S- Sustainability Resources: Budgeting and Cost

Agenda 1. Discuss readings- Brooks Chapters 6, 7 4Brainstorm sources of cost and income 2. Hands On Activity – Work as a team to Fill in Parameters for First Place Fund for Youth (p.96)

Once you have established Community Need developed a Logic Model and formed and Assessment Plan, the next question is, how you will pay for or SUSTAIN your program.

Mobilizing Resources 1. Define the Capabilities Needed 2. Devise a Human Resource Outline to meet each capability need 3. Develop a resource plan 4. Put on the Numbers Brooks Ch 6 p 86

1. Define the Capabilities Needed Start by reflecting on the activities and who will do them.

Figure 6.1 The Capabilities – Resource Model

2. Devise a Human Resource Outline to meet each capability need

Figure 6.1 The Capabilities – Resource Model

3. Develop a resource plan

Figure 6.2 Sources of income for American nonprofits* * Salamon 2002

4 Different nonprofits rely on different types –Social welfare: 52% government, <1/3 earned –Health: less than 6% is donated –But arts groups are half funded by private giving –Religious institutions are not government funded Income sources 4 Three main sources of nonprofit revenue –Fee income, which is about half of the total –Donations, which are about one fifth –Government, which provides the balance 4 Figure 6.2 shows income sources for all nonprofits

Figure 6.3 Types of earned income for social enterprises

Table 6.3 The Product Profile Map Source: James & Young (2006) High mission impact Low mission impact Positive profitStarsCash cows Loss-makingSaintsDogs

Table 6.4 Revenues from membership dues for various nonprofit enterprises, 2003 Enterprise type Percentage of income from dues Labor organizations66.02% Social clubs59.61% Business leagues40.27% Public charities (all 501(c)(3)) 0.90% Source: Steinberg (2006)

Table 7.1 Source of donations to American nonprofits, 2005 Living individuals76.5% Foundations11.5% Bequests6.7% Corporations5.3%

Figure 7.1 Average annual contributions to various types of causes and charities among those making positive contributions, 2003

Delancy Street- how do they sustain themselves? 15 minute video

Sample Programs for Class Final Project*indicates may be used as an example in the course 4 Crime Related 4 Scared Straight 4 Community Policing 4 Fight Crime Invest in Kids* 4 Neighborhood Watch 4 Domestic Violence Arrest policy* 4 Delancy Street Moving Company (job training for ex cons)*- Today’s Example 4 The city of Syracuse has recently launched a new violence intervention project called Syracuse Truce. Syracuse Truce is a partnership of community members, law enforcement and service providers that is designed to reduce gun violence. Syracuse Truce is based on a model that has proven to be effective in addressing gang problems in Boston, Indianapolis, Lowell and Cincinnati. The model is based on focused deterrence, focusing additional enforcement efforts on the small number of offenders (and their associated gang contacts) who are responsible for a disproportionate share of gun violence. Those individuals and groups willing to cooperate with the message of Syracuse Truce will also be assisted in making connections with service providers and other appropriate programs. 4 4 Human Service Related 4 Pedal to Possibilities 4 Job Training Program* 4 Mental Health Counseling (e.g., engagement calling*) 4 21 day challenge horses as disability therapy* 4 Homeless Outreach 4 Youth counseling sessions 4 Fit 4 Life Youth Fitness and Anti-obesity program*

Lets Look at One 4 Delancy Street Moving Company –Mimi Silbert

4 Delancy Street Moving Company –Mimi Silbert Social Entrepreneurship Delancey Street is considered a pioneer of social entrepreneurship development in America – developing business skills to help solve social problems. Since 1972, Delancey Street has created 12 successful ventures that have trained residents in marketable skills, created positive interactions between residents and customers in the community, and helped support the organization financially. These include: Crossroads Café, Bookstore & Art Gallery Catering & Event Planning Delancey Coach (Corporate Private Car Service) Digital Print Shop Handcrafted Furniture, Ironworks, Plants & Glass, Ceramics Landscaping Moving and Trucking Paratransit Van & Bus Services Restaurant Screening Room Specialty Advertising Sales Xmas Tree Sales and Decorating

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Mobilizing Resources 1. Define the Capabilities Needed 2. Devise a Human Resource Outline to meet each capability need 3. Develop a resource plan 4. Put on the Numbers Brooks Ch 6 p 86

Which Software will you purchase? RaisersEdgeDonorSnap Tracking Types of Donors Keeping Track of Donations Supporting fundraising Activities Personal Relationships: -Direct mail, Telemarketing Virtual -Traditional Media Avoiding Donor Lapse Charting Progress toward your Strategy

Donor Recruitment Corresponds with Brooks Chapter 8 Collect Cards

Figure 8.1 Spending tradeoffs in fundraising 4 There are different kinds of donors –Potential donors –New donors –Transition – give a second time –Core – three or more donors –Lapsed – have stopped giving –Lapsed but reactivated 4 Most donors – as much as 80% – are inactive 4 Active donors can be in any of the other types 4 Core donors are the most productive 4 Figures 8.2 and 8.3 illustrate these types

Figure 8.2 The dimensions of a typical list of active donors According to Merkle- Core Donors provide the biggest revenue even though not the largest percentage of active donors.

Figure 8.3 Gift size among active donors to a sample of social service organizations

Figure 8.4 The percentage of donors retained from one year to the next Source: Merkle-Domain

Figure 8.6 Average number of donations by different donor types

Figure 8.5 The fundraising ecosystem Strategy, try to Win  Keep  Lift

fundraising-infographics-for-nonprofits/

Fundraising strategies 4 Win: gain new donors or regain lapsed donors –Example: Habitat for Humanity soliciting volunteers and donors through churches 4 Keep: maintain donors in the core –Example: World Vision targets donors for retention 4 Lift: Obtain larger gifts from core donors –Example: MAP targeting the best prospects from donors to increase gift averages 4 Figure 8.4 illustrates donor retention 4 Figure 8.5 illustrates the fundraising ecosystem

Figure 8.7 The main reasons donors lapse

Marketing and Fundraising

Nonprofit Technology Network: The State of Nonprofit Data November 2012

Nonprofit Technology Network: The State of Nonprofit Data November 2012 Not every nonprofit has the basic infrastructure in place to even track the seemingly easily collectable data points, however. Among the one-third of nonprofits not tracking these metrics, many reported that they did not have the technology to track these relatively straightforward numbers. for example, nearly a third cited not having the technology or knowledge to track opens as their reason for not measuring this particular metric.

There are many Donor Development Software Programs to Choose From software/

One of the Most Popular software/

Five types of fundraising activity (1) Fundraising is a major activity for nonprofit managers 4 1. Personal relationships –Get others on board with personal contact –Letters may not be sufficient to convey that vision –Conversations, tours, and events with direct contact with individuals 4 2. Direct mail –Although it seems antiquated, it is profitable –Some fundraising firms conduct direct mail for nonprofits, e.g., Easter Seals, St. Jude’s Children’s Hospital –Few (1 – 3%) of recipients respond to initial asks –More (e.g., 20%) of prior givers donate later times –It may not work for early stage social ventures /03/11/direct-mail-alive-and-kicking/

Telemarketing, calling lists of donors and non-donors –There is resistance from call recipients –It helps with small donations, member renewal –Impractical for some early-stage social ventures –Because it needs equipment and expertise, it is often delivered by fundraising firms 4 4. Traditional media –Newspapers, magazines, television, radio –Fundraising using broadcasting has been effective for many Christian organizations –Social ventures can buy advertising and other placements in such media

Five types of fundraising activity (3) 4 5. Virtual means –Raising revenue over the web is not a cure-all –Social entrepreneurs should be careful Donors are still adapting to e- giving solicitations are treated as spam No guarantees of Web site traffic Nonprofit have been slow to adapt technologies

Video relationship-management/raisers-edge

Donor Snap 4 _medium=cpc&utm_term=fundraising%2Bdirectory&ut m_campaign=FRDIR _medium=cpc&utm_term=fundraising%2Bdirectory&ut m_campaign=FRDIR

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Using Raisers Edge on a day to day basis… dF6Q

FYI – Making Letters KoA

Do a sample mail merge on the fly

First make the spreadsheet

Queries for Mailings

What types of Queries might you run?

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Raising funding is connected to being able to demonstrate effectiveness

Utilizing results includes for publicity and fund raising for non profits: reading-to-their-kids/MCwPYPKY20SPNrUHf1p0Pw.cspx reading-to-their-kids/MCwPYPKY20SPNrUHf1p0Pw.cspx

4. Put on the Numbers

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Financial Data

Nonprofit Technology Network: The State of Nonprofit Data November 2012 Video: accounting/financial-edge-7#tileContent1

Nonprofit Technology Network: The State of Nonprofit Data November 2012 Video: accounting/financial-edge-7#tileContent1

Cost Concepts 4 Variable Costs 4 Semi-Variable 4 Step Costs 4 Fixed Costs Cost Output

Matching Game! 4 Fixed Costs (do not vary with output): –Top administrators and resources they use. –Financial, legal and other services provided organization. 4 Variable costs (vary directly with output): –Consumables: materials, supplies, gas used in transportation –Printing/postage/communication –Part time personnel providing service directly –Legal, financial and other services tied directly to output –Equipment (and O&M) used directly in service provision 4 Semi-variable costs (fixed cost + variable cost per unit): –Phones, utility rates. 4 Step costs (vary in lump with output): –FT personnel –Facilities/utilities/equipment (and O&M) tied to personnel Source: Bretschneider Cost Output

Cost Concepts Cost Output Variable Costs Semi-Variable Step Costs Fixed Costs 4 Key question: how does each change as the cost unit (or unit of activity your agency performs – visits miles, packages, clients) changes

Cost Concepts Cost Output Fixed Costs 4 Fixed costs do not change as units of activity (kids) change.

Sheet A-1,cell C 27 is the proportion of the monthly salary we are responsible for (remember we are only one of the 4 childcare sites see assumption 5 in parameters) A-1, C25 is _____ Administrator salary/month

Cost Concepts Cost Output Variable Costs Variable Revenues 4 Variable costs are to fixed costs as electric bills are to monthly rent charges. 4 variable costs do change as units of activity (kids) change.

Sheet A-1 is a quick clue that it is a parameter. then look for cell C 20 (in sheet a-1) (it is “Food costs/day/child”) B6 is the number of children in the daycare (see previous slide) A-1, another parameter, C20 is “Work days/month”

Cost Concepts Cost Output Semi-variable Secretary paid by hours of work required, but may require standard benefits package such as health benefits. 4 Semi-variable costs do change as units of activity (kids) change but they start off with a fixed cost.

Not needed here but would be like… =flat cost + (# clients*($5.00))

Cost Concepts Cost Output Step Costs 4 change only when units of activity (kids) reach steps (i.e. by law need one staff member for every 5 kids)

Sheet A-1,cell C 20 is “Work days/month” B7 is the number of employees A-1, C 21 is Hours/day/emplo yee (i.e. 8 hours a day) A-1, C 24 is Hourly wage-- daycare worker (i.e. $6.50/hr)

Share literacy letter as an exemplary solicitation letter – example of where a liberal arts edu can help!

Estimating Personnel Costs 4  How do I assess the value of volunteers?  esearch/volunteer_time.html esearch/volunteer_time.html  Summary: The estimated dollar value of volunteer time is $19.51 per hour for 2007.

Cost Concepts Cost Output Variable Costs

Cost Concepts Cost Output Semi-variable Phone and utilities included in Rental

Cost Concepts Cost Output Step Costs

Budgeting for your education! 4 loans/forgiveness-cancellation#public- service-loan loans/forgiveness-cancellation#public- service-loan

Nonprofit Technology Network: The State of Nonprofit Data November 2012

Nonprofit Technology Network: The State of Nonprofit Data November 2012

Activity: p 96 First Place Fund for Youth Use the CLASS project planning tool to walk through the above 4 steps as a group for “First Place Fund for Youth”

Novel Approaches to Raise Money

Dan Pallota – 1 st 10 minutes To accompany Brooks Ch 8 Entrepreneurial Fundraising and Marketing

For Discussion: Dan Pallotta: The way we think about charity is dead wrong bfAzi6D5FpM

Inspirational Stories from Students For Final Project

street/video/d/video/jennifer- nadler-lemoyne-speaker-bridge- street-3271/ Soc Club Events on Video

Local grad to pedal cross country for area's homeless 4 Local-grad-to-pedal-cross-country-for- areas/d/story/UpgtCu_Jf0yzmb3zHuVUKQ Local-grad-to-pedal-cross-country-for- areas/d/story/UpgtCu_Jf0yzmb3zHuVUKQ

Room for Growth

Father and daughter continue mission for special needs playground near Phoenix 4 bmyo bmyo

First list all of your assumptions in a sheet/tab called parameters

Crucial for Final Project 4 This exercise will help you complete the S portion of your final project 4 For your final project DO NOT just tweak your Imagination Library budget- it will likely lead to many mistakes. 4 Instead start from scratch and build a new smaller budget for your program just like we will practice today – Use the last 2 tabs of your Project Planning Tool in Excel

1.Daycare Budget than explore the full flexible spreadsheet - Use digital handout parameter sheet, run scenarios as a class

The Scenario: Use this to complete the Parameters

Break Even Analysis

Return on Investment Source: U.S. Office of Personnel Management

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Wasserman 1994:7 Deciding How To Spend Limited Resources

Cost Benefit Analysis (NB= Net Benefit) ff1011/10_04/toolbox/resources/res2050/res2050.htm

Cost Benefit Analysis (NB= Net Benefit)

Sample: 4 “Documenting the cost-effectiveness of nutrition education programs is important to justify and determine expenditures and ensure continued funding. “