Financial Management in Religious Organizations

Lilly Study FindingsJohn Zietlow, D.B.A., CTP

Title of Individual Responding to Survey

TITLE Percentage: Exec. Director 30% CFO 10% VP-Finance 10% Treasurer 20% Controller 0% Chief Accountant 10% Sundry Other 30%

Numbers add to more than 100% due to rounding.

Primary Management Objective

Serv. Qty.5.0%Effic.

Deliv.12.0%

Serv. Quality29.0%

Other6.0%

Serv. Qual. &

Quantity48.0%

Primary Financial Objective

1.Financial Breakeven

- Still Clear Favorite2.Maximize Net Revenue3.Maximize Cash Flow Minimize Cost Maximize Net Donations Minimize Fin. Risk

#1 Ranks:Breakeven0.4Net Revenue0.2Cash Flow0.1Cost Minim.0.1Net Donations0.1Financial Risk0.1

Degree of Achievement:Chief Financial Objective

Poor5.0%

Fair12.0%

Average30.0%

Very Good38.0%

Excellent15.0%

Main Obstacle - Better Achievement of Financial

Objective

Ineffective/Insufficient Fundraising – 42 %No Long-range Financial Planning - 19 %Ineffective Budgeting Practices - 6 %Poor Cost Control - 5 %Inadequate Finance Staffing - 5 %Other - 13 %

Resolution of Programmatic and Financial Objective Conflict

47% Would Scale Back on Program to Meet Financial Objective

24% Would Scale Back, But Not Enough to Meet Financial Objective16% Would Fully Implement Program13% Would Not Implement Program At All (although proposed by Exec. Dir. or Exec. Committee)

Selecting Which Programs to Initiate: Major and Minor Influences

MAJOR INFLUENCES:Charter - 56%IncorporationArticles - 30%I.R.S. Exemption - 28%ExecutivePreferences - 24%

LESSER INFLUENCES:

Donor Surveys - 4%Client Preferences- 12%Board Preferences- 19%Pres./Anticipated Financial Position- 17%Preserve Status Quo - 2%

Operating Budgets

* 87% Develop and Use Operating Budget* 12% Do Not Develop & Use Budget!

(versus 15% in my 1984 study)Of Those Using Budget:

– 87% Include Specified Purpose (Restricted) Funds or

Projects– Most of Remaining 13% Do Not

Include These (but they should)

Inputs to Budget Development:Check Each That Applies

* Prior Year Budget - 41%* Prior Year Actual - 66%* Zero-Based Review - 16%* Anticipated Revenue - 56%* Long-range Financial Plan - 14%* Other - 8%

Compute & Analyze Financial Ratios?

Unsure2.0%

No60.0%

Yes38.0%

Use Computer to Monitor or Forecast Cash?

NO21.0%

YES79.0%

Our Bank’s Perception – Are We Using Sophisticated and Useful

Cash Mgt. Techniques for Size/Type?

Agree/SA45.0%

Neutral33.5%

Disagree/SD21.5%

Practice Daily Active Cash Management?

Unsure1.0%

No50.0%

Yes49.0%

Cash Forecasting Usage & Value

Ranking of Uses of the Cash Forecast:1. Anticipate Shortages, Surpluses2. Vary Fundraising Expense, See Effect3. Anticipate Effect of Varying Revenue

Develop a Cash Forecast?

No54%

Yes44%

Un-sure2%