Business planning

Institute of Fundraising Workshop

BUSINESS PLANNING

The Cranfield Trust – Alice Dabrowska Operations Manager

Cranfield Trust Volunteer- Collete Williams

Why do I need to Plan?

NOW?!

The UK has fallen from fifth to eighth in the World Giving Index, CAF's third

annual report on giving across 164 countries, which surveys the amount people

have donated to charity, whether they have volunteered their time and whether

they have helped a stranger.

UK Giving 2012, Britain's biggest annual survey of charitable giving, also published

by CAF showed that giving dropped by an "unprecedented" 20% in 2011-12 –

representing some £1.7bn in charitable income. The amount rises to £2.3bn when

adjusted for inflation, CAF says.

A recent House of Lords discussion of the Small Charitable Donations Bill,

Baroness Hayter of Kentish Town quoted CAF's research, which found one in six

charities could be threatened with closure and up to 40% were worried they

would have to close if the economic situation failed to improve.

NOW?

Payment by Results - how will cashflows and contracts operate? Organisations

need good business and negotiation skills to avoid suicidal contracts. Current lack

of clarity and confidence. Threat of massive liquidity strain for those charities

affected as they provide services where delayed payments form part of the contract.

The voluntary sector’s enhanced role in delivering public services through L.A.

commissioning offers many opportunities but also comes with associated risks.

Funding shortfalls and increased demand is threatening the sector's capacity to

successfully deliver services. The government is opening up new channels for

funding, infrastructure and resources to allow voluntary organisations to become

more responsive and decrease the risk of service failure.

Large gap in information between what councils are doing to administer personal

budgets and how charities should prepare for them….two massive challenges at

the same time: cuts to charity budgets as well as service users being told they are

ineligible to receive a personal budget at all.

NOW?

•To understand the charity as a business and to view the organisation from a fresh

perspective

•Raises awareness of internal and external influences

•A chance to identify gaps, resource needs, knowledge and skills

•Builds and improves teamwork through participation

•Provides a means of communication inside the organisation with both internal and

external stakeholders.

•Effective in presenting charity to funders and boards.

•Guides the operations; sets targets and allows measurement of successes and

achievements as well as highlighting areas for improvement.

•Revitalises and motivates staff, boosts moreale, “we know why we are here”,

aligns personal objectives

Why bother with Business Planning?

Where do we

want to be?

Analysis is necessary to identify the principal

success factors for your organisation moving

forward.

But if these facts can't be easily explained to

stakeholders and/or stakeholders can't see the

need or urgency for change, the plan will

inevitably fail through lack of buy-in.

If, however, the essence of the plan - including the principal reasons why the

stakeholders MUST change is identified and wrapped in a compelling narrative,

engagement and therefore action is more likely to follow.

The right narrative facilitates strategic change by making change welcome,

achievable and personally relevant.

In 2008 they requested help from The Cranfield Trust in

order to produce a Business Plan for the purpose of a

Capital Asset in which to invest a lump sum. This was

deemed to be a huge success by the charity, with Kim

Brown, the Chief Executive commenting that:

“The volunteer had a massive impact. We have recently

received a £1m grant based on the vision the volunteer

helped us formulate. (He) is now one of our Trustees which

we are delighted with... Thank you so much - we have had

such an amazing outcome from our involvement with

Cranfield Trust."

Case Study

Hampton Trust

Business Plan, Salary & Structure

Review and Advice on Pension

Schemes

Performance

Management

Marketing

IT

Human

Resources

Finance

Business

plans

Strategy

Formulating the Plan and Periodically Reviewing

Develop the vision…where we want to be in x

months time

Agree the values…how we want to work

together and the image we want to portray

Where we

are now

Change

Where we

want to be

Setting the goals, deciding and defining where the organisations needs and wants

to go

A plan is of no use unless it is followed

The high level thinking must be translated into something tangible – things to be

done, actions, the plan

The plan is a roadmap. Take time to look at where you are and compare and

contrast your current position with what you had planned. Are you adrift? Then

change events, alter plan to reflect reality, get back on track.

The plan is a living document it is NOT a documents, created at great expense,

that simply gathers dust.

What do we mean by

Business Planning?

“The strategic planning project, resulted in the Scottish part of the organisation forming a

more cohesive bond, gaining insight and clarity as to the strategic issues we face,

the options for responding to those and planning well for the future.

In particular, and unexpectedly, it resulted in us presenting a positive, coherent and well

thought out strategy for Scotland to our newly appointed CEO, in her early days in the

organisation. Since then, keeping a focus on Scotland, within the context of a UK

organisation, has been made both easier and more effective.”

Case Study

Community Service Volunteers Scotland

Strategic Plan Community Service Volunteers (CSV) is the UK’s leading volunteer

and training organisation, with 200,000 volunteers and 20,000 trainees

involved in programmes across the UK each year. It is a

registered charity and has an almost 50 year history of social action,

with a wealth of experience in creating opportunities for people to work

together to have a positive impact on the community.

We have a strategy, why do we need

a business plan?

If you are failing to plan, you are planning to fail. Tariq Siddique

BUDGET

Detailed list of all planned

expenses and revenues

produced on an annual

basis.

CASHFLOW

Rolling record of actual and

planned movement of cash

in and out of the venture –

liquidity. A continuous

check on the use and

availability of resources.

We have a budget,

what’s the use of a

cash flow?

Cash Flow Summary Year 1 Month 1 Month 2 Capital Forecast Actual Forecast Actual Investment Capital Set-up costs Expansion Total Income Restricted Funding Grants Unrestricted Funding Grants Sales Donations Total Expenditure Opening Costs Promotions Marketing Staff Materials, stock Workspace Services Insurance Transport Expenses Tax PAYE, NI Financing Loan interest Loan repayment Total Cash Position Income expenditure Bank opening balance Bank closing balance Reserves Contingency Total

The first step for all trustees is to obtain clear and reliable financial

information, along with realistic and regular cash flow forecasts.

In a time of financial difficulties this information will indicate whether

there is scope to renegotiate the timing of grant receipts – allowing

trustees to explore other sources of income or to contact the Charity

Commission for permission to use restricted funds for general

purposes.

Recruiting and retaining good

Trustees…

financial sustainability is the key to survival as

well as growth

Corporate World = maximising shareholder value

Charitable Organisations = identifiable public benefit

How do we define what value we

add?

Can we define what the need is that we are endeavoring to support by

our intervention?

If we can, then what is the value of the work we are doing and how can

we package and communicate what we are doing or are planning to do

in a way that people can understand?

Be realistic

Ensure your back-up plan is practical and workable. The use of an independent

third party to review assumptions can incur short-term cost but avoids bigger

problems.

Understand your finances

Robust financial information and strong budgeting processes are key to avoiding

insolvency. Understand the cost and benefit of your services.

Be prepared

Organisations that have survived major funding cuts are those which have

anticipated the problem in advance. They ‘ve been able to make decisions and

put their contingency plan in operation, whether that is cutting back provision

and overheads or supplying alternative services.

NOW?

Matt Dunham is an advisory partner with Grant Thornton

Develop the right mindset

Charities need to be commercially aware as do the individuals within them. Having

staff who are flexible and understand the economic realities while maintaining a

caring approach can make all the difference to success or failure.

Strong leadership

These leaders have a clear vision, can communicate that to staff and achieve a

consensus. They are compassionate but aware of the commercial environment,

they understand the need to generate surpluses to be sustainable, but happy to dip

into them on occasion to invest in the future to improve services.

Look for service efficiencies

Don't make the simple mistake of cutting services if you could instead have made

them more efficient. Mergers and shared services offer major potential for

efficiencies and will prove the solution for many organisations.

NOW?

Matt Dunham is an advisory partner with Grant Thornton

“…..business plan; to review the strengths and weaknesses of the

organisation and to agree goals and objectives for the next 5 years.

This was a searching process and I appreciate the skills and empathy Doug

brought to the project, his genuineness and firmness regarding necessary

change along with his time commitment. His willingness to meet with staff and

trustees enabled him to gain an accurate picture of the organisation as a whole

along with the challenges we will possibly face in the future. I am confident

that this special time will have safeguarded the future development of UCHM

while enabling the business plan to be used in generating much need funds for

the establishing of our ongoing service to vulnerable people in the community.

Case Study

United Churches Healing Ministry

Business Plan

Performance

Management

Marketing

IT

Human

Resources

Finance

Business

plans

Strategy

“I love what you guys do and that you exist in the world.” Love is All We Need

The Cranfield Trust’s

600+ Volunteers are high

calibre managers, active in

the commercial sector.

Most have postgraduate

qualifications and are from

leading international

business schools. "The project volunteer

brought (what the

charity needed) an

objective, skilled and

knowledgeable

approach to our

strategic planning

needs…"

Ormerod Home Trust

"The volunteer had a

massive impact. We have

recently received a £1m

grant based on the vision

the volunteer helped us

formulate…."

Hampton Trust

20+ years experience as the UK’s leading provider of free management consultancy for the voluntary sector

200+ Management Consultancy Projects a year

Where we are now

Change

Where we want to be