3 Key Benefits of Reducing Spreadsheets in Finance

Using Success Metrics to Drive Your Non-Profit’s Mission and Impact

Do you find running your non-profit today is more challenging than it was five years ago?  If you said yes, many of our recent webinar attendees agree with you. Why?  Fundraising, which is the lifeblood of a successful non-profit, has become increasingly more difficult. Let’s look at some reasons why.

The Bernie Effect

Does anyone remember the Bernie Madoff scandal? Bernie Madoff, an investment advisor to large non-profit foundations and wealthy families, defrauded them of billions of dollars in a Ponzi scheme.  He promised huge returns and generated those returns from money that came in from new investors.

Charitable foundations, both large and small, lost millions. If you took a look at the list of his victims, many were household names.

As a result of losing all of this money, these foundations now had a lot less money to invest in good non-profits like yours.

The Rise of Crowdfunding

There are also new avenues for individuals to donate which increases the competition for donations.

Crowdfunding alternatives like GoFundMe, Razoo, Causes and Crowdrise compete with the same people that are your potential donors.

Non-Profit Excesses

Reading the news, you hear about non-profits paying executives large salaries, or spending a significant amount of their fundraising on administrative and marketing expenses, and a small percentage going to the people they were organized to help. The Wounded Warrior foundation threw lavish parties and paid their former executives handsomely.  As a result, potential donors are significantly more careful about who they give money to. They expect more information about who they are sending their hard-earned dollars to, and what results they are achieving. They want information beyond your 501c3 registration and certificate of good standing.

The Answer – Success Metrics

One way of making potential donors, members and volunteers more comfortable is to develop, and publish Success Metrics. How do we define Success Metrics?

  1. They clearly demonstrate an organization’s willingness to be accountable, and transparent
  2. Success metrics are outcome indicators (“What impact are my programs having?”) that go beyond financial performance (“What’s my cash balance?”)
  3. They balance organizational health, financial performance and stability

The Pan Mass Challenge (PMC) publishes a great success metric. 100% of all fundraising goes to the Jimmy Fund. This tells every potential donor that every dollar they raise or send them will go directly for cancer research.  It is this Success Metric that has allowed the PMC to raise more than $51 million dollars last year, which represents 50% of the Jimmy Funds total operating budget.

If you would like to learn how you organization can benefit from success metrics, please contact us.

5 Telltale Signs it is Time to Replace Books

Is it Time for a New Finance System for Your Project Based Business?

Companies that provide project-based services need to grow successfully. They do this by balancing margin and profitability against the value the deliver to their clients.  How can they monitor and measure this critical balance? According to SPI Research, these are 5 critical metrics:

  1. Annual Revenue per Billable Consultant

Understanding how much revenue each consultant is producing is a key indicator of financial success, but it must be assessed in relation to labor costs. Revenue per billable consultant should ideally equal one- to two-times the labor costs of employing each consultant.

Organizations with high annual revenue per billable consultant tend to do well because higher rates indicate better consultant productivity with respect to larger projects, more revenue in backlog, as well as more on-time and on-budget completions.

  1. Annual Revenue per Employee

Higher annual revenue per employee is strongly correlated with profitability and efficiency. By measuring how much revenue each employee brings in relative to how much they cost, you can quickly determine the financial health of an organization.

  1. Billable Utilization

Utilization is central to accurately determining organizational profitability, as well as a key signal to expand or contract the workforce. By tracking work hours for billable employees, an organization can get a better picture of workforce productivity. You should base this metric on a 2000 hour per year average.

  1. Project Overrun

Project overrun is the percentage above budgeted cost versus the actual cost of a project. Whether a project goes over in either budget or allotted person-hours, it can limit future work and, in many cases, reveal internal efficiency or management issues, which also negatively impact bottom-line results.

  1. Project Margin

Keeping project margins high is essential as it ultimately drives overall profits. Poor financial performance can often be directly correlated to low project margins, as organizations are no longer able to invest in future growth activities.

If your finance system cannot easily measure, track and provide these key metrics immediately, then it may be time to reevaluate it. We will be happy to provide you with a complementary assessment of your current finance system.  Feel free to contact us.

Top 5 Success Metrics for Professional Services Organizations

What are the 5 Key Success Metrics for Professional Services Companies?

Companies that provide financial services, advertising and marketing agencies, legal, and other consulting businesses, encounter many growth challenges. According to an article released by Sage Intacct, they also face additional obstacles to their success, including:

  • A shortage of talent due to baby-boomer retirement and fewer STEM (science, technology, engineering and math) university graduates
  • Increased client demands and expectations for greater service value for their dollars
  • More complicated projects, which require resources that may be remotely scattered
  • Different billing structures which complicate invoicing and managing cash flow

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