purpose of this document this set of slides is intended to provide community foundations with a...
TRANSCRIPT
Purpose of This Document• This set of slides is intended to provide community foundations with a template for presenting the findings of their
activity-based costing analysis
• Foundations can use any or all of these slides as appropriate
• To use these slides, foundations must:
• Enter the results of their activity-based costing analysis in relevant slides
• Update the peer foundation data on appropriate slides based on current benchmarking data available on the CF Insights database (www.cfinsights.org) (NOTE: this data is available to members of CF Insights only)
• Need help analyzing the data or putting together presentation materials? Contact [email protected] for information on pricing.
Helpful Tips when deciding what to include/exclude :
• Who is your audience? A Finance Committee may want the nitty gritty details on all products while the Board may be more interested in very high level findings and a few key recommendations.
• Where can you drill down?
• Determine key decisions your foundation is considering. For instance, are you looking to evaluate the viability of certain products? Do you want to consider investing further in certain areas?
• Was there anything that surprised you? For instance, did you expect DAFs would be generating a big surplus, but the foundation is subsidizing them? How do the data explain the results (perhaps the effective fee and/or average fund size are low)?
• Where would peer comparison data be helpful?
• The CF Insights database can help put some of your data into context (note that not all data sampled here is available for all community foundations). Contact [email protected] for assistance.
cfinsights.org
Activity-Based Costing AnalysisPresentation of Results
YOUR COMMUNITY FOUNDATION NAME
DATE
SHARING KNOWLEDGE. GROWING IMPACT.
© CF Insights 20123
AGENDA
I. Methodology
II. Sample Slides for Overview and High-Level Findings
III. Sample Slides for Peer Data
IV. Sample Slides for Discussion
Methodology
© CF Insights 20124
Community Foundations Can Build Transparency Into the Costs and Revenues Associated with their Products by Asking New Questions
• How much cost is associated with each Foundation product?
• Which products make money and which do we subsidize?
• Are our subsidies consistent with our mission and strategic priorities?
• What determines cost for each of our products?
Activity-Based Costing can help you determine answers to these questions
Methodology
© CF Insights 20125
The Cost-Revenue Study Uses Activity-Based Costing to Assess the True Cost of a Foundation’s Products and Services
• Activity-Based Costing (ABC) allows organizations to determine the actual cost associated with each product or service
• Cost data is gathered and traced to specific activities, then costs are allocated to products or services based on their utilization of activities
Staff costs are assigned to activities and products based on reported time, weighted by individual salaries, including taxes and benefits
Expense 1 Expense 3 Expense 4Expense 2
Activity 1 Activity 2 Activity 3
Product 1 Product 2
Costs are assigned
to activities…
…then allocated based on utilization
of activities
Methodology
Cost Matrix DAF Discretionary Scholarships AgencyFee for Service
Planned Giving
Supporting Orgs.
InitiativesCommunity
Leadership and Services
…
Acquiring or Establishing a New Fund
or Gift
$Y $Y $Y $Y $Y $Y $Y $Y $Y $Y
Maintaining Funds
$Y $Y $Y $Y $Y $Y $Y $Y $Y $Y
Making Grants
$Y $Y $Y $Y $Y $Y $Y $Y $Y $Y
Providing Non-Grant Services to
the Community
$Y $Y $Y $Y $Y $Y $Y $Y $Y $Y
Other StaffActivities
$Y $Y $Y $Y $Y $Y $Y $Y $Y $Y
100% of the Foundation’s Staff Time, Cost and Other Expenses Were Assigned to a Matrix of Products and Activities
The model uses a set of standardized rules for allocating activity time to products
where staff were unable to do so
16 Products
>1
00
Ac
tiv
itie
s
6 © CF Insights 2012
Methodology - Products Used in the Analysis
Product Description
UnrestrictedFunds that meet community needs as they arise through the Foundation’s Grants Program and are typically held in perpetuity, producing an annual income
Field of Interest Funds allowing donors to support a broad area of concern
DesignatedFunds created to ensure ongoing assistance to specific non-profit and charitable organizations, monitored to ensure that they fulfill purposes that donors intended to support
Geographic Affiliates Specific fund names
Agency FundsEndowment funds established by individual non-profit organizations to be held and managed by the CF. The CF makes regular reports and distributions to the organization.
Scholarship Funds providing an annual income to be distributed in the form of scholarships
Donor Advised Funds / Endowed
Funds held by the CF where the donor has specified that the fund’s income or assets be used for the benefit of one or more specific public charities or areas of interest, subject to spending policy
Donor Advised Funds/ Non-Endowed
Funds held by the CF where the donor has specified that the fund’s income or assets be used for the benefit of one or more specific public charities or areas of interest
Fee for Service Funds which require a significantly customized set of services, including committee work, event planning
Supporting Orgs. Specific fund names
Fiscal Sponsorships Specific fund names
Other
Special InitiativesSpecific Initiative names
Community LeadershipActivities specific to each foundation, typically resulting from its mission driven priorities. Examples include: activities that support the growth of philanthropy in the community, providing technical assistance to non-profits, convening funders through grant writing workshops and local presentations.
Planned Giving Charitable trusts including Charitable Remainder Trusts and Charitable Lead Trusts
Fundraising for Operations Fundraising activities to support the foundation's operations .
© CF Insights 20127
Sample product list and definitions - Update to include your products and
product definitions
© CF Insights 20128
AGENDA
I. Methodology
II. Sample Slides for High-Level Findings
III. Sample Slides for Peer Data
IV. Sample Slides for Discussion
High Level Findings
Total Assets Total Revenue Total Cost0%
20%
40%
60%
80%
100%
15%19%
2%
6%6%
6%
37%
20%
15%
38%
35%
22%
2%
14%
3%
4%
13%
34%
3%
Fee for Service
Planned Giving
Leadership Activities
Initiatives
Fundraising
Supporting Organizations
Discretionary
Endowed DAFs
Non-Endowed DAFs
Designated Funds
© CF Insights 20129
% of Total Assets, Revenues and Costs by Product
$800M $10M $10M
Total DAFs represent
21% of costs
Total DAFs
represent26% of
revenues
Total DAFs represent
43% of assets
Update with your products and data
Total Foundation Fund Types Initiatives Civic Leadership Other
($12,000,000k)
($9,000,000k)
($6,000,000k)
($3,000,000k)
$0k
$3,000,000k
$6,000,000k
$9,000,000k
$12,000,000k
$105k
$4,793k
($937k)($3,467k)
($283k)
Total Revenue Total Cost Total Surplus/Subsidy
High Level Findings
© CF Insights 201210
2011 Costs & Revenues ($M) Operating Budget Only
Costs and Revenues by Product Category
Update with your products and data
Des
igna
ted
Unr
esric
ted
and
FO
I
DA
F -
End
owm
ent
Sch
olar
ship
s
Fee
for
Ser
vice
Pla
nned
Giv
ing
Fis
cal S
pons
orsh
ips
Geo
grap
hic
Aff
iliat
es
Age
ncy
Fun
d R
aisi
ng F
unds
Sup
port
ing
Org
s.
DA
F -
Non
End
owed
Com
mun
ity L
eade
rshi
p
-$600,000K
-$450,000K
-$300,000K
-$150,000K
$0K
$150,000K
$300,000K
$450,000K
$600,000K
$254,236K$208,862K
$91,335K$64,795K
$34,433K
($6,855)K ($16,359)K ($21,640)K($40,122)K($42,846)K ($47,316)K
($106,365)K
($588,154)K
© CF Insights 201211
High Level Findings
Cross-subsidizing is not unusual in a community foundation business model and it is important to be intentional about where investments are made
Surplus, Subsidy and Investment for Each Product
Surplus Subsidy Investment
2011 Surplus/Subsidy/Investment by Product ($k) Operating Budget Only
© CF Insights 2012
– Number of products, and asset concentration in each product
– Degree of customization allowed or encouraged by the Foundation
– Endowment or grantmaking emphasis of each fund - or rate of pass through
– Average fund size in each product category
– Pricing discounts from published pricing and matching pricing to underlying cost drivers
– Revenue diversification beyond asset-based fees
12
A NUMBER OF INTERRELATED FACTORS INFLUENCE THE SUSTAINABILITY OF THE PRODUCTS PROVIDED BY COMMUNITY FOUNDATIONS
High Level Findings
High Level Findings
Surplus Products
Product 1 Product 2 Product 3 Product 4 Product 5
Total Surplus Generated
Total Assets
% of Assets
% Total Revenues
% Total Costs
Average Fund Size
Breakeven Fund Size
Breakeven Fee (Costs as %
Assets)
Effective Fee (Revenue as %
Assets)
© CF Insights 2012
Details for Products that Generate a Surplus
13
Update with data from your products that generate a surplus
Product Investments
Product 1 Product 2 Product 3 Product 4 Product 5 Product 6 Product 7 Product 8
Total Surplus/ Investment
Total Assets
% of Assets
% Total Revenues
% Total Costs
Average Fund Size
Breakeven Fund Size
Breakeven Fee (Costs as %
Assets)
Effective Fee (Revenue as %
Assets)
© CF Insights 2012
Details for Products That Require a Subsidy/Investment
14
High Level Findings
Update with data from your products that require a subsidy/investment
© CF Insights 201215
AGENDA
I. Methodology
II. Sample Slides for High-Level Findings
III. Sample Slides for Peer Data
IV. Sample Slides for Discussion
Sample Peer Comparison Data
© CF Insights 201216
Peer Data Can Help Put Your Foundation’s Findings Into Context
• Members of CF Insights can access a variety of financial and operating metrics for hundreds of peer community foundations at www.cfinsights.org, including details on:
• Assets, Gifts, and Grants• Product Mix• Staffing• Operating Expenses• Geographic Indicators
• Additionally, numerous community foundations have completed the Activity-Based Costing analysis. Surplus/Subsidy and cost data by product for these foundations can also be accessed at www.cfinsights.org
• Need assistance accessing the data or looking for more detailed Activity-Based Costing data from peers? Contact [email protected]
• We’ve included some sample slides in this section that may help you assess your performance in comparison to peers. This is not an exhaustive representation of all the data available to members!
• Interested in learning about the benefits of becoming a CF Insights member? Contact [email protected] or visit www.cfinsights.org
Sample Peer Comparison Data
© CF Insights 201217
Assets by Product Among Peers
Peer 1Sample CF Peer 2 Peer 3
CF Insights members can access this data in the CF Insights Database
Peer 4
Sample Peer Comparison Data
© CF Insights 201218
Percent of Total Cost by Product Among Peers
Peer 1Sample CF Peer 2 Peer 3 Peer 4
CF Insights members can access this data in the CF Insights Database
Sample Peer Comparison Data
© CF Insights 201219
Percent of Total Costs by Activity - DAFs
Peer 1
Sample CF Peer 2 Peer 3 Peer 4
CF Insights members can access this data in the CF Insights Database
Peer 1
Sample Peer Comparison Data
© CF Insights 201220
Total Surplus/Subsidy - DAFs
Peer 1Sample CF Peer 2 Peer 3 Peer 4
CF Insights members can access this data in the CF Insights Database
Sample Peer Comparison Data
© CF Insights 201221
Operating Budget
SAMPLE CF Peer 1 Peer 2 Peer 3 Peer 4$0 M
$1,000,000 M
$2,000,000 M
$1,336,158.2M
$1,115,226.0M$1,031,448.4M
$1,172,815.2M
$1,560,827.2M
Total Asset Size ($M) $140 $52 $91 $97 $103
CF Insights members can access this data in the CF Insights Database
© CF Insights 2011
Donor Advised Agency Unrestricted/FOI Scholarships Supporting Orgs0.00%
1.00%
2.00%
3.00%
4.00%
SAMPLE CF Peer 1
Peer 2 Peer 3
Peer 4
22
Cost
s as
% o
f Ass
ets
Traditional Percent of Assets Fee at 1.0%
Sample Peer Comparison Data
Costs as % of Assets (Breakeven Fee for Products)
Would this data be helpful to you? Contact [email protected] for access
© CF Insights 201223
Donor Advised Agency Unrestricted/FOI Scholarships Supporting Orgs0.00%
1.00%
2.00%
3.00%
4.00%
SAMPLE CF Peer 1
Peer 2 Peer 3
Peer 4Reve
nue
as %
of A
sset
s
Fee Revenue as % of Assets (Effective Fee)
Traditional Percent of Assets Fee at 1.0%
Sample Peer Comparison Data
Would this data be helpful to you? Contact [email protected] for access
© CF Insights 201224
Sample CF Peer 1 Peer 2 Peer 3 Peer 40%
20%
40%
60%
80%
100%
90%
69%76%
84%
99%
6% 7% 7%
24%
0.22981072894257 0.0886247281159513 $ Other Income
$ Fee for Service Revenue
$ Interest Income
$ External Gifts/Grants for Operations
$ Disbursements from Operating Endowment/Reserve
$ Support Fee Revenue
Revenue Mix
Sample Peer Comparison Data
Would this data be helpful to you? Contact [email protected] for access
© CF Insights 201225
Leadership Funding
Would this data be helpful to you? Contact [email protected] for access
Sample CF Peer 1 Peer 2 Peer 3 Peer 40%
20%
40%
60%
80%
100%
97%
81% 79%
65% 62%
0.0302073334026279
0.0530194218034474
19% 16%
28%29%
0.0701503669072671 0.091421721918127
Admin Fees
Operating En-dowment Dis-bursements
External Gifts
Other Revenue
Operating Budget
Community Leadership and Initiatives Revenue Sources
Pe
rce
nt
of
Tota
l R
ev
en
ue
fo
r L
ea
de
rsh
ip
© CF Insights 201226
AGENDA
I. Methodology
II. Sample Slides for High-Level Findings
III. Sample Slides for Peer Data
IV. Sample Slides for Discussion
Discussion Tool
© CF Insights 201227
Informed by a New Set of Facts, the Foundation Can Engage in Productive Board/Staff Dialogue and Make Intentional Strategic Choices
• Are our operations aligned with our mission and strategy?
• To improve sustainability, achieve impact, and promote philanthropy going forward, what changes should we make in our:
• Product portfolio?
• Processes?
• Policies?
• Pricing?
• Revenue sources?
• How do we prioritize investment of resources?
– Which fee based products will we subsidize, if any?
– How should we trade off subsidizing certain fee-based products versus community leadership activities?
• How do we develop and evaluate new product/service introductions?
Questions
Discussion Tool
• This business model analysis provides key information on products’ sustainability, community investment and opportunities for change
• Before determining any changes to these products’ fees, costs or policies, however, the Foundation must step back and review how each product plays a role in achieving its strategic priorities
28
What are our strategic
priorities?
What mix of products aligns with our strategic priorities?
– Within fee based products– Fee based vs. community
leadership products?
How do we position priority products for growth?
What operational changes do we make by product:–Price –Policy–Processes–Revenue sources?
Before Determining Changes To Make Based on This Data, the Foundation Should Step Back and Consider Its Strategy
© CF Insights 2012
Discussion Tool
ProductProduct
EmphasisRevenue
AdjustmentsOpportunities to Reduce/
Redirect Costs
Fee BasedProducts
Unrestricted
Field of Interest
Designated
Geographic Affiliates
Agency Funds
Scholarship
Donor Advised Funds / Endowed
Donor Advised Funds/ Non-Endowed
Fee for Service
Planned Giving
Fundraising Funds
Supporting Orgs.
Leadership Initiatives
Community Leadership
Strategy Should Guide Prioritization and Adjustment of Products
© CF Insights 201229
Update with your Products