WNPS State Board
Fall 2016 Financial Review
Oct. 22, 2016
1
Do you know you’re a Fiduciary ?
National Council of Nonprofits
“…. a fiduciary is a person or organization that owes to another the duties of good faith and
trust. The highest legal duty of one party to another, it also involves being bound ethically
to act in the other's best interests.”
“Board members are the fiduciaries who steer the organization towards a sustainable
future by adopting sound, ethical, and legal governance and financial management
policies, as well as making sure the nonprofit has adequate resources to advance its
mission.”
A source for more information
“Washington Nonprofits and Jacobson Jarvis & Co PLLC present “Finance Unlocked for
Nonprofits” (FUN), resources designed to help board members advance their missions as
they learn how to make better financial decisions and better protect their assets. FUN, as
the name suggests, breaks with traditional nonprofit financial training in providing fun,
interactive learning opportunities that work for busy board members.”
Finance Unlocked for Nonprofits
2
Agenda
• 2015
– Audited Financial Statements and Report
– IRS 990
• 2016 financial status
– Profit & Loss year-to-date & projection for year-end
– Restricted funds
• 2017 proposed budget
– Endowment distribution
– Administrative Overhead
– 2017 budget proposal
• Administrative Overhead Policy change proposal
3
Decisions Requested
• Approvals of
– 2015 Audited Financial Statement, Auditors communication, IRS 990
– 2017 proposed budget and associated proposals
– Administrative Overhead Policy change
4
WNPS Accounting Components
State
General
Funds
State
Temporarily
Restricted
Funds
State
Permanently
Restricted
Funds
Society
General
Funds
State
Chapter(s)
General
General
Funds
Funds
+
Chapter(s)
Stateed
Temporarily
Funds
Restricted
Funds
=
Society
Temporarily
Restricted
Funds
Society
Permanently
Restricted
Funds
5
2015 Society Audit Results
6
Audited Financial Statements and 990 Form
Action Requested: State Board review and acceptance of the Audited
Financial Statements, Auditor Communication, and IRS 990.
7
2016 State Financial Status
Profit & Loss status as of 9/30/2016
Temporarily Restricted fund status
Endowment Fund status
8
State General Fund
2016 Profit & Loss Status
• Year-end estimate highly dependent on achieving 4th quarter contributions at
least equal to those received in 2015 (~$28K or 37% of total contributions)
• If achieved, expect to end the year with a loss of approx $8,300
Contributors to expected improvement in year-end result versus plan
- Contributions running better than plan (~15K)
- Douglasia & calendar production costs lower then planned (~ $5K)
Why the improvement is not better
- Fees for accounting & audit services higher then planned (~$3.5K)
- Profit from events (particularly Botany WA) less then planned (~$3K)
- Chapter rebates higher then planned (~$3K)
- Insurance costs higher then planned (~$1.3K)
Details of 2016 P&L year-to-date and year-end estimate contained in accompanying PDF file
9
Current Cash Balances
With a projected $13K loss for 4th Quarter 2016 (which could be worse if
income projections are not met) available cash for general operations will be
drawn down.
Likely will drop us below bank account minimum, incurring nominal fees .
Cash flow needs may require use of Operating Reserve funds during the 1st
half of 2017.
10
Temporarily Restricted Fund Status
Accounting Improvement Project has been spent down to $0
Goal remains to spend down and close the Hinman fund in
2016 to reduce administrative effort.
11
Endowment Fund Status
12
2017 State Plan
2017 Endowment Distribution proposal
2017 Administrative Overhead proposal
2017 Preliminary “as is” Budget
13
2017 Endowment Grant Distribution
•
•
Per policy, annual distribution limited to not more than 5% of Fair Market Value
(FMV) as of Sept 30, and not to reduce Permanently Restricted donations
FMV as of 9/30/2016 = $143,291 with $25,275 temporarily restricted
– 5% = $7,164
•
Proposed distribution = $6,500
– Conservation = $2,000
– Education = $2,000
– Research = $2,500
FAC endorses this proposal
Action requested: State Board approval
14
2017 Admin OH Rate
Admin OH rate calculated on 3-year rolling average of functional costs
Admin OH % =
Mgmt & General Expense
___________________________
Fundraising + Program Expenses
2016 WNPS Society Administrative Overhead¹
Year
Management &
General Expenses
Program
Services
Expenses
Fundraising
Expenses
Admin OH %
2013
$16,566
$208,515
$4,540
7.8%
2014
$22,450
$220,721
$5,563
9.9%
2015
$43,649
$193,709
$13,384
21.1%
3-Year Average
$27,555
$207,648
$7,829
12.8%
¹ WNPS Administrative Overhead Policy; Draft 2015 WNPS Audit Report
15
State General Fund
2017 Proposed Budget
FAC recommends a “balanced budget” for 2017
Increases in income & expenses primarily due to higher spending levels
on State & CPS Stewardship programs as compared to 2016
To achieve a balanced budget
1. “Priced in” higher profit targets on workshops, Botany WA & Study Weekend
($4,140 increased profit)
2. Eliminated funds for one edition of Douglasia ($3,125 of decreased expense)
Without these changes, would expect to run ~$7,000 in the hole in 2017
16
2017 Event Profit Targets
As part of balancing 2017 plan
• targeting $4140 higher profit than 2016 from events
• approx $2300 higher profit than the average of the last 4 years
• Botany WA is about ½ of this increase ($1100)
17
2017 Proposed Budget Summary – Income
Details of proposed 2017 budget contained in accompanying PDF file
18
2017 Proposed Budget Summary – Expenses (page 1)
19
2017 Proposed Budget Summary – Expenses (page 2)
20
Other notes re: 2017 State budget
•
•
•
Only salary increase included is 0.2% COLA based on projected Social Security
increase
No provision for overtime payments if required by law
Admin OH income on Stewardship programs masks ongoing shortfall in operating
income versus expenses.
FAC endorses 2017 plan as presented
Action Requested: State Board approval
21