nema - turnarounds
TRANSCRIPT
Executive Service Corpswww.Nonprofit-Consultants.org
New England Museum Association
Nonprofit Turn AroundsJune 16, 2009Michael Daily
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Two Themes
“A recession is a terrible thing to waste”
“Skate to where the puck is going to be” Wayne Gretsky
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Upside to a Recession
Good time to strengthen staff Good time to negotiate purchases
Lock in prices Good time to develop new programs Stresses contribute to building a stronger organization Your print advertising stands out Some competitors will go out of business Can connect with your audience around the values your
museum represents Can connect with your audience around your value proposition
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Where are we today?
The Boston Globe - 4/25/09Gardner Museum cuts staff by 9 percent
3 from Development5 from Administration3 from Conservation1 CuratorHiring Freeze
CutPrintingMailingTravelSenior Staff Salaries by 5%
Overall 7% reduction for 2009 and 11% for 2010
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Where are we today?
What have you done to weather the recession?Develop a "worst-case scenario" contingency budget 65%Engage more closely with your board 59%Funder conversations to explain situation / use of currently restricted grants 48%Freeze all hires and current salaries 48%Use reserve funds 43%Collaborate with another NPO to provide programs 42%Reduce staff or salaries 41%Reduce or eliminate programs 39%Delay payments to vendors 23%Speed up the collection of receivables 22%Reduce staff hours (short weeks, furloughs, etc.) 22%Reduce staff benefits 21%Reduce or refinance occupancy costs 18%Collaborate with another NPO to reduce administrative expenses 13%Sell assets such as a building or securities 6%Merge with another organization 5%No change - business as usual 4%
Nonprofit Finance Fund Survey - 3/09
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Signs of Trouble
Difficulty paying the bills Deteriorating financials Board members are not financially savvy The books are behind No one knows quite where we are Board or Senior Staff Turnover Declining life stage Large grant is running out Dependence on one funder
7$-
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
2004 2005 2006 2007 2008
Fund Balance at Year End
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Preventive Measures
Dashboards One Page - Monthly Reports to Board Summary of Progress/Status Historic, Current, Predictive Indicators
Strategic Plan Good Board
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Dashboard Example
0
100,000
200,000
300,000
400,000
500,000
600,000
0
50,000
100,000
150,000
200,000
250,000
-20406080
100120140
This Year Last Year
Web Site Traffic
20,00025,000
-
10,000
20,000
30,000
This Year Last Year
Revenue Performance Components of Revenue
MEMBERSHIP RENEWALS
85%
15%
RENEWALLASPSE
MONTH END CASH BALANCE(This year and last)
$-$20,000.00$40,000.00$60,000.00$80,000.00
Cash Last year
New Exhibit was well received, but visits were disappointing.
Weather held down attendance last month.
Renewals were better this month.
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Are you Viable???
Mission makes sense Dedicated players Financial (Business) model that works
Is everything on the table?
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Cash Flow – How long do we have?
Week 1 Week 2 Week …
Beginning Cash $50 $40 $35
Cash Receipts Admissions $20 $20 Memberships $5 $5
Total Resources $75 $65
Cash Disbursements Payroll $30 $30 Phone Bill $5
Total Disbursements $35 $30
Ending Cash $40 $35
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Cash Management – Moving Receipts and Payments to Your Advantage
Accelerate Revenue Postpone Expenses Slow Down Paying Payables Beware of New Programs that Eat Cash
Understand Cash Cycles Understand Cash Seasonality Monetarize Underutilized Assets
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Seasonality?
Month End Cash Flow
$-
$20,000.00
$40,000.00
$60,000.00
$80,000.00
$100,000.00
$120,000.00
Jan Feb March April May June July Aug Sept Oct Nov Dec
2006 2007 2008
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Reducing Expenses
Can we cut this? Can we do it differently? Do we have to do it?
Remember: You have the most leverage with suppliers when you are desperate!
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Developing a Business Model
Start with Cash Flow Spread Sheet Relate Income and Expenses Determine Fixed Costs Determine Variable Costs Consider Every Angle Rerun Spread Sheets
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Program Accounting Tricks
Program Revenues $50,000
Less Program Expenses
($49,000)
Contribution to funding Overhead & Fund Balance
$1,000
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Expenses You Need to Pay
Payroll Payroll Taxes Insurance
Health Workers comp Liability
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Lay-offs
One lay-off is better than 2 or 3 or … It takes planning
How are we going to organize to get the essential things done with less staff?
What do we want the organization/staff to look like in 18 months?
How are we going to communicate the new structure? How are we going to tell those who are laid off?
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Lay-offs
Bad Apples – Performance vs. Seniority Marketing Director? Development Director? Consider contemporary solutions
Collaborate on Back Office Collaborate on Marketing Share a Senior (or Junior) Staffer Interns Furloughs Volunteers
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Increasing Revenues – The Best Solution!
Increase admission fees? Increase membership fees? Increase programs? Increase promotion expenses? Add an appeal? Add an event? Rent out space? Be aggressive about all of the above!
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Final Thoughts
“Hug your donors” “Hug your board” “Invest in your future”
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Executive Service Corps Contacts
Michael Daily – ESC Northern New England (603) 362-9300 [email protected] www.Nonprofit-Consultants.org
Lisa Cawley – ESC Boston & RI (617) 357-5550 [email protected] www.escne.org
Elaine McDonald – ESC Connecticut (860) 493-1103 [email protected] www.nesc.org