SanctuaryFinancial Management

IFAW Big Cat Sanctuary Workshop10/25/13

Intro

• Not expert

• Story of what we did – hope useful

• Prior to BCR

• Met Carole late 2002 – Offered to help

• Beginning and end of story first

TOPICS

• Detailed Financial Statements - Chart of Accounts)

• Goals dictate Financial Strategy

• Commitment to Animals is Pension Liability

• Tours

• Bequests

• Fundraising – a few thoughts

OH NO, ACCOUNTING!!

Chart of Accounts

Chart of Accounts is

• NOT numbers.

• Outline of what you want/need to know to make good decisions.

• Detailed enough to make good decisions

EXPENSES

REVENUE 1) Is it working?2) Trend

Reasons chart often bad

• Why chart often bad– Came with software

– Small business accountants create it• Limited time

• For profit focused on taxes, not management decisions

• Person who knows what is important is operator of entity, NOT the accountant.

• NOT more work– Each item still goes into an account

• Bottom line: enough detail to make decisions

GOALS

FINANCIAL STRATEGY

2003 Strategy Discussion 3 Primary Observations

1) Future commitment to cats is like pension liability

2) Cannot “rescue” way out of problem

3) Need cash to invest in revenue generation

• GM – funded vs. unfunded

• Retirees are cats

• Can calculate direct future cost:– Rescue 8 year old tiger

– Food & Medical avg $10,000/year

– Can live to 20

– Future liability: 12 years left x $10k = $120,000

– Vs. “rescue cost” of new cage and transportation

2003 Strategy Discussion 3 Primary Observations

#1 - Pension Liability

Calculate for entire sanctuaryAssume no donations, visitors or new cats

Big Cat Rescue Pension Liability =

Approximately $5mm

2003 Strategy Discussion 3 Primary Observations

#2 - The Problem

Cannot rescue our way out of “the problem”

- Problem is thousands of cats living in miserable conditions.

- Sanctuaries total maybe 500-1000 out of estimated 10,000 to 20,000? And that is aftercats have been mistreated for years.

- Solution is changing the regulations, the laws, and behavior of public (pet tiger cub, attend circus, see white tiger).

• In a For Profit– Bootstrap (cash flow)– Investor– Lender

• BCR as Nonprofit 2003– No cash flow to bootstrap to pay for

• Development person• Soliciting donors (direct mail?)

– Investor not relevant; Could not borrow based on finances– Had to come from

• More donations or• Earned income (like tours)

– 6 months cash in bank – afraid to use. 9/11 household goods• CRITICAL REALIZATION: NEVER have cash to invest in revenue generation if as more

revenue came in we spent it all taking in more cats

2003 Strategy Discussion 3 Primary Observations

#3 - Need cash to invest to grow revenue

Decision

Keep cat population stable (i.e only take in cats as we lose them) and build reserves.

Four reasons:

1) Fund the pension liability to insure ability to meet future commitment to the cats.

2) Have cash to invest in ways to build long term revenue

3) Free resources for advocacy to solve problem

4) Build reserves to insure orderly succession

1) FIRST responsibility is to cats we have by insuring their future

2) IMPACT MANY MORE CATS: Resources devoted to advocacy could end misery for thousands instead of handful we could take in

3) Personal: Waking up differently

EXTREMELY difficult decisionHard to say no

Remind selves of rationale:

Seed Capital

• Knew nothing about donations

• Focused on Tours (discuss later)

Examples of Investments made over 10 years to generate revenue

• Development person – 6 years without• Website – Carole alone, then Philippine assistant• Videos

• Full time employee making videos 2009– BigCatTV.com 66 million views– Roku– Discovery Animalist Channel– Cannot track donations but $2500 from dean in CA

• Social Networking• Remote person

– making games, cards– INTERACTS on social sites– Result: “Engagement” – people commenting, liking, forwarding

• Facebook – 100,000 followers

Result

• Donations and visitor revenue steadily rose– Donations

• $120k 2002 to $1.2mm 2012• 10x but low base; not remarkable number• But 2 things proud of:

– Grew even during recession– Low fundraising cost - 7%

» Charity Navigator 4 Star» Donors appreciate» Brand positioning we chose

– Tour Revenue• $178k 2002 to $758k 2012• Volume and price increases

TOURS

Tours

• Philosophy – share ours, not persuade

• FIRST RULE: ZERO tradeoff with animal welfare– Animals unsuitable not on tour path

– # people in tour

– Time in front of cat

– # people total – control with pricing, reservations

• Pricing– Not be bashful

– Create high value experience

Kinds of tours

• Regular – 90 minutes - $29

• Private - $110 + $55 each added person

• Feeding - $55

• Keeper – enrichment - $110

• Night - $55

• Kids – under 10: $19, adults $29

Benefits of Tours

Revenue– “Seed capital” that got us initial cash to invest– Early years tours exceeded donations.

• Since 2007 donations > tours• Important: limited capacity

– Huge part of building reserves and capital improvements at sanctuary

• $5mm revenue over 10 years• $1.7mm Capex including land purchase• $3.2mm increase in investments

– If no tours, maybe more focus on donations?– Benefit to diversity of income– Tours have other important benefits:

Benefits of Tours

• Increase Donations

– Convert visitors to donors

– Awareness – word of mouth

– Donor recognition: signs, bricks, etc. SEEN

– Gives donors an easy way to introduce others

– Tour revenue exceeds fundraising/admin XP

SO ALL DONOR REVENUE IS FOR PROGRAM EXPENSE

Benefits of Tours

• Enlist Volunteers

– 13 staff

– 90 volunteers

Benefits of Tours

• Enlist Advocats

– For us important because of advocacy focus

– Action alerts – Schreibvogel mall cub display

– Call legislators at end of tour

BEQUESTS

BEQUESTS

• When first urged by consultant

• Not pay today’s bills – take time

• Too complicated – gift annuity

BEQUESTS• Don’t need knowledge

• Sophisticated have financial advisors• Others just have will or investment account

•Tiny effort to promote• Create “Legacy Society”• Website• Big Cat Times• List in tour waiting area

RESULTS

• Initially 8 members – now 67

• First bequest 2010

• Two left over $100k, others small

• Total 2010-2012 $372k

FUNDRAISING STRATEGY

Fundraising Strategy

• Web vs. Direct Mail– Benefit: low cost – fundraising cost 7%

– More $ if did direct mail?

• Focus on existing donors– Cost to keep vs. acquire.

• Hired volunteer with no experience – skill set– Outgoing, passion, record keeping

• “Development Director” title– Director of Donor Appreciation

– Small thing, but sends message

DONOR RECOGNITION

OTHER FUNDRAISING TOOLS

CAPITAL ONE CARD

IMAGE ON OUR WEBSITE

LEADS TO THEIR PAGE TO APPLY

• Over $20,000 in 2013• Annuity – just arrives quarterly• Makes “Impression” on user with each use• Awareness - other people see and comment• Requires little effort – just promote online

• Not in nonprofit rate mailings• Contact - kendra.horger@capitalone.com

BENEFITS:

RAZOO.COM

Razoo

• 0% - 4.9%

• Benefits

– Easy to set up

– Video or photo

– Thermometer

– Set donation levels

– REPORTING

One Takeaway

Consider limiting intake to build reserves

THE END

Are you still awake?