Mission Money Matrix: Now What? North Star Nonprofits: MCN Annual Conference 2013 Kate Barr, Executive Director Nonprofits Assistance Fund

Transcription

1 Mission Money Matrix: Now What? North Star Nonprofits: MCN Annual Conference 2013 Kate Barr, Executive Director Nonprofits Assistance Fund

2 Who We Are Nonprofits Assistance Fund s mission is to build financially healthy nonprofits that foster community vitality. Our financial experts help nonprofits strengthen their capacity to address unexpected events, finance new opportunities, and realize strategic goals. We fulfill our mission by helping you thrive. Find out more at

3 Sustainability Impact Business Model Adaptability

4 Nonprofit Business Model Revenue Mix Cost of Effective Programs Mission/Business Model Infrastructure Capital Structure

5 Adaptable

6 The Balancing Act Financial sustainability The ability to generate resources to meet the needs of the present without compromising the future Programmatic sustainability The ability to develop, mature, and cycle out programs to be responsive to constituencies over time Organizational sustainability The ability to build, adapt and refresh organizational capacity and leadership that is both relevant and responsive [Bell, Masaoka, Zimmerman +]

7 Balancing Mission and Money The matrix map: a tangible, visual tool to foster understanding, discussion, and strategic decisions to build a sustainable business model

8 Financial Sustainability NET LOSS NET SURPLUS Financial Sustainability Net financial results of business lines or programs: Related income all direct & indirect costs

9 Financial Sustainability Revenue related to program/activity Direct expenses Shared, allocated expenses Distributed share of infrastructure costs Program/activity profitability or Program/activity need for subsidy

10 Financial Sustainability Program #1 Program #2 Grants and contributions 47,000 35,000 Program fees 4,000 18,000 Total Income 51,000 53,000 Personnel 37,000 26,000 Rent and office 5,000 4,000 Other expenses 12,000 7,000 Total direct expenses 54,000 37,000 Indirect distribution 9,000 6,000 Total expenses 63,000 43,000 Surplus/Deficit (12,000) 10,000

11 Programmatic Sustainability HIGH MERIT Relative merit of business lines or programs, based on consistent criteria and review LOW MERIT Mission Merit

12 Programmatic Sustainability Answers the questions: What programs/activities must we do? What programs/activities do not add enough value relative to other options and opportunities? Requires more questions than meets our mission

13 Programmatic Sustainability Relative value of business line/program area 1. Aligns with mission 2. Excellence in execution 3. Scale or volume/reach 4. Depth of impact 5. Fills an important gap 6. Community building value 7. Leverage of other programs Create a rating process with sufficient/appropriate input

14 Mission-Money Matrix HIGH MERIT NET LOSS NET SURPLUS Financial Sustainability LOW MERIT Mission Merit

15 Mission-Money Matrix HIGH MERIT Legal services Financial Literacy NET LOSS NET SURPLUS Financial Sustainability LOW MERIT Mission Merit Annual walkathon

16 Mission-Money Matrix Financial Literacy Legal services High school mentor program Financial Sustainability Attorney resource & referral Evening classroom rentals Mission Merit Family budget classes Annual walkathon Annual gala

17 Mission-Money Matrix Financial Sustainability Mission Merit

18 Balancing Mission & Money High mission merit High financial sustainability Invest in it to build Pay attention Communicate and celebrate!

19 Mission-Money Matrix Financial Sustainability Mission Merit

20 Balancing Mission & Money High mission merit Low financial sustainability Celebrate mission success Manage costs Fundraise or subsidize

21 Balancing Mission & Money Low mission merit Low financial sustainability Realistic assessment of value Set timeline to improve, move, or stop

22 Balancing Mission & Money Low mission merit High financial sustainability Can the impact be improved? Attend to it Build it efficiently

23 Mission-Money Matrix Financial Sustainability Mission Merit

24 Mission-Money Matrix and You Pick one program or activity that you know well. Where would it fall on your matrix?

25 Evaluation Process A scoring process establishes a starting point for further discussion. This is not a final grade.

26 Mission-Money Matrix HIGH MERIT NET LOSS NET SURPLUS Financial Sustainability LOW MERIT Mission Merit

27 Mission-Money Matrix Financial Sustainability Mission Merit

28 Using the Matrix Is a change needed? Why? What kind? Revenue Expense Program design Organizational strategy Program & Financial Sustainability

29 Actionable Matrix Maps Developing and taking action with a matrix map Identify business lines Calculate financial results Evaluate mission merit Plot on matrix Facilitate strategy discussion Untangle options Make decisions & take action

30 Mission-Money Matrix Financial Sustainability Mission Merit

31 Develop the Matrix 1. Steps: Brainstorm criteria Agree on definitions Weighting and scoring 2. Survey board/key leaders and key staff to rate impact 3. Analyze financial reports for ranking 4. Create mission money matrix

32 5. Review matrix results and complete additional analysis or research if needed Refine the Matrix

33 Discuss Strategic Imperatives 6. Strategic discussion about the matrix results and whether or not actions are needed 7. Open discussion and idea-sharing about options

34 Untangle the Options 8. If change is needed, ask: Why? What kind? Revenue Expense Program design/ implementation Organizational strategy

35 9. Consider the intersections, dependencies, and ripples in financial and programmatic areas Look for Interdependence

36 Take Action 10. Create a plan and timeline to implement 11. Adapt and respond to additional information and options

37 Case Study: Eastern Community Center MISSION To increase the economic opportunities for families in the Eastern Community through education, employment and community building. STRATEGIC GOALS Focus on unique value and impact in the community Strengthen financial health and sustainability Build capacity to adapt and change

38 Case Study: Eastern Community Center Programs: After School All-Stars Food for Everyone English is Easy Another Dawn Daycare Thrift Store

39 Case Study: Eastern Community Center In small groups: 1) Plot the Eastern Community Center programs on the Mission Money Matrix. 2) For each program, discuss whether a change is needed. Why? What kind? Think about revenue, expense, program design/ implementation, and/or organizational strategy. 3) Are there possible intersections and dependencies among programs/ activities? 4) What are one or two specific recommendations you would make for next steps on their action plan?

40 Mission-Money Matrix Financial Sustainability Mission Merit

41 Balancing Mission and Money

42 Nonprofits Assistance Fund Building financially healthy nonprofits that foster community vitality Nonprofit loans Strategic financial guidance Training for staff and boards Resources and tools