2012 skills based summit - 3m, budgeting & roi

Contribution Net Income Overview

3M Confidential

Budgeting and ROI

Becky Williams and Susanne Lynch, 3M


• Why budget?• Creating & understanding a budget• Using the budget to establish

operating rhythm• Using ROI to prioritize projects

Agenda


The Board’s Challenge

• Establish goals based on priorities & external factors

• How to communicate goals appropriately

• Predicting the unpredictable nature of fundraising income.

• Choosing which flight path for the organization

Daily choices about trade-offs


• To achieve specific program & financial objectives– Surplus vs Deficit– Evaluate programs to continue or

discontinue– Evaluate & plan for new programs– Performance Evaluation

• To understand where you have been & where you want to be

Why budget?


• Breaking down the Budget– Donations/Fundraising/Grants– Payroll Expenses/Administrative

Expenses– Programs/Projects

• We will go into thedetails of each section.

• Timing

Creating & Understanding a Budget


• Reality:– Fluctuate along with seasons and economic factors.– It’s more about setting goals than predicting

income.– Use the budget as a yearly performance review for

your marketing and fundraising teams.

• Review current year finish

Donations, Fundraising & Grants


• Discuss assumptions and add expectations for the next year.– What Grants will continue/discontinue?– Are there new Grants the team is going forward on?– What changes, if any, are expected with Donations &

Fundraising?– Where are the risks?

Donations, Fundraising & Grants


• Reality:– Use volunteers to keep payroll lean– Find ways to develop relationships with

organizations willing to offer discounts (Renters agreement, supplies, etc)

– Other operating expenses could include; Taxes, equipment, etc.

• Review current year expenses:

Operating Expenses


• Discuss assumptions for spending next year.– Wage increases due to inflation– Premiums?– Changes in contracts/agreements– Expenses related to Programs/Projects?

Operating Expenses


• Reality:– Funding creative, frugal and wide reaching

programs to maximize the organizations impact.– Prioritizing is key.– Needs change unexpectedly – find new ways to

shift money to meet the new needs• Review current year Projects

Programs and Projects


• Discuss assumptions for next year.– Project ending?– New project or program?

Programs and Projects


3M Confidential


• What month is the New Grant going to start/end?

• What month will the program cost come through?

• Annual/Monthly/Qtrly payments.• Analyze history to show patterns &

trends

Timing is Everything…


Timing is Everything…


ROIC: Return on Invested Capital

• Measure the return of an investment– Generally measured in financial terms but

can be applied to non-financial conditions

• The goal of ROIC is to:– Understand both returns and costs– Find the best investment based on certain

criteria– Find a common ground to evaluate

investments

3M ConfidentialWhere do you get the best “bang for your buck”?


ROIC

Who would you invest with? Why?

Bernie WarrenIncome $100 $50

Investment $2000 $500ROIC 5% 10%


ROIC Non-Financial


Non-Financial ROIC

1

2

3

4

5

1 2 3 4 5

Low

I

mpa

ct

H

igh

Low Difficulty HighProject A Project B Project C Project D Project E Project F

• Return can also be measured by how much impact a project can have relative to effort (Simple 1-5 scale)

• Projects in the green area provide a high impact at low difficulty (Very high bang for the buck)

• Projects in the red area have a high degree of difficulty and yield a low impact (Low bang for the buck)


What the Project LeadersWanted

What the Board Wanted

What the Donors wantedWhat the People in Need Wanted

What the budget can allow

What the Volunteerswanted

Funds are limited....


Thank You!

2012 skills based summit - 3m, budgeting & roi

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