chart your strategic course. measure outcomes consider long-term viability evaluate mission...
TRANSCRIPT
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Understanding Where Finances & Mission Intersect
Chart Your Strategic Course
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Board Empowerment ……..
•Measure outcomes
• Consider long-term viability
Evaluate Mission
Effectiveness
• Ensure adequate resources
• Assure long-term sustainability
Ensure Financial Viability
Fiduciary Responsibility
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Does this Board look familiar?
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Reality
AND YOU ARE COMPLICATED
4
BOARD MEMBERS
HAVE LIVES
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Boards don’t always plan well
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How Do You Plan in a
Changing World? 6
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"I always skate to where I think the puck
is going to be.“
- Wayne Gretsky
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So how will you know where the puck is going to be if you don’t know where you are …
$(50,000) $(40,000) $(30,000) $(20,000) $(10,000) $- $10,000 $20,000 $30,000 $40,000
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
Mission Margin Matrix
Program 3Program 1
Program 2
Program 4
Fundraiser 1
Fundraiser 2
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Planning Follows a Process
Mission Values
Vision Strategic Plan
Organizational Objectives Service Imperatives
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The Role of Planning
Operations – beginning organization Functionality What is not working – how do we fix it
Organizational What do we need to grow Are our systems working
Visionary How do we move the needle How do we scale How do we affect transformational change
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Step 1: Identify Core Business Activities
Step 2: Set & Map Mission Impact: a) Alignment with mission b) Excellence in Execution c) Scale or volume d) Depth e) Filling an important gap f) Community/constituent building g) Leverage
Step 3: Map Fiscal Impact:
a) Profit (Loss) b) Program Expense
Profit (Loss) = Revenue - (Direct Expenses + Allocated Share + Administration)
Step 4: Create Bubble Chart Impact & Profitability
High Alignment With Impact Statement
These programs require funding. Pursue opportunities for additional funding and/or cost improvements
These programs are self-sustaining. Invest and grow them.
Lower Alignment With Impact Statement
These programs are potential distractions. Find ways to improve them or reconsider participation
These programs generate income Pursue them unless they become a management distraction
Negative Positive
Financial Contribution
Measuring Organizational Impact & Sustainability
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Time to measure impact
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Determining Impact
Alignment with Core
Mission
Excellence in Execution
Scale/Volume
Depth
Filling an Important Gap
Community Building
Leverage
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Alignment with Core MissionCongruent with an organization’s mission, while also contributing to the impact of the organization.
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Excellence in Execution
How is the program executed, which can be evaluated through program evaluation data, feedback from clients, direct observations, staff performance evaluations, staff turnover.
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Scale/Volume
Client utilization and number of services completed.
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Depth
Level of impact on people involved, which can be measured through program evaluation data and logic models.
Scaling System 4 – Exceptional Impact 3 – Very Strong Impact 2 – Some Impact 1 – Not Much Impact
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Filling an Important Gap
Filling a gap that is really important, which can be evaluated through reviewing competitors or asking constituents where else they obtain/could obtain that service.
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Community Building
How the program helps build community around the organization, which can be evaluated through interview with community leaders, reviews of donor histories, and client surveys.
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Leverage
The degree to which a program or business line increases the impact of other programs.
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Program Criteria SummaryMISSION MAPPING
Program:
Criteria Rating 1 - 4 (2 is on x axis)
Notes
Mission Alignment Excellence in Execution Scale/Volume Depth Filling an Important Gap Community Building Leverage
Average
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MISSION MARGIN MAPPING -- Net Profit
Profitability and Impact Scoring , Based on Fiscal Year Actual
Business Line /Program/Service Expenses Profit or Loss Mission Impact
Expenses should include direct expenses, allocation and administrative overhead
Determining Profitability
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Mission Margin Matrix Table
Program Profit or LossRating
(1 lowest - 4 highest)
Program Expenses
Program 1 (40,000)$ 3.86 777,000$ Program 2 (5,000)$ 3.12 157,000$ Program 3 12,000$ 3.10 125,000$ Program 4 (7,500)$ 3.57 51,540$ Fundraiser 1 27,750$ 1.57 75,000$ Fundraiser 2 5,000$ 1.77 12,000$
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Mission Margin Matrix As a Chart
$(50,000) $(40,000) $(30,000) $(20,000) $(10,000) $- $10,000 $20,000 $30,000 $40,000
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
Mission Margin Matrix
Program 3Program 1
Program 2
Program 4
Fundraiser 1
Fundraiser 2
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Questions you should ask
1) What can you grow?
2) What should you reduce or eliminate?
3) Where are you at risk?
4) How do you mitigate risk?
5) Where can you collaborate?
6) Can your fundraising offset programs that are not funded?
7) What is the impact of reducing a program in terms of administrative allocation?
HOW CAN YOU MOVE THE MATRIX?
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Trouble Ahead ……
How do you plan for contingencies?
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Forecasting, Scenario Planning and Crisis Management all Look to the Future
Forecasting: Predicting the future based on extrapolating from the present
Scenario Planning: Series of “What If” exercises Strategic Planning exercises to test the viability of
alternative strategies Evaluate risks and potential upside to new strategies Plan if you lose major source of revenue – what
programs can be impacted and still maintain mission Plan if you receive an unexpected significant
contribution
Crisis Management – worst case scenario – “Plan B”
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Revised chart with estimates
ORIGINAL UPDATED
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Scenario Planning
Exercises: What if Program 1
revenue was $850,000 with $950,000 in expenses
What if program 2 doubled its size and saw twice as many people▪ Mission impact
would be higher▪ Cost would be 1/3
higher▪ Revenue would be
70% higher
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Crisis Management
You have identified the X factor and it has happened. What does it look like and what are your options? Your major funding source has pulled the
plug The volume has dropped 70% on
Program 1 – moving it close to the line relative to mission
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What Have We Learned?
Mission is critical – understand and review the impact you want to have
Finances can shift Forecast Plan by scenario’s Manage crisis well
Plan for the futureAlign collaborations well
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“If you don’t know where you are going,
you are certain to end up somewhere else.”
Yogi Berra
Go Forth,Act Decent,Call Your MotherFrom Time to TimeSimcha Fisher
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