Nonprofit Finance FundTools 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 ® nonprofitfinancefund.org www.nonprofitfinancefund.org ©2011 Nonprofit Finance ©2011 FundNonprofit Finance Fund 1 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 nonprofitfinancefund.org ©2011 Nonprofit Finance Fund® 2 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. nonprofitfinancefund.org ©2011 Nonprofit Finance Fund® 3 Agenda Welcome & Introductions Nonprofits in a Post Recession Economy Tools for Planning & Sustainability Case Study Wrap Up ® nonprofitfinancefund.org www.nonprofitfinancefund.org ©2011 Nonprofit Finance ©2011 FundNonprofit Finance Fund 4 “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 nonprofitfinancefund.org ©2012 Nonprofit Finance Fund ® 5 “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 nonprofitfinancefund.org ©2012 Nonprofit Finance Fund ® 6 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 nonprofitfinancefund.org ©2012 Nonprofit Finance Fund ® 7 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 nonprofitfinancefund.org ©2012 Nonprofit Finance Fund ® 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 nonprofitfinancefund.org ©2011 Nonprofit Finance Fund® 9 Agenda Welcome & Introductions Nonprofits in a Post Recession Economy Tools for Planning & Sustainability Case Study Wrap Up ® nonprofitfinancefund.org www.nonprofitfinancefund.org ©2011 Nonprofit Finance ©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 nonprofitfinancefund.org ©2011 Nonprofit Finance Fund® 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. That‟s why we need a budget.” Increase focus Set and clarify goals nonprofitfinancefund.org ©2012 Nonprofit Finance Fund –Bruce Bonner, COO, Children’s 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 you‟ve been nonprofitfinancefund.org Budget Surplus / Deficit Where you are now ©2012 Nonprofit Finance Fund Where you‟re 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) nonprofitfinancefund.org ©2012 Nonprofit Finance Fund $ 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 Government contracts 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) nonprofitfinancefund.org ©2012 Nonprofit Finance Fund $ 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 nonprofitfinancefund.org ©2012 Nonprofit Finance Fund® 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 nonprofitfinancefund.org ©2011 Nonprofit Finance Fund® 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 nonprofitfinancefund.org ©2011 Nonprofit Finance Fund® 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) nonprofitfinancefund.org $426 $859 ©2011 Nonprofit Finance Fund® $611 $583 $764 $1,457 $805 $454 $441 ($100) $112 $83 $250 ($57) $100 $100 $286 $286 19 Building Your Cash Flow Projections: Tips and Techniques Be disciplined and conservative, but not too conservative – an unrealistic cash flow projection is useless Prepare cash flow projections monthly (if not weekly in times of crisis) and continually update based on actuals vs. projection Revisions to your projections will be necessary. Each month, check for anomalies and subject them to further review Look for trends in the end of the month cash balances: How do projections stack up against actual cash balances? Which months end with positive/negative cash levels? What are the patterns? nonprofitfinancefund.org ©2011 Nonprofit Finance Fund® 20 Using Program Profitability Model to Assess Risk Assessing underlying program economics informs strategic decisions about: Whether and how to cut costs Where to focus fundraising efforts Whether to sustain, grow or cut/change programs How to respond to operating changes How to allocate resources among competing priorities Nonprofits often make decisions to maintain deficit programs critical to their mission The key is to understand the size of, and identify the source for the subsidy needed to cover, these deficits The PPM removes complex cost allocations: Total cost allocations are often critical for funder reports and pricing analyses However, they are not always best suited for devising financial strategy and making operating decisions nonprofitfinancefund.org ©2011 Nonprofit Finance Fund® 21 Program Profitability Analysis: A Visual Tool Contribution Margin Money +$ -$ 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 nonprofitfinancefund.org ©2011 Nonprofit Finance Fund® 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 Government contracts 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 nonprofitfinancefund.org ($259) ($5) ($10) $20 ©2011 Nonprofit Finance Fund® ($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) ($120) 23 Agenda Welcome & Introductions Nonprofits in a Post Recession Economy Tools for Planning & Sustainability Case Study Wrap Up ® nonprofitfinancefund.org www.nonprofitfinancefund.org ©2011 Nonprofit Finance ©2011 FundNonprofit Finance Fund 24 24 Case Study: “Rock City” San Francisco Bay Area arts organization. Mission is to improve the lives of youth, teens, and families living in the city and surrounding bay area through music and musical theater. Core goals include: Keeping youth and teens off the streets and out of juvenile detention centers in a drug-free and violence-free environment Providing youth and teens with the access to music education, instruments, and direction that will empower them to express themselves through art Engaging teens in art by working with contemporary music genres that they identify with, such as hip-hop and rock Encouraging community-building and civic engagement Major programs include a series of new productions and live music events each year, music education, and site-specific community performances. The organization experienced 2 years of significant operating losses during a period of rapid growth. nonprofitfinancefund.org ©2012 Nonprofit Finance Fund 25 Financial Snapshot Income Statement & Balance Sheet Overview ($ in thousands) 2,500 2,000 1,500 1,000 Operating revenue Operating expenses (before depreciation) 500 Assets Liabilities 0 2000 2001 nonprofitfinancefund.org 2002 2003 2004 2005 ©2009 Nonprofit Finance Fund 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 nonprofitfinancefund.org 2002 2003 2004 2005 ©2009 Nonprofit Finance Fund 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 nonprofitfinancefund.org 2002 2003 2004 ©2009 Nonprofit Finance Fund 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 nonprofitfinancefund.org 2002 2003 2004 ©2009 Nonprofit Finance Fund 2005 2006 2007 2008 29 Health of Balance Sheet Unrestricted Net Assets ($ in thousands) 100 50 0 -50 -100 Liquid -150 Property & equipment (P&E) -200 2000 2001 nonprofitfinancefund.org 2002 2003 2004 ©2009 Nonprofit Finance Fund 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 nonprofitfinancefund.org 2002 2003 2004 ©2009 Nonprofit Finance Fund 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 nonprofitfinancefund.org ©2009 Nonprofit Finance Fund $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 nonprofitfinancefund.org ($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) ©2009 Nonprofit Finance Fund $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. nonprofitfinancefund.org ©2009 Nonprofit Finance Fund 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 nonprofitfinancefund.org ($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) ©2009 Nonprofit Finance Fund $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. nonprofitfinancefund.org ©2009 Nonprofit Finance Fund 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) nonprofitfinancefund.org $215,386 ©2009 Nonprofit Finance Fund $24,493 $152,091 $80,447 ($79,908) $539 $152,630 37 Case Study: Rock City Total Net Assets ($ in thousands) 800 700 600 500 400 300 200 100 Unrestricted 0 -100 Temporarily restricted -200 2000 nonprofitfinancefund.org 2001 2002 2003 2004 ©2009 Nonprofit Finance Fund 2005 2006 2007 2008 2009B 2010P 38 Case Study: Rock City Unrestricted Net Assets ($ in thousands) 800 700 600 500 400 300 200 100 Liquid 0 -100 Property & equipment (P&E) -200 2000 2001 nonprofitfinancefund.org 2002 2003 2004 ©2009 Nonprofit Finance Fund 2005 2006 2007 2008 2009B 2010P 39 Agenda Welcome & Introductions Nonprofits in a Post Recession Economy Tools for Planning & Sustainability Case Study Wrap Up ® nonprofitfinancefund.org www.nonprofitfinancefund.org ©2011 Nonprofit Finance ©2011 FundNonprofit Finance Fund 40 40 Why Focus on Finance? Adaptive Capacity Leadership Program Management Financial Management and Capital Structure Financial Systems & Operations nonprofitfinancefund.org ©2011 Nonprofit Finance Fund® 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 nonprofitfinancefund.org ©2011 Nonprofit Finance Fund® 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 nonprofitfinancefund.org ©2011 Nonprofit Finance Fund® 43 Thank You! To Stay Connected… Learn More nonprofitfinancefund.org 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
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