Survive & Thrive - Scale Collaborative · Surviving and thriving 3. Different organizational...

Survive & Thrive: Financial Strategies and Scenario Planning

for Non-Profits and Social Enterprises

Lee Herrin, lherrin@scalecollaborative.ca

Kristi Fairholm Mader, kfmader@scalecollaborative.ca

March 30th, 2020

Scale Collaborative

Our work:

To assist non profit organizations to financially diversify from grant dependency by integrating enterprising revenue streams

To build socially enterprising eco-systems that incorporate social enterprise, social procurement and social finance

Scale Collaborative

Kristi Fairholm Mader Lee Herrin

Tips to beat the COVID stress

• Take care of you! Sleep, eat well, exercise, be calm

• Take daily breaks

• Connect with friends and family

• Listen closely to your body, your family and friends

• Set boundaries

• Get accurate information

• Use healthy coping skills that you’ve learned in life

• Get support when needed

• Have hope: “this too will pass”

Agenda

1. The leadership challenge

2. Surviving and thriving

3. Different organizational strategies

4. Calculate your burn rate

5. Run scenarios

6. Identify short and medium term needs

7. Next steps

8. Questions

This is a leadership challenge

• As leaders, we make the decisions:

• What do we privilege?

• What do we protect?

• What do we sacrifice?

• How can we make these decisions:

• Equitably?

• Ethically?

• With integrity?

It is also an opportunity to

rethink everything…

Agenda

5. Run scenarios

7. Next steps

8. Questions

What we need to do to survive

Not run out of cash

Preserve our staff core, and our core of committed volunteers

Preserve our customer/client trust and confidence

Preserve our funder, donor, supporter confidence

Not lose our regulatory status, licenses, accreditation, etc.

What we need to do to thrive

Increase our long-term financial resources and self-reliance

Strengthen our staff and volunteer team

Build loyalty and goodwill with our clients, customers and community members

Demonstrate our strength, innovation and resilience to funders, donors and supporters

Improve and tighten our standards

Agenda

5. Run scenarios

7. Next steps

8. Questions

Different organizational strategies

Ramp up—meet critical community need

Experiment—meet emerging community need

Steady state—hold, different delivery

Hibernation—period of low activity

Amalgamate—merge organizations to build strength

Shutdown—wind-up operations

Different resource requirements

Strategy Resources Required Likeliest source

Ramp-up Much more Funders, donors, government contracts, customers/clients

Experiment More, but not much more Funders, donors, reserves, customers/clients

Steady state Current resources

Hibernation Less, maybe much less Donors

Amalgamate Redirect existing resources Funders, donors

Shutdown Much less, then none Current cash and reserves

Different critical questions

Strategy Critical questions?

Ramp-up • How can we ramp-up safely? From where can we secure the necessary resources?• What do we need to stop doing (temporarily) to make this new activity possible?• How will we manage this new, temporary activity?• What plans do we need to make to return to normal operations?

Experiment • What new services and resources for our community can we explore at this time?• Who should lead the experiment?• How will we evaluate the experiment?

Steady state • How will we safely continue to operate? How do we shift our delivery model?• How will we maintain our organization and our relationships virtually?

Hibernation • What can we stop doing entirely? What costs can we shed? • How do we take care of our people? Who can we not afford to lose? • What long-term projects can we complete (safely) during this hibernation?• How will we maintain our organization and our relationships virtually?• What plans do we need to make to restart normal operations?

Agenda

5. Run scenarios

7. Next steps

8. Questions

Calculating your burn rate

• When we’re in deficit, we start burning cash

• Burn rate is a measure of monthly negative cashflow

• Burn rate is a crude measure to let you know how fast you are sinking and when you will run out of cash

monthly continuing cash receivables

less monthly continuing non-discretionary payables

equals cash burn per month

Evaluate your current cash position

• As at March 31st, 2020 look at your bank balance(s)

• Your cash on hand divided by the burn rate is how long you can survive in your current deficit position

• If some revenue is continuing, or you can reduce ongoing expenses, your burn rate will be lower

The question of deferred revenue

• Deferred revenue is cash in hand reserved for future periods

• If you access deferred revenue for current expenses, you need to be able to “pay it back” later• Is it restricted for specific purposes?

• Are any of those purposes ongoing operations?

• Can you request relaxation of requirements from the funder?

Agenda

5. Run scenarios

7. Next steps

8. Questions

Current cash flow: baseline scenario

• Enter your opening cash (and equivalents) balance

• Enter your deferred revenue schedule

• Enter credit limits accessible to you

• Enter reserve account balances

• Start with what you know and what seems most likely today

• Estimate receivables and payables by month on a cash basis

• Don’t forget placeholders for large, non-discretionary occasional or extraordinary annual expenditures

Starting Operating Cash Balance -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

Deferred Revenue -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

Total available credit -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

Revenues still to come by month expected Budgeted amounts not yet received Apr 2020 May June July August September October November December Jan 2021 Febuary March

Revenue stream 1 -$

Revenue stream 2 -$

Revenue stream 3 -$

Revenue stream 4 -$

Revenue stream 5 -$

Revenue stream 6 -$

Revenue stream 7 -$

Revenue stream 8 -$

Revenue stream 9 -$

Revenue stream 10 -$

Total Revenue still to be received -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

Expenses in month they become due Amounts you will pay in this scenario Apr 2020 May June July August September October November December Jan 2021 Febuary March

Wages -$

Benefits -$

Payroll Taxes -$

Contracts -$

Professional Development -$

Professional Fees -$

Insurance -$

Rent / Occupancy -$

Office Supplies -$

Program Supplies -$

Advertising & Marketing -$

Special Event Expenses -$

Bank Charges & Interest -$

Repairs and Maintenance -$

Telephone & Internet -$

Accounting and Audit Fees -$

Legal Fees -$

Interest on Long Term Debt -$

Amounts required to restart operations -$

Expense category 1 -$

Total Expenses -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

Surplus / Deficit from Operations -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

Extraordinary inflows of cash -$

Extraordinary outflows of cash -$

Ending Cash Balance prior to use of reserves -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

Use this section if you intend to use reserves to fund operations this year. Reserve balances will automatically calculate based on drawdown amounts entered below.

Reserve Fund Opening Balance -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

Reserve Fund Drawdowns -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

Ending Reserve Fund Balance -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

Ending Operating Account Balance -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

Check: is cash balance within available credit? YES YES YES YES YES YES YES YES YES YES YES YES

By how much? -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

Check: are we in our deferred revenue? NO NO NO NO NO NO NO NO NO NO NO NO

By how much?

Your Organization Name Cash Flow Projection--Base Case Scenario

2020-2021

Enter in expected budgeted totals for each month, and then update with actuals at the end of each month

Starting Operating Cash Balance 44,204$ 52,765$ 53,351$ 44,426$ 41,387$ 43,373$ 45,334$ 47,271$ 49,182$ 40,957$ 42,793$ 49,654$

Deferred Revenue 9,167$ 8,333$ 7,500$ 6,667$ 5,833$ 5,000$ 4,167$ 3,333$ 2,500$ 1,667$ 10,833$ 10,000$

Parent Fees 200,000$ -$ -$ 20,000$ 20,000$ 20,000$ 20,000$ 20,000$ 20,000$ 20,000$ 20,000$ 20,000$ 20,000$

Child Care Operating Funding (Province of BC) 116,667$ 16,667$ 16,667$ 8,333$ 8,333$ 8,333$ 8,333$ 8,333$ 8,333$ 8,333$ 8,333$ 8,333$ 8,333$

Subsidy 5,000$ -$ -$ 500$ 500$ 500$ 500$ 500$ 500$ 500$ 500$ 500$ 500$

ECE Wage Enhancement 10,000$ -$ -$ 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ 1,000$

Fundraising 8,250$ -$ -$ 750$ 750$ 750$ 750$ 750$ 750$ 1,500$ 750$ 750$ 750$

Miscellaneous 1,000$ -$ -$ 100$ 100$ 100$ 100$ 100$ 100$ 100$ 100$ 100$ 100$

Gaming Funding 10,000$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 10,000$ -$

Total Revenue still to be received 350,917$ 16,667$ 16,667$ 30,683$ 30,683$ 30,683$ 30,683$ 30,683$ 30,683$ 31,433$ 30,683$ 40,683$ 30,683$

Wages 230,000$ 5,000$ 5,000$ 30,000$ 20,000$ 20,000$ 20,000$ 20,000$ 20,000$ 30,000$ 20,000$ 20,000$ 20,000$

Benefits 15,000$ 1,250$ 1,250$ 1,250$ 1,250$ 1,250$ 1,250$ 1,250$ 1,250$ 1,250$ 1,250$ 1,250$ 1,250$

Payroll Taxes 19,806$ 431$ 431$ 2,583$ 1,722$ 1,722$ 1,722$ 1,722$ 1,722$ 2,583$ 1,722$ 1,722$ 1,722$

Professional Development 1,200$ 100$ 100$ 100$ 100$ 100$ 100$ 100$ 100$ 100$ 100$ 100$ 100$

Professional Fees 4,800$ 400$ 400$ 400$ 400$ 400$ 400$ 400$ 400$ 400$ 400$ 400$ 400$

Insurance 5,000$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 5,000$ -$

Program Supplies 10,000$ -$ -$ 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ 1,000$

Bank Charges & Interest -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

Repairs and Maintenance 30,000$ -$ -$ 3,000$ 3,000$ 3,000$ 3,000$ 3,000$ 3,000$ 3,000$ 3,000$ 3,000$ 3,000$

Telephone & Internet 900$ 75$ 75$ 75$ 75$ 75$ 75$ 75$ 75$ 75$ 75$ 75$ 75$

Accounting and Audit Fees 3,000$ -$ 3,000$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

Amounts required to restart operations 5,000$ -$ 5,000$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

Property Taxes 5,000$ -$ -$ -$ 5,000$ -$ -$ -$ -$ -$ -$ -$ -$

Waste management 3,600$ 300$ 300$ 300$ 300$ 300$ 300$ 300$ 300$ 300$ 300$ 300$ 300$

Fundraising Expense 4,000$ -$ -$ 400$ 400$ 400$ 400$ 400$ 400$ 400$ 400$ 400$ 400$

Security 2,400$ 200$ 200$ 200$ 200$ 200$ 200$ 200$ 200$ 200$ 200$ 200$ 200$

Utilities 3,875$ 350$ 325$ 300$ 275$ 250$ 275$ 300$ 325$ 350$ 400$ 375$ 350$

Total Expenses 343,581$ 8,106$ 16,081$ 39,608$ 33,722$ 28,697$ 28,722$ 28,747$ 28,772$ 39,658$ 28,847$ 33,822$ 28,797$

Surplus / Deficit from Operations 7,336$ 8,561$ 586$ (8,925)$ (3,039)$ 1,986$ 1,961$ 1,936$ 1,911$ (8,225)$ 1,836$ 6,861$ 1,886$

Ending Cash Balance prior to use of reserves -$ 52,765$ 53,351$ 44,426$ 41,387$ 43,373$ 45,334$ 47,271$ 49,182$ 40,957$ 42,793$ 49,654$ 51,540$

Reserve Fund Opening Balance 30,000$ 30,000$ 30,000$ 30,000$ 30,000$ 30,000$ 30,000$ 30,000$ 30,000$ 30,000$ 30,000$ 30,000$

Ending Reserve Fund Balance 30,000$ 30,000$ 30,000$ 30,000$ 30,000$ 30,000$ 30,000$ 30,000$ 30,000$ 30,000$ 30,000$ 30,000$

Ending Operating Account Balance 52,765$ 53,351$ 44,426$ 41,387$ 43,373$ 45,334$ 47,271$ 49,182$ 40,957$ 42,793$ 49,654$ 51,540$

By how much? 52,765$ 53,351$ 44,426$ 41,387$ 43,373$ 45,334$ 47,271$ 49,182$ 40,957$ 42,793$ 49,654$ 51,540$

By how much?

XYZ Child Care Society Cash Flow Projection--Base Case Scenario