Brendan Wu
BUILDING FINANCIAL SUSTAINABILITY INTO CHARITIES
Trees that Count
Summary: It’s not enough for charities to deliver high-impact programs if there’s no effective strategy for sustaining the organisation financially. Neither is it enough to be just financially stable.
Often, management teams of charitable organisations find themselves frustrated by a simple but fundamental problem - the lack of clear financial goals for their organisation. Without a shared understanding of what their financial outcomes are, the most well-meaning charity will almost inevitably find themselves drawn into running an organisation that struggles for financial sustainability, therefore undermining its effectiveness to grow and successfully deliver to their mission.
Measuring and monitoring financial sustainability should be viewed by charities as a dynamic and continual process. Aligning the financials with a strategic plan that defines their outcomes, builds programs, community support, and collaborative partnerships will help charities overcome the challenge of maintaining financial sustainability in the short and long term.
My Role
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Design and build financial processes and models
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Integrate the financial conversation with strategy and planning
The toolkit
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Google sheets,
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Business planning
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Strategic framework
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Excel
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Xero
Soft skills needed
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Financial nous
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Collaboration
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Who I worked with
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CEO
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Finance manager
Background
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Trees That Count (TTC) is a charity that funds the planting of native trees. In the past , they reported on their financial performance with no real way of understanding how they were progressing against their charitable purpose.
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In the for-profit world, balance sheets and profit and loss statements tells a lot about how close an organisation is to meeting their objectives. With TTC, balancing financial sustainability with its charitable mission was a core challenge.
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TTC is striving to advance its strategic direction over a 3-5 year horizon. One of the core objectives was to better understand its financial position and to have in place sound financial practices which will support and inform the growth trajectory and at the same time become financially self-sufficient as a means to “sustainability.”
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My role
Enable the CEO and Board to answer "why they are here" by putting in place financial management practices to inform future success against strategic outcomes and at the same time, ensure financial sustainability
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Step 1 - Getting started
My starting point was to work with both the CEO and Finance Manager to understand the strategy and business plan for the year. I then moved into looking at how closely aligned the financial reporting to the plan and what the monthly process was for collecting and managing the information. The last piece was to understand how the financials were used to support decisions.
Step 2 - Initial design and build
Once we had an agreement on how they wanted the financials to work to support the business, I started to design the spreadsheets to report the data and align it with how Xero worked. This gave the CEO a working model that she could use to get insights from the financials and be able to report to the Board on how well the organisation was operating according to its strategy
Step 3 - Financial reporting and month end processes
With the way forward, I worked alongside the finance manager to embed a month end process which would create some transparency on the timings for cashflow, accruals and reporting
Step 4 - Ongoing work
Since the initial implementation, we have been evolving the financials to shift it from purely financial reporting to a model by which it can inform the strategic outcomes of the organisation. This has helped with providing a forecast of investment, funding and operational cost required to support the strategic intent over a 3 year time period.
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Outcome
We were able to forecast the financial impact in light of TTC's strategic goals which ensures that the management team continually assess their performance against their stated outcomes.
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Being able to evaluate activities and operations from a financial standpoint and mission impact as well as the interaction between these two dimensions has allowed TTC to develop strategic plans to manage its short term financial challenges while maintaining its long term goals.
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What was delivered
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Financial management practices
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Forecast and budget tools
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Building capability across the team to connect financials to strategic and business planning outcomes
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Embed the thinking that balances financial sustainability with the strategic goals