Purpose of This Document This set of slides is intended to provide community foundations with a template for presenting the findings of their activity-based

Purpose of This Document• This set of slides is intended to provide community foundations with a template for presenting the findings of their

activity-based costing analysis

• Foundations can use any or all of these slides as appropriate

• To use these slides, foundations must:

• Enter the results of their activity-based costing analysis in relevant slides

• Update the peer foundation data on appropriate slides based on current benchmarking data available on the CF Insights database (www.cfinsights.org) (NOTE: this data is available to members of CF Insights only)

• Need help analyzing the data or putting together presentation materials? Contact [email protected] for information on pricing.

Helpful Tips when deciding what to include/exclude :

• Who is your audience? A Finance Committee may want the nitty gritty details on all products while the Board may be more interested in very high level findings and a few key recommendations.

• Where can you drill down?

• Determine key decisions your foundation is considering. For instance, are you looking to evaluate the viability of certain products? Do you want to consider investing further in certain areas?

• Was there anything that surprised you? For instance, did you expect DAFs would be generating a big surplus, but the foundation is subsidizing them? How do the data explain the results (perhaps the effective fee and/or average fund size are low)?

• Where would peer comparison data be helpful?

• The CF Insights database can help put some of your data into context (note that not all data sampled here is available for all community foundations). Contact [email protected] for assistance.

http://www.cfinsights.org/

mailto:[email protected]


cfinsights.org

Activity-Based Costing AnalysisPresentation of Results

YOUR COMMUNITY FOUNDATION NAME

DATE

SHARING KNOWLEDGE. GROWING IMPACT.

© CF Insights 20123

AGENDA

I. Methodology

II. Sample Slides for Overview and High-Level Findings

III. Sample Slides for Peer Data

IV. Sample Slides for Discussion

Methodology


Community Foundations Can Build Transparency Into the Costs and Revenues Associated with their Products by Asking New Questions

• How much cost is associated with each Foundation product?

• Which products make money and which do we subsidize?

• Are our subsidies consistent with our mission and strategic priorities?

• What determines cost for each of our products?

Activity-Based Costing can help you determine answers to these questions

Methodology


The Cost-Revenue Study Uses Activity-Based Costing to Assess the True Cost of a Foundation’s Products and Services

• Activity-Based Costing (ABC) allows organizations to determine the actual cost associated with each product or service

• Cost data is gathered and traced to specific activities, then costs are allocated to products or services based on their utilization of activities

Staff costs are assigned to activities and products based on reported time, weighted by individual salaries, including taxes and benefits

Expense 1 Expense 3 Expense 4Expense 2

Activity 1 Activity 2 Activity 3

Product 1 Product 2

Costs are assigned

to activities…

…then allocated based on utilization

of activities

Methodology

Cost Matrix DAF Discretionary Scholarships AgencyFee for Service

Planned Giving

Supporting Orgs.

InitiativesCommunity

Leadership and Services

…

Acquiring or Establishing a New Fund

or Gift

$Y $Y $Y $Y $Y $Y $Y $Y $Y $Y

Maintaining Funds

$Y $Y $Y $Y $Y $Y $Y $Y $Y $Y

Making Grants

$Y $Y $Y $Y $Y $Y $Y $Y $Y $Y

Providing Non-Grant Services to

the Community

$Y $Y $Y $Y $Y $Y $Y $Y $Y $Y

Other StaffActivities

$Y $Y $Y $Y $Y $Y $Y $Y $Y $Y

100% of the Foundation’s Staff Time, Cost and Other Expenses Were Assigned to a Matrix of Products and Activities

The model uses a set of standardized rules for allocating activity time to products

where staff were unable to do so

16 Products

>1

00

Ac

tiv

itie

s

6 © CF Insights 2012

Methodology - Products Used in the Analysis

Product Description

UnrestrictedFunds that meet community needs as they arise through the Foundation’s Grants Program and are typically held in perpetuity, producing an annual income

Field of Interest Funds allowing donors to support a broad area of concern

DesignatedFunds created to ensure ongoing assistance to specific non-profit and charitable organizations, monitored to ensure that they fulfill purposes that donors intended to support

Geographic Affiliates Specific fund names

Agency FundsEndowment funds established by individual non-profit organizations to be held and managed by the CF. The CF makes regular reports and distributions to the organization.

Scholarship Funds providing an annual income to be distributed in the form of scholarships

Donor Advised Funds / Endowed

Funds held by the CF where the donor has specified that the fund’s income or assets be used for the benefit of one or more specific public charities or areas of interest, subject to spending policy

Donor Advised Funds/ Non-Endowed

Funds held by the CF where the donor has specified that the fund’s income or assets be used for the benefit of one or more specific public charities or areas of interest

Fee for Service Funds which require a significantly customized set of services, including committee work, event planning

Supporting Orgs. Specific fund names

Fiscal Sponsorships Specific fund names

Other

Special InitiativesSpecific Initiative names

Community LeadershipActivities specific to each foundation, typically resulting from its mission driven priorities. Examples include: activities that support the growth of philanthropy in the community, providing technical assistance to non-profits, convening funders through grant writing workshops and local presentations.

Planned Giving Charitable trusts including Charitable Remainder Trusts and Charitable Lead Trusts

Fundraising for Operations Fundraising activities to support the foundation's operations .


Sample product list and definitions - Update to include your products and

product definitions


AGENDA

I. Methodology

II. Sample Slides for High-Level Findings



High Level Findings

Total Assets Total Revenue Total Cost0%

20%

40%

60%

80%

100%

15%19%

2%

6%6%

6%

37%

20%

15%

38%

35%

22%

2%

14%

3%

4%

13%

34%

3%

Fee for Service

Planned Giving

Leadership Activities

Initiatives

Fundraising

Supporting Organizations

Discretionary

Endowed DAFs

Non-Endowed DAFs

Designated Funds


% of Total Assets, Revenues and Costs by Product

$800M $10M $10M

Total DAFs represent

21% of costs

Total DAFs

represent26% of

revenues

Total DAFs represent

43% of assets

Update with your products and data

Total Foundation Fund Types Initiatives Civic Leadership Other

($12,000,000k)

($9,000,000k)

($6,000,000k)

($3,000,000k)

$0k

$3,000,000k

$6,000,000k

$9,000,000k

$12,000,000k

$105k

$4,793k

($937k)($3,467k)

($283k)

Total Revenue Total Cost Total Surplus/Subsidy

High Level Findings


2011 Costs & Revenues ($M) Operating Budget Only

Costs and Revenues by Product Category

Update with your products and data

Des

igna

ted

Unr

esric

ted

and

FO

I

DA

F -

End

owm

ent

Sch

olar

ship

s

Fee

for

Ser

vice

Pla

nned

Giv

ing

Fis

cal S

pons

orsh

ips

Geo

grap

hic

Aff

iliat

es

Age

ncy

Fun

d R

aisi

ng F

unds

Sup

port

ing

Org

s.

DA

F -

Non

End

owed

Com

mun

ity L

eade

rshi

p

-$600,000K

-$450,000K

-$300,000K

-$150,000K

$0K

$150,000K

$300,000K

$450,000K

$600,000K

$254,236K$208,862K

$91,335K$64,795K

$34,433K

($6,855)K ($16,359)K ($21,640)K($40,122)K($42,846)K ($47,316)K

($106,365)K

($588,154)K


High Level Findings

Cross-subsidizing is not unusual in a community foundation business model and it is important to be intentional about where investments are made

Surplus, Subsidy and Investment for Each Product

Surplus Subsidy Investment

2011 Surplus/Subsidy/Investment by Product ($k) Operating Budget Only

© CF Insights 2012

– Number of products, and asset concentration in each product

– Degree of customization allowed or encouraged by the Foundation

– Endowment or grantmaking emphasis of each fund - or rate of pass through

– Average fund size in each product category

– Pricing discounts from published pricing and matching pricing to underlying cost drivers

– Revenue diversification beyond asset-based fees

12

A NUMBER OF INTERRELATED FACTORS INFLUENCE THE SUSTAINABILITY OF THE PRODUCTS PROVIDED BY COMMUNITY FOUNDATIONS

High Level Findings

High Level Findings

Surplus Products

Product 1 Product 2 Product 3 Product 4 Product 5

Total Surplus Generated

Total Assets

% of Assets

% Total Revenues

% Total Costs

Average Fund Size

Breakeven Fund Size

Breakeven Fee (Costs as %

Assets)

Effective Fee (Revenue as %

Assets)

© CF Insights 2012

Details for Products that Generate a Surplus

13

Update with data from your products that generate a surplus

Product Investments

Product 1 Product 2 Product 3 Product 4 Product 5 Product 6 Product 7 Product 8

Total Surplus/ Investment

Total Assets

% of Assets

% Total Revenues

% Total Costs

Average Fund Size

Breakeven Fund Size

Breakeven Fee (Costs as %

Assets)

Effective Fee (Revenue as %

Assets)

© CF Insights 2012

Details for Products That Require a Subsidy/Investment

14

High Level Findings

Update with data from your products that require a subsidy/investment


AGENDA

I. Methodology




Sample Peer Comparison Data


Peer Data Can Help Put Your Foundation’s Findings Into Context

• Members of CF Insights can access a variety of financial and operating metrics for hundreds of peer community foundations at www.cfinsights.org, including details on:

• Assets, Gifts, and Grants• Product Mix• Staffing• Operating Expenses• Geographic Indicators

• Additionally, numerous community foundations have completed the Activity-Based Costing analysis. Surplus/Subsidy and cost data by product for these foundations can also be accessed at www.cfinsights.org

• Need assistance accessing the data or looking for more detailed Activity-Based Costing data from peers? Contact [email protected]

• We’ve included some sample slides in this section that may help you assess your performance in comparison to peers. This is not an exhaustive representation of all the data available to members!

• Interested in learning about the benefits of becoming a CF Insights member? Contact [email protected] or visit www.cfinsights.org





http://www.cfinsights.org/BecomeaMember/OverviewofBenefits/tabid/180/Default.aspx



Assets by Product Among Peers

Peer 1Sample CF Peer 2 Peer 3

CF Insights members can access this data in the CF Insights Database

Peer 4



Percent of Total Cost by Product Among Peers

Peer 1Sample CF Peer 2 Peer 3 Peer 4




Percent of Total Costs by Activity - DAFs

Peer 1

Sample CF Peer 2 Peer 3 Peer 4


Peer 1



Total Surplus/Subsidy - DAFs

Peer 1Sample CF Peer 2 Peer 3 Peer 4




Operating Budget

SAMPLE CF Peer 1 Peer 2 Peer 3 Peer 4$0 M

$1,000,000 M

$2,000,000 M

$1,336,158.2M

$1,115,226.0M$1,031,448.4M

$1,172,815.2M

$1,560,827.2M

Total Asset Size ($M) $140 $52 $91 $97 $103


© CF Insights 2011

Donor Advised Agency Unrestricted/FOI Scholarships Supporting Orgs0.00%

1.00%

2.00%

3.00%

4.00%

SAMPLE CF Peer 1

Peer 2 Peer 3

Peer 4

22

Cost

s as

% o

f Ass

ets

Traditional Percent of Assets Fee at 1.0%


Costs as % of Assets (Breakeven Fee for Products)

Would this data be helpful to you? Contact [email protected] for access



Donor Advised Agency Unrestricted/FOI Scholarships Supporting Orgs0.00%

1.00%

2.00%

3.00%

4.00%

SAMPLE CF Peer 1

Peer 2 Peer 3

Peer 4Reve

nue

as %

of A

sset

s

Fee Revenue as % of Assets (Effective Fee)

Traditional Percent of Assets Fee at 1.0%





Sample CF Peer 1 Peer 2 Peer 3 Peer 40%

20%

40%

60%

80%

100%

90%

69%76%

84%

99%

6% 7% 7%

24%

0.22981072894257 0.0886247281159513 $ Other Income

$ Fee for Service Revenue

$ Interest Income

$ External Gifts/Grants for Operations

$ Disbursements from Operating Endowment/Reserve

$ Support Fee Revenue

Revenue Mix





Leadership Funding


Sample CF Peer 1 Peer 2 Peer 3 Peer 40%

20%

40%

60%

80%

100%

97%

81% 79%

65% 62%

0.0302073334026279

0.0530194218034474

19% 16%

28%29%

0.0701503669072671 0.091421721918127

Admin Fees

Operating En-dowment Dis-bursements

External Gifts

Other Revenue

Operating Budget

Community Leadership and Initiatives Revenue Sources

Pe

rce

nt

of

Tota

l R

ev

en

ue

fo

r L

ea

de

rsh

ip



AGENDA

I. Methodology




Discussion Tool


Informed by a New Set of Facts, the Foundation Can Engage in Productive Board/Staff Dialogue and Make Intentional Strategic Choices

• Are our operations aligned with our mission and strategy?

• To improve sustainability, achieve impact, and promote philanthropy going forward, what changes should we make in our:

• Product portfolio?

• Processes?

• Policies?

• Pricing?

• Revenue sources?

• How do we prioritize investment of resources?

– Which fee based products will we subsidize, if any?

– How should we trade off subsidizing certain fee-based products versus community leadership activities?

• How do we develop and evaluate new product/service introductions?

Questions

Discussion Tool

• This business model analysis provides key information on products’ sustainability, community investment and opportunities for change

• Before determining any changes to these products’ fees, costs or policies, however, the Foundation must step back and review how each product plays a role in achieving its strategic priorities

28

What are our strategic

priorities?

What mix of products aligns with our strategic priorities?

– Within fee based products– Fee based vs. community

leadership products?

How do we position priority products for growth?

What operational changes do we make by product:–Price –Policy–Processes–Revenue sources?

Before Determining Changes To Make Based on This Data, the Foundation Should Step Back and Consider Its Strategy

© CF Insights 2012

Discussion Tool

ProductProduct

EmphasisRevenue

AdjustmentsOpportunities to Reduce/

Redirect Costs

Fee BasedProducts

Unrestricted

Field of Interest

Designated

Geographic Affiliates

Agency Funds

Scholarship

Donor Advised Funds / Endowed

Donor Advised Funds/ Non-Endowed

Fee for Service

Planned Giving

Fundraising Funds

Supporting Orgs.

Leadership Initiatives

Community Leadership

Strategy Should Guide Prioritization and Adjustment of Products


Update with your Products

Documents

Purpose of This Document This set of slides is intended to provide community foundations with a template for presenting the findings of their activity-based