fees
Government contracts
Unrestricted Grants
Restricted Grants
Bequest
Revenue to be raised
Carryover
Reserve Draw
Total Revenue
Program Expenses
Salaries & Benefits
Consultants
Supplies
Program Travel
Office Management
Rent and Utilities
IT System Investment
Development
Communications
Subscriptions
Dues
Bank Fees
Meeting Expense
Postage and Messenger
Misc.
Total Program Expenses
Admin Overhead
Total Expenses
Operating Surplus (Deficit)
73,750
101,813
178,750
95,000
50,000
46,000
20,000
10,000
$ 575,313
$ 206,333
103,333
10,776
15,113
836
22,658
75,000
6,171
16,000
1,000
1,250
750
2,100
250
500
$ 462,070
100,000
$ 562,070
$ 13,243
14
Sample Budget (Improved)
Budget: Sunrise Advocacy

FY2012 Budget
Reserve
drawdown and
amounts to be
raised are
excluded from
revenue
Income & Support

Program Fees
Unrestricted Grants
Net Assets Released
Total Revenue
Expenses
Salaries & Benefits
Consultants
Supplies
Travel
Office Management
Rent and Utilities
Development
Communications
Misc.
Total Expenses
Operating Surplus (Deficit)
Bequest
IT System Investment
Total Surplus (Deficit)
73,750
101,813
178,750
95,000
449,313
223,000
120,000
27,443
15,113
17,503
39,325
22,838
16,250
5,600
487,070
$
$
(37,758)
50,000
(75,000)
(62,758)
For a true operating picture, this

should include only unrestricted
funds that are part of core
business/programs
Rather than carryover of any funds

from prior periods, only list funds
released from restriction
Manageable set of functional expense

categories
Any anticipated irregular or one-time

expenses or revenue are listed below
the line
15
Good Budgeting Practices

Do not plug budget gaps with to be raised placeholders
Account for revenue restrictions
Only include revenue that can be used in that year
Net assets released should be included as operating revenue in
the year they are released
Avoid the term carryover can mean many things!
Put extraordinary activities below the line

Anything not repeatable or reliable
Non-operating (capital campaigns, pass-through)
Format for clarity and be audience-appropriate
Legible
Structure directs the reader to the most relevant items
Consolidate information to provide appropriate level of detail
for a particular audience
16
Quantify the Challenge:

Cash Flow Projections
Ensure more visibility into the future by developing a
physical landscape of the timing and reliability of cash in
and cash out
Distinguish between cash flow issues (timing of receipts)

and cash issues (shortage of cash overall)
Estimate how much cash to keep on hand and, if

appropriate, how much short-term debt and/or reserves
you will need to access during low cash months
Provide a better understanding of financial health with

regards to:
Working capital and Liquidity
Balance sheet strength
17
Monthly Cash Flow Projections:

A Basic Worksheet
Month 1
Month 2
A. Beginning Cash
100
120
B. Operating Cash In
50
C. Operating Cash Out
20
B-C Net Cash From Operations
30
D. Net Non-Operating Cash
-10
A+(B-C)+D Ending Cash
120
100+(50-20)-10
18
Monthly Cash Flow Projections

Monthly Cash Flow, Based on Current Annual Forecast
($ in Thousands)
Cash (Opening Balance)
Current
Forecast
$126
Cash In
Government Grants and Contracts
Developer fees
Foundations, corporations, other
Individuals
Special events
CM Scholarship
Grants Receivable
Contribution Receivable
Total Cash In
$4,572
$271
$2,400
$0
$40
$8
$1,188
$631
$9,111
Cash Out
Salaries and benefits
Professional services
Program Costs
Interest Expense
Administrative costs
Occupancy
Accounts Payable
($6,009)
($160)
($417)
($9)
($472)
($330)
($613)
Accrued Salaries
Total Cash Out
Net Cash In/(Cash Out) From
Operations
Cash Ending Balance (Before
Special Items)
Jan. Plan
Feb.
Plan
March
Plan
April
Plan
May
Plan
June
Plan
July August
Plan
Plan
Sept.
Plan
Oct.
Plan
Nov.
Plan
Dec.
Plan
Total
2009
$126
$426
$859
$611
$583
$764
$1,457
$805
$454
$441
$112
$83
$126
$570
$200
$11
$142
$51
$200
$10
$0
$600
$500
$17
$520
$120
$99
$75
$0
$580
$0
$43
$50
$100
$751
$115
$200
$3,772
$271
$1,875
$0
$40
$8
$1,187
$631
$7,784
$450
$293
$100
$20
$0
$100
$40
$8
$187
$300
$1,515
$500
$200
$1,053
$100
$444
($445)
($75)
($31)
($1)
($21)
($7)
($413)
($445)
($1)
($31)
($1)
($27)
($15)
($100)
($445)
($31)
($1)
($54)
($47)
($100)
($223)
($223)
($8,233) ($1,215)
($620)
($678)
$878
$300
$433
($234)
$1,004
$426
$859
$625
$250
$31
$491
($445)
($1)
($31)
($1)
($27)
($15)
$250
$700
($445)
$1,287
($31)
($1)
($27)
($15)
($445)
($2)
($31)
($1)
($54)
($47)
($520) ($519)
($580)
($28)
$181
$707
$583
$764
$1,471
$140
$174
$580
$93
$240
($668)
($15)
($46)
($1)
($41)
($22)
($445)
($8)
($31)
($1)
($27)
($15)
($445)
($445)
($4)
($31)
($1)
($27)
($15)
($445)
($792) ($526) ($578) ($523)
($519)
($652) ($352)
($278)
$218
($132)
($167)
$301
($7)
$805
$454
($31)
($1)
($54)
($47)
$2
$456
($430)
$12
($31)
($1)
($27)
($15)
$1,066
($668)
($12)
($46)
($1)
($67)
($55)
($5,786)
($116)
($402)
($9)
($452)
($315)
($613)
($223)
($848) ($7,917)
Special Items
Line of Credit ($350 available)
$100
Principal Payment(s) on Loan ($57)
(14)
(14)
$250
(14)
(14)
2010 Revenues Rec'd in Cash in 2009

Cash Ending Balance (After
Special Items)
$426
$859
$611
$583
$764
$1,457
$805
$454
$441
($100)
$112
$83
$250
($57)
$100
$100
$286
$286
19
Building Your Cash Flow Projections:

Tips and Techniques
Be disciplined and conservative, but not too
conservative an unrealistic cash flow projection is
useless
Prepare cash flow projections monthly (if not weekly in
times of crisis) and continually update based on actuals
vs. projection
Revisions to your projections will be necessary. Each
month, check for anomalies and subject them to further

review
Look for trends in the end of the month cash balances:

How do projections stack up against actual cash
balances?
Which months end with positive/negative cash levels?
What are the patterns?
20
Using Program Profitability Model to

Assess Risk
Assessing underlying program economics informs strategic
decisions about:
Whether and how to cut costs
Where to focus fundraising efforts
Whether to sustain, grow or cut/change programs
How to respond to operating changes
How to allocate resources among competing priorities
Nonprofits often make decisions to maintain deficit programs

critical to their mission
The key is to understand the size of, and identify the source for
the subsidy needed to cover, these deficits
The PPM removes complex cost allocations:
Total cost allocations are often critical for funder reports and
pricing analyses
However, they are not always best suited for devising financial
strategy and making operating decisions
21
Program Profitability Analysis:

A Visual Tool
Contribution
Margin
Money
+$
-$
High $ contribution
Low mission alignment
High $ contribution
High mission alignment
Assess threat of drift

Opportunity to align with
core programs?
Non-financial costs?
What can we cultivate and
Low $ contribution
Low mission alignment
Relevance to the
organization?
Legacy? One-off?
Opportunities for strategic
realignment?
preserve?
Are there opportunities for
growth?
Low $ contribution
High mission alignment
Potential to cut costs?
Can the revenue model
change?
Does subsidy exist elsewhere
in the organization?
Low Impact
High Impact
Mission
22
Sample Program Profitability Model

Programs
After
School
Youth
Program
Capacity
Literacy
Senior
Services
Program
Subtotal
Special
Fundraising Events
Program
Mgmt
Admin.
Capacity
Subtotal
Total
Revenue
(A) Earned
Ticket Sales
Client Fees
Subtotal
$457
$110
$156
$613
$110
$100
$900
$1,367
$0
$256
$1,623
$0
$10
$80
$704
$152
$946
$242
$185
$427
$427
$800
$0
$0
$0
$0
$0
$0
$0
$1,367
$0
$256
$1,623
$0
$0
$10
$80
$946
$337
$1,373
$243
$107
$1,031
$349
$1,730
$0
$0
$1,373
$3,353
$0
(B) Contributed
Foundations & Corporations
Government
Individuals
Trustees
Subtotal
Total Revenue
$113
$27
$85
$12
$237
$0
$120
$0
$233
$27
$85
$12
$357
$850
$110
$120
$900
$1,980
$946
($100)
($525)
($172)
($188)
($20)
($48)
($29)
($1,046)
($511)
$0
($371)
($20)
($103)
$0
($44)
($100) ($1,000)
($2,094)
$120
Expenses
Salary & Benefits
Consultants & Contractors
Professional Fees
Occupancy
Office & Supplies
Program
Interest
Miscellaneous
($441)
($239)
($112)
($3)
($85)
($80)
($12)
($8)
($15)
Total Expenses
($894)
($100)
Surplus/Deficit
($45)
$10
($259)
($5)
($10)
$20
($100)
($115)
($175)
($85)
($62)
($13)
($46)
($44)
($15)
($20)
($102)
($748) ($1,794)
($195)
($706)
($146)
($146)
($108)
($479)
$0
($20)
$0
($103)
($20)
($20)
($161)
($205)
($300)
($337)
($85)
($656)
($1,378) ($3,472)
($85)
($656)
$646
($85)
$90
($475)
($5)
($120)
23
Agenda

Case Study
Wrap Up
2011
FundNonprofit
Finance Fund
24
24
Case Study: Rock City

San Francisco Bay Area arts organization. Mission is to improve the
lives of youth, teens, and families living in the city and surrounding bay
area through music and musical theater.
Core goals include:
Keeping youth and teens off the streets and out of juvenile detention
centers in a drug-free and violence-free environment
Providing youth and teens with the access to music education,
instruments, and direction that will empower them to express
themselves through art
Engaging teens in art by working with contemporary music genres that
they identify with, such as hip-hop and rock
Encouraging community-building and civic engagement
Major programs include a series of new productions and live music
events each year, music education, and site-specific community
performances.
The organization experienced 2 years of significant operating losses
during a period of rapid growth.
25
Financial Snapshot
Income Statement & Balance Sheet Overview

($ in thousands)
2,500
2,000
1,500
1,000
Operating revenue
Operating expenses
(before depreciation)
500
Assets
Liabilities
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009B 2010P
26
Profitability
Operating Revenue & Expenses

($ in thousands)
2,500
2,000
1,500
1,000
500
Revenue
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009B 2010P
Expenses (before
depreciation)
27
Profitability
Operating Surplus (Deficit) Before Depreciation

Surplus/deficit as a % of expenses ($ in thousands)
100
10%
50
3%
2%
5%
0
3%
-1%
-1%
0%
0%
2009B
2010P
-50
-100
-6%
-10%
-150
2000
2001
2002
2003
2004
2005
2006
2007
2008
28
Health of Balance Sheet
Total Net Assets

($ in thousands)
800
700
600
500
400
300
200
100
Unrestricted
0
-100
Temporarily restricted
-200
2000
2001
2002
2003
2004
2005
2006
2007
2008
29
Health of Balance Sheet
Unrestricted Net Assets

($ in thousands)
100
50
-50
-100
Liquid
-150
Property & equipment
(P&E)
-200
2000
2001
2002
2003
2004
2005
2006
2007
2008
30
Liquidity
How Is Cash Committed?

($ in thousands)
900
800
700
600
500
Temporarily restricted net

assets
400
300
Deferred revenue
200
100
Cash and investments
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
31
ORIGINAL
Capacity
Rock City PPA

FY2010
Original
Productions
Revenue
(A) Earned
Admissions
Fees
Merchandise Revenue
Subtotal
Arts-inEducation
Community
Events
Program Subtotal
Gen Ops
Development
Capacity
Subtotal
Total Budget
$14,018
$58,000
$4,179
$76,197
$73,453
$28,650
$2,700
$104,803
$9,500
$402,000
$0
$411,500
$96,971
$488,650
$6,879
$592,500
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$96,971
$488,650
$6,879
$592,500
Subtotal
$0
$75,000
$18,000
$0
$312,000
$405,000
$0
$0
$0
$0
$682,238
$682,238
$0
$0
$0
$0
$205,250
$205,250
$0
$75,000
$18,000
$0
$1,199,488
$1,292,488
$49,400
$87,500
$0
$43,500
$340,000
$520,400
$0
$137,500
$0
$0
$0
$137,500
$49,400
$225,000
$0
$43,500
$340,000
$657,900
$49,400
$300,000
$18,000
$43,500
$1,539,488
$1,950,388
Total Revenue
$481,197
$787,041
$616,750
$1,884,988
$520,400
$137,500
$657,900
$2,542,888
($400,853)
($131,850)
($56,687)
($4,300)
($10,690)
($3,880)
($12,465)
($3,500)
($13,000)
($3,150)
($1,550)
($6,900)
($380)
($2,700)
($4,000)
($1,250)
($12,500)
$0
($1,000)
($12,000)
($1,500)
($157,002)
($306,125)
($2,500)
$0
($350)
$0
($107,980)
$0
$0
($2,000)
$0
($1,200)
($8,000)
$0
($1,500)
$0
$0
($5,600)
$0
$0
$0
($709,695)
($565,475)
($129,187)
($4,800)
($43,040)
($3,880)
($203,945)
($3,500)
($22,000)
($12,150)
($1,550)
($13,545)
($14,980)
($16,450)
($8,600)
($4,000)
($12,500)
($41,600)
($61,000)
($12,000)
($1,500)
($180,864)
($147,500)
($57,264)
$0
($1,500)
$0
$0
($8,050)
$0
($1,000)
$0
$0
$0
$0
($2,575)
($3,200)
$0
($15,000)
$0
$0
($23,000)
($137,266)
($4,250)
($7,200)
$0
($27,192)
$0
($4,000)
($4,700)
$0
($16,850)
($900)
($2,000)
($5,865)
$0
($1,775)
($1,050)
($1,150)
($3,210)
$0
$0
$0
($318,130)
($151,750)
($64,464)
$0
($28,692)
$0
($4,000)
($12,750)
$0
($17,850)
($900)
($2,000)
($5,865)
$0
($4,350)
($4,250)
($1,150)
($18,210)
$0
$0
($23,000)
($1,027,825)
($717,225)
($193,651)
($4,800)
($71,732)
($3,880)
($207,945)
($16,250)
($22,000)
($30,000)
($2,450)
($15,545)
($20,845)
($16,450)
($12,950)
($8,250)
($13,650)
($59,810)
($61,000)
($12,000)
($24,500)
($592,257)
($1,885,397)
($439,953)
($217,408)
($657,361)
($2,542,758)
(B) Contributed
Government
Individuals
Corporate
Foundations
Net Assets Released
Expenses
Personnel Salaried plus benefits
($151,840)
Non Salaried (aritst, contractors, etc.)
($127,500)
Facilites
($70,000)
Marketing
($500)
Hospitality
($32,000)
Copying
$0
Travel
($83,500)
Supplies & Equipment
$0
Documentation
($9,000)
Printing
($7,000)
Design
$0
SWAG
($5,445)
Tech Costs
($6,600)
Adv/Promotion
($13,750)
Postage
($3,100)
Materials
($2,750)
Slam/Stipends/Talent
$0
Other
($36,000)
Housing
($60,000)
Ticket Subsidies
Misc.
Total Expenses
($608,985)
($684,155)
Surplus/Deficit
($127,788)
$102,886
$24,493
($409)
$80,447
($79,908)
$539
$130
32
ORIGINAL
Sub-Programs of "Original Productions"
Rock City PPA
New Shows
July 4th Show
Program Total
Library Series
Revenue
(A) Earned
Admissions
Fees
Merchandise Revenue
Subtotal
$14,018
$53,000
$4,179
$71,197
$0
$2,500
$0
$2,500
$0
$2,500
$0
$2,500
$14,018
$58,000
$4,179
$76,197
Subtotal
$75,000
$18,000
$290,000
$383,000
$0
$0
$0
$0
$0
$0
$22,000
$22,000
$75,000
$18,000
$312,000
$405,000
Total Revenue
$454,197
$2,500
$24,500
$481,197
(B) Contributed
Individuals
Corporate
Net Assets Released
Expenses
Staff
Artist
Facilities
Marketing
Hospitality
Copying
Travel
Supplies
Prof Dev
Documentation
Printing
Design
T-Shirts
Tech Costs
Advertising/Promotion
Postage
Materials
Stipends
Local Travel
Other
Housing
($151,840)
($116,500)
($70,000)
$0
($32,000)
$0
($61,000)
$0
$0
($5,500)
($6,000)
$0
($5,445)
($6,600)
($13,750)
($3,100)
($2,750)
$0
($12,500)
($11,000)
($60,000)
$0
($10,000)
$0
$0
$0
$0
($10,000)
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
($25,000)
$0
$0
($1,000)
$0
($500)
$0
$0
$0
$0
$0
($3,500)
($1,000)
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
($151,840)
($127,500)
($70,000)
($500)
($32,000)
$0
($71,000)
$0
$0
($9,000)
($7,000)
$0
($5,445)
($6,600)
($13,750)
($3,100)
($2,750)
$0
($12,500)
($36,000)
($60,000)
Total Expenses
($557,985)
($45,000)
($6,000)
($608,985)
Surplus/Deficit
($103,788)
($42,500)
$18,500
($127,788)
33
ORIGINAL
Rock City PPA
Arts-in-Education Sub-Programs
Artistic
Devolopment
Visiting
Musicians
District 1
District 2
District 3
Mentor
Program
Junior High
Mentor
Program
High School
Music Classes
Artist
Residency
Program
After School After School
Site 1
Site 2
General AIE Total
Revenue
(A) Earned
Admissions
Fees
Merchandise Revenue
Misc. Revenue
Subtotal
$0
$0
$0
$0
$0
$0
$13,650
$0
$0
$13,650
$0
$0
$0
$0
$0
$5,000
$15,000
$0
$0
$20,000
$19,000
$0
$0
$0
$19,000
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$27,550
$0
$2,200
$0
$29,750
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$73,453
$28,650
$2,700
$0
$104,803
Government
Individuals
Corporate
Foundations
Other Unrestricted
Net Assets Released
Subtotal
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$35,000
$35,000
$0
$0
$0
$0
$0
$22,500
$22,500
$0
$0
$0
$0
$0
$22,500
$22,500
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$165,802
$165,802
$0
$0
$0
$0
$0
$108,131
$108,131
$0
$0
$0
$0
$0
$328,305
$328,305
$0
$0
$0
$0
$0
$682,238
$682,238
Total Revenue
$0
$13,650
$35,000
$42,500
$41,500
$0
$0
$29,750
$0
$165,802
$108,131
$328,305
$787,041
($26,517)
($15,000)
$0
($500)
$0
$0
($2,500)
($500)
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
($22,466)
($5,400)
$0
($400)
($600)
($500)
($500)
($120)
$0
($6,000)
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
($22,466)
($5,400)
$0
($300)
($450)
($375)
($300)
($180)
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
($22,466)
($4,500)
$0
($500)
($1,500)
($1,250)
($1,250)
($300)
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
($26,518)
($12,500)
$0
($100)
($2,000)
($625)
($75)
($50)
$0
$0
$0
$0
$0
$0
$0
$0
$0
($12,500)
$0
$0
$0
$0
($27,232)
($200)
($1,000)
$0
($150)
$0
($150)
$0
$0
($2,500)
($400)
($250)
($1,500)
($125)
$0
$0
$0
$0
$0
$0
$0
$0
($66,596)
($2,850)
($26,182)
$0
($460)
$0
($780)
$0
$0
($1,000)
($1,700)
($250)
($3,900)
($130)
($2,700)
($4,000)
($500)
$0
$0
$0
($6,000)
$0
$0
($35,986) ($29,471)
($31,766)
($54,368)
($33,507)
($117,048)
($54,368)
($33,507)
($87,298)
(B) Contributed
Expenses
Staff
Artist
Facilities
Marketing
Hospitality
Copying
Staff Travel
Supplies
Prof Dev
Documentation
Printing
Design
T-Shirts
Tech Costs
Advertising
Postage
Materials
Grants
School Clubs
Other
Ticket Subsidies
Retreat
($26,447)
($2,000)
($500)
$0
($100)
($30)
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Total Expenses
($29,077) ($45,017)
Surplus/Deficit
($29,077) ($31,367)
($986)
$13,029
$9,734
($26,448)
($25,000)
$0
$0
$0
$0
($6,000)
$0
$0
($2,500)
$0
$0
$0
$0
$0
$0
($750)
$0
$0
$0
$0
$0
$0
($17,122)
($15,000)
$0
$0
($1,500)
($500)
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
($1,000)
$0
($1,500)
($26,799)
($13,500)
$0
($1,500)
($2,700)
($200)
($210)
($600)
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
($24,864)
$0
($22,700)
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
($400,853)
($131,850)
($56,687)
($4,300)
($10,690)
($3,880)
($12,465)
($3,500)
$0
($13,000)
($3,150)
($1,550)
($6,900)
($380)
($2,700)
($4,000)
($1,250)
($12,500)
$0
($1,000)
($12,000)
($1,500)
($60,698) ($36,622)
($45,509)
($47,564)
($684,155)
($60,698) $129,180
$62,622
$280,741
$102,886
Note: Additional sub-program columns have been hidden for presentation purposes. As a result, the totals in the Program Total column may not equal the sum of visible columns.
34
REVISED
Sub-Programs of "Original Productions"
Rock City PPA
New Shows
July 4th Show
Program Total
Library Series
Revenue
(A) Earned
Admissions
Fees
Merchandise Revenue
Subtotal
$14,018
$53,000
$4,179
$71,197
$0
$2,500
$0
$2,500
$0
$2,500
$0
$2,500
$14,018
$58,000
$4,179
$76,197
Subtotal
$75,000
$18,000
$290,000
$383,000
$10,000
$30,000
$0
$40,000
$0
$0
$22,000
$22,000
$85,000
$48,000
$312,000
$445,000
Total Revenue
$454,197
$42,500
$24,500
$521,197
(B) Contributed
Individuals
Corporate
Net Assets Released
Expenses
Staff
Artist
Facilities
Marketing
Hospitality
Copying
Travel
Supplies
Prof Dev
Documentation
Printing
Design
T-Shirts
Tech Costs
Advertising/Promotion
Postage
Materials
Stipends
Local Travel
Other
Housing
($151,840)
($116,500)
($70,000)
$0
($32,000)
$0
($61,000)
$0
$0
($5,500)
($6,000)
$0
($5,445)
($6,600)
($13,750)
($3,100)
($2,750)
$0
($12,500)
($11,000)
($60,000)
$0
($10,000)
$0
$0
$0
$0
($10,000)
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
($25,000)
$0
$0
($1,000)
$0
($500)
$0
$0
$0
$0
$0
($3,500)
($1,000)
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
($151,840)
($127,500)
($70,000)
($500)
($32,000)
$0
($71,000)
$0
$0
($9,000)
($7,000)
$0
($5,445)
($6,600)
($13,750)
($3,100)
($2,750)
$0
($12,500)
($36,000)
($60,000)
Total Expenses
($557,985)
($45,000)
($6,000)
($608,985)
Surplus/Deficit
($103,788)
($2,500)
$18,500
($87,788)
35
REVISED
Rock City PPA
Arts-in-Education Sub-Programs
Artistic
Visiting
Devolopment Musicians
District 1
District 2
District 3
Mentor
Program
Junior High
Mentor
Program
Music
High School Classes
Artist
Residency
Program
After School After School
Site 1
Site 2
General AIE Total
Revenue
(A) Earned
Admissions
Fees
Merchandise Revenue
Misc. Revenue
Subtotal
$0
$0
$0
$0
$0
$0
$13,650
$0
$0
$13,650
$0
$0
$0
$0
$0
$5,000
$15,000
$0
$0
$20,000
$19,000
$0
$0
$0
$19,000
$0
$35,000
$0
$0
$35,000
$0
$25,000
$0
$0
$25,000
$27,550
$60,000
$2,200
$0
$89,750
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$73,453
$148,650
$2,700
$0
$224,803
Government
Individuals
Corporate
Foundations
Other Unrestricted
Net Assets Released
Subtotal
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$35,000
$35,000
$0
$0
$0
$0
$0
$22,500
$22,500
$0
$0
$0
$0
$0
$22,500
$22,500
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$165,802
$165,802
$0
$0
$0
$0
$0
$108,131
$108,131
$0
$0
$0
$0
$0
$328,305
$328,305
$0
$0
$0
$0
$0
$682,238
$682,238
Total Revenue
$0
$13,650
$35,000
$42,500
$41,500
$35,000
$25,000
$89,750
$0
$165,802
$108,131
$328,305
$907,041
($26,517)
($15,000)
$0
($500)
$0
$0
($2,500)
($500)
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
($22,466)
($5,400)
$0
($400)
($600)
($500)
($500)
($120)
$0
($6,000)
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
($22,466)
($5,400)
$0
($300)
($450)
($375)
($300)
($180)
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
($22,466)
($4,500)
$0
($500)
($1,500)
($1,250)
($1,250)
($300)
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
($26,518)
($12,500)
$0
($100)
($2,000)
($625)
($75)
($50)
$0
$0
$0
$0
$0
$0
$0
$0
$0
($15,000)
$0
$0
$0
$0
($27,232)
($200)
($1,000)
$0
($150)
$0
($150)
$0
$0
($2,500)
($400)
($250)
($1,500)
($125)
$0
$0
$0
($2,500)
$0
$0
$0
$0
($66,596)
($2,850)
($26,182)
$0
($460)
$0
($780)
$0
$0
($1,000)
($1,700)
($250)
($3,900)
($130)
($2,700)
($4,000)
($500)
($2,500)
$0
$0
($6,000)
$0
$0
(B) Contributed
Expenses
Staff
Artist
Facilities
Marketing
Hospitality
Copying
Staff Travel
Supplies
Prof Dev
Documentation
Printing
Design
T-Shirts
Tech Costs
Advertising
Postage
Materials
Grants
School Clubs
Other
Ticket Subsidies
Retreat
($26,447)
($2,000)
($500)
$0
($100)
($30)
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
($26,448)
($25,000)
$0
$0
$0
$0
($6,000)
$0
$0
($2,500)
$0
$0
$0
$0
$0
$0
($750)
$0
$0
$0
$0
$0
$0
($17,122)
($15,000)
$0
$0
($1,500)
($500)
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
($1,000)
$0
($1,500)
($26,799)
($13,500)
$0
($1,500)
($2,700)
($200)
($210)
($600)
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
($24,864)
$0
($22,700)
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
($400,853)
($131,850)
($56,687)
($4,300)
($10,690)
($3,880)
($12,465)
($3,500)
$0
($13,000)
($3,150)
($1,550)
($6,900)
($380)
($2,700)
($4,000)
($1,250)
($20,000)
$0
($1,000)
($12,000)
($1,500)
($45,509)
($47,564)
($691,655)
Total Expenses
($29,077) ($45,017) ($35,986) ($29,471) ($31,766)
($56,868) ($36,007) ($119,548) ($60,698) ($36,622)
Surplus/Deficit
($29,077) ($31,367)
($21,868) ($11,007)
($986)
$13,029
$9,734
($29,798) ($60,698) $129,180
$62,622
$280,741
$215,386
Note: Additional sub-program columns have been hidden for presentation purposes. As a result, the totals in the Program Total column may not equal the sum of visible columns.
36
REVISED
Capacity
Rock City PPA

FY2010
Original
Productions
Revenue
(A) Earned
Admissions
Fees
Merchandise Revenue
Subtotal
Arts-inEducation
Community
Events
Program Subtotal
Gen Ops
Development
Capacity
Subtotal
Total Budget
$14,018
$58,000
$4,179
$76,197
$73,453
$148,650
$2,700
$224,803
$9,500
$402,000
$0
$411,500
$96,971
$608,650
$6,879
$712,500
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$96,971
$608,650
$6,879
$712,500
Subtotal
$0
$85,000
$48,000
$0
$312,000
$445,000
$0
$0
$0
$0
$682,238
$682,238
$0
$0
$0
$0
$205,250
$205,250
$0
$85,000
$48,000
$0
$1,199,488
$1,332,488
$49,400
$87,500
$0
$43,500
$340,000
$520,400
$0
$137,500
$0
$0
$0
$137,500
$49,400
$225,000
$0
$43,500
$340,000
$657,900
$49,400
$310,000
$48,000
$43,500
$1,539,488
$1,990,388
Total Revenue
$521,197
$907,041
$616,750
$2,044,988
$520,400
$137,500
$657,900
$2,702,888
($400,853)
($131,850)
($56,687)
($4,300)
($10,690)
($3,880)
($12,465)
($3,500)
($13,000)
($3,150)
($1,550)
($6,900)
($380)
($2,700)
($4,000)
($1,250)
($20,000)
$0
($1,000)
($12,000)
($1,500)
($157,002)
($306,125)
($2,500)
$0
($350)
$0
($107,980)
$0
$0
($2,000)
$0
($1,200)
($8,000)
$0
($1,500)
$0
$0
($5,600)
$0
$0
$0
($709,695)
($565,475)
($129,187)
($4,800)
($43,040)
($3,880)
($203,945)
($3,500)
($22,000)
($12,150)
($1,550)
($13,545)
($14,980)
($16,450)
($8,600)
($4,000)
($20,000)
($41,600)
($61,000)
($12,000)
($1,500)
($180,864)
($147,500)
($57,264)
$0
($1,500)
$0
$0
($8,050)
$0
($1,000)
$0
$0
$0
$0
($2,575)
($3,200)
$0
($15,000)
$0
$0
($23,000)
($137,266)
($4,250)
($7,200)
$0
($27,192)
$0
($4,000)
($4,700)
$0
($16,850)
($900)
($2,000)
($5,865)
$0
($1,775)
($1,050)
($1,150)
($3,210)
$0
$0
$0
($318,130)
($151,750)
($64,464)
$0
($28,692)
$0
($4,000)
($12,750)
$0
($17,850)
($900)
($2,000)
($5,865)
$0
($4,350)
($4,250)
($1,150)
($18,210)
$0
$0
($23,000)
($1,027,825)
($717,225)
($193,651)
($4,800)
($71,732)
($3,880)
($207,945)
($16,250)
($22,000)
($30,000)
($2,450)
($15,545)
($20,845)
($16,450)
($12,950)
($8,250)
($21,150)
($59,810)
($61,000)
($12,000)
($24,500)
($691,655)
($592,257)
($1,892,897)
($439,953)
($217,408)
($657,361)
($2,550,258)
(B) Contributed
Government
Individuals
Corporate
Foundations
Net Assets Released
Expenses
Personnel Salaried plus benefits
($151,840)
Non Salaried (aritst, contractors, etc.)
($127,500)
Facilites
($70,000)
Marketing
($500)
Hospitality
($32,000)
Copying
$0
Travel
($83,500)
Supplies & Equipment
$0
Documentation
($9,000)
Printing
($7,000)
Design
$0
SWAG
($5,445)
Tech Costs
($6,600)
Adv/Promotion
($13,750)
Postage
($3,100)
Materials
($2,750)
Slam/Stipends/Talent
$0
Other
($36,000)
Housing
($60,000)
Ticket Subsidies
Misc.
Total Expenses
($608,985)
Surplus/Deficit
($87,788)
$215,386
$24,493
$152,091
$80,447
($79,908)
$539
$152,630
37

Total Net Assets
($ in thousands)
800
700
600
500
400
300
200
100
Unrestricted
0
-100
Temporarily restricted
-200
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009B 2010P
38

Unrestricted Net Assets
($ in thousands)
800
700
600
500
400
300
200
100
Liquid
0
-100
Property & equipment

(P&E)
-200
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009B 2010P
39
Agenda

Case Study
Wrap Up
2011
FundNonprofit
Finance Fund
40
40
Why Focus on Finance?
Adaptive Capacity
Leadership
Program
Management
Financial
Management
and
Capital
Structure
Financial
Systems &
Operations
Fundraising &
Development
Board
Governance
and
Leadership
41
Takeaway #1:
Nonprofits Need Profits
Many business choices are risky; a cash cushion can
help manage this risk.
Risk minus Cash = Crisis
Surpluses need to be sufficient to:

Pay for the annual wear-and-tear of PP&E
Finance investments in new fixed assets and/or
improvements that may not be fully financed through a

capital campaign,
Cover any debt principal payments
Contribute to growth and savings
Surpluses are an indicator of good management and
increasingly recognized as such by the funding
community.
Effective capitalization requires regular surpluses
42
Takeaway #2:
Own Your Numbers
Making sound business choices requires:
Reliable, accurate and timely financial data
Understanding this data and using it to tell your financial
story
Transparently
Without apology
43
Thank You!
To Stay Connected
Learn More
Twitter
twitter.com/nff_news
Facebook
facebook.com/nonprofitfinancefund
Our Blog
philanthropy.com/blogs/money-and-mission
Sign Up
nonprofitfinancefund.org/sign-up
RSS
nonprofitfinancefund.org/news/feed
Get in
Touch!
415-255-4849
SF@NFFUSA.ORG
213-623-7001
LA@NFFUSA.ORG
44

Tools For Success: Financial Management in Challenging Times

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Tools For Success: Financial Management in Challenging Times

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Nonprofit Finance Fund

Tools for Success: Financial

2011 Nonprofit Finance Fund

Welcome & Introductions

Nonprofit Finance Fund (NFF):

$280 million in loans; over $1 billion in capital leveraged

500+ Nonprofit Business Analyses; 200+ nonprofit

Formed hundreds of strategic partnerships to advance

Financial consulting services and workshops

Financial advocacy across the nonprofit sector

Serving nonprofits nationwide from eight local offices

Northeast: Boston, New York

Mid-Atlantic: Philadelphia, Washington, DC, Newark, NJ

West Coast: San Francisco, Los Angeles

2011 Nonprofit Finance Fund

The NFF Triangle

Mission and Program

The people, space, and

What resources and

2011 Nonprofit Finance Fund

Welcome & Introductions

Nonprofits in a Post Recession Economy

Rules of FOR-PROFIT Finance

In the for-profit world,

12-ounce latte = $3.00

seen as necessary and

Source: Matt Milletto, Vice President of

2012 Nonprofit Finance Fund

Rules of NONPROFIT Finance

Nonprofits exist for a reason:

Rarely an obvious commercial return

product (e.g., homeless do not pay per night for shelter)

subsidize the cost required dependency

directly to the people served

unrelated to achieving the mission

2012 Nonprofit Finance Fund

Mission Support (Subsidy) Business

When program growth or change occur, one of two things

2012 Nonprofit Finance Fund

Surplus Size Matters:

This is the Title

Full Costs > Operating Expenses

Full costs include:

2012 Nonprofit Finance Fund

Focus, Focus, Focus

Which activities are core to your mission?

Once you define what is core to your mission then

Make Mission-Driven Decisions:

2011 Nonprofit Finance Fund

Welcome & Introductions

Nonprofits in a Post Recession Economy

Tools for Planning & Sustainability

Financial & Organizational Assessment

2011 Nonprofit Finance Fund

What is a Budget and Why Does It

Provide a road map

Our needs are

2012 Nonprofit Finance Fund

Bruce Bonner, COO,

How the Budget Relates to

2012 Nonprofit Finance Fund

Sample Budget (Original)