A involve 2012 staying in control-workshop-budgeting-full-cost-recovery
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Transcript of A involve 2012 staying in control-workshop-budgeting-full-cost-recovery
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Staying in Control
Building blocks and controls for effective financial management
Involve Conference 2012 - Workshop A
Full Cost Recovery
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2
The Building Blocks for effective financial management
Planning
Controls Accounting
Monitoring
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Management Controls
The purpose of a control is to minimise risks:
Failure to achieve objectives
Poor use or loss of funds & assets
Low staff morale
Public loss of confidence
Resource: “Management Controls” Checklist
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Accounting & Monitoring
Chart of Accounts
Easy to monitor budgets
Accurate record keeping
Timely financial reports
Excel – Sage – QuickBooks
Resource: www.mango.org.uk/Guide/QuickBooksmanual
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5
Financial Planning
“If you don’t know where you are going, then you are sure to end up somewhere else”Mark Twain
“Failing to plan is planning to fail”Chinese Proverb
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1. What are the objectives of the project?
The Planning Process ?
4. What will these
resources cost?
7. Is this realistic and sustainable?
3. What resources & how much time to perform these
activities?
2. What activities to achieve these
objectives?
5. Where will the funds
come from?
6. How do we check progress
and update plans?
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“Full Cost Recovery”
How do we calculate the full cost of a project?
How do we finance these costs?
What are the consequences if full costs are not recovered ?
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“Full Cost Recovery”
Prepare plan
List capital / set up costs
List revenue direct costs
Identify overhead costs
Decide on basis of apportionment of …..overhead costs between projects
Do the Maths! ……not this time!
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Case Study - Leafy Lane
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“Allocation of overheads to projects” - building up the full cost
PREMISES
ADMINISTRATION
GOVERNANCE & STRATEGY
FUNDRAISING
“Healthy Eating”
Direct costs
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Sharing the overheads between Projects
FLOOR AREA
DAYS IN USE
USERS
STAFFEXPENDITURE
Marginal Costs ?X
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PREMISES
ADMINISTRATION
GOVERNANCE & STRATEGY
FUNDRAISING
Premises
Direct costs
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PREMISES
ADMINISTRATION
GOVERNANCE & STRATEGY
FUNDRAISING
Admin.
Premises
Direct costs
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PREMISES
ADMINISTRATION
GOVERNANCE & STRATEGY
FUNDRAISING
Governance
Admin.
Premises
Direct costs
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PREMISES
ADMINISTRATION
GOVERNANCE & STRATEGY
FUNDRAISINGFundraising
Governance
Admin.
Premises
Direct costs
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“The full cost of the Projectincludes a proportionate share of the overheads”
PREMISES
ADMINISTRATION
GOVERNANCE & STRATEGY
FUNDRAISING
Fundraising
Governance
Admin.
Premises
Direct costs
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Recovering the Cost . . . .
Prepare budget & cash flow projections
Include “donated” costs & services in ….costings - use for “matched funding”?
Are beneficiaries to contribute?
Negotiate with Donors
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Issues with Overheads
Resources: www.ncvo-vol.org.uk/advice-support/funding-finance www.biglotteryfund.org.uk/full_cost_recovery
Do managers know true cost when negotiating with donors or bidding for service contracts? “10% to cover overheads” usually not realistic.
Increases or reduction in activity/projects may result in a disproportionate increased cost in overheads for each project.
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Who is financing your …project’s unrecovered costs?
Ring-fence any restricted funds received for other current or future projects
Build up supporter base to finance potentially “unrecoverable” overheads
Build up adequate reserves to finance funding fluctuations