Fundamentals of NGO financial sustainability
NGO Financial Sustainability Prepared by: Abt Associates Inc., Under a subcontract to: Pathfinder International Produced for: U.S. Agency for International Development FUNDAMENTALS OF Abt Associates Inc. is a subcontractor to Pathfinder International under Cooperative Agreement No. CCP-A-00-92-00025-20, (effective 1 June 1994) with the United States Agency for International Development in support of the Family Planning Ser- vices Project to increase the access to and availablity of high-quality family planning and/or reproductive health services. Acknowledgments Abt Associates Inc. would like to thank the many people who contributed to the development of Fundamentals of NGO Financial Sustainability. Path- finder International has made sustainability a priority and has allocated diverse resources towards helping organizations achieve that goal, including providing the funding for the financial sustainability project through which this manual was developed. The contributing authors of the manual include Stefania Slabyj, Nena Terrell, Stephen Musau, Michael McGunnigle, Kate Stillman, and T.J. Ryan. Some of the material was adapted from a manual entitled, Improving Sustainability through Multi-Disciplinary Financial Management, which was compiled by TEO Resource Managers. Gail Naimoli of the Manoff Group provided curriculum development support for this manual. Kate Stillman coordinated the entire process of producing the manual, and reviewed each chapter before it went to the editor. Linda Griffin Kean pro- vided skillful editing and desktop publishing services. Most of all, we thank the staff members of the many nongovernmental organizations with whom we work through Pathfinder International. Their dedication and commitment in providing vital health services to under- served populations on a daily basis are inspirational. Contents Acknowledgments Acronyms Introduction 1. Key Elements of Sustainability The Types of Sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1-4 Factors that Influence Sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1-6 Monitoring Sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1-7 Figure 1.1. Eight Characteristics of Effective Leadership and Management . . . . . . . . . . . . . .1-8 Figure 1.2. Harmony of Sustainability Efforts and Stakeholder Interests . . . . . . . . . . . . . . . .1-9 The Role of Communication. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1-10 Figure 1.3. The Importance of Communication. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1-10 The Sustainability Process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1-11 Figure 1.4. The Process of Sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1-12 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1-13 Example: Guide for Organizational Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1-14 2. Strategic Planning The Benefits of Strategic Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-3 The Three Stages in the Strategic Planning Process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-4 Figure 2.1. The Three-Stage Strategic Planning Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-4 Stage One: Planning and Preparation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-5 Example: Strategic Planning Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-6 Stage Two: The Strategic Planning Workshop . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-9 Figure 2.2. SWOT Guidelines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-11 Example: SWOT Table for Afya Clinic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-13 Example: Mission Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-14 Example: Vision Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-14 Example: Programmatic Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-15 Example: Organizational Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-15 Example: Programmatic Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-16 Example: Organizational Objectives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-16 Stage Three: Finalize the Strategic Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-18 Figure 2.3. Sample Work Plan Table. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-19 2 Example: Strategic Planning Workshop Agenda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-22 3. Human Resource Management Figure 3.1. Developing a Human Resource Management System . . . . . . . . . . . . . . . . . . . . . .3-4 Plan Your Staffing Needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-5 Example: Staffing Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-6 Develop an Organizational Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-7 Example: Organizational Chart. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-8 Create Job Descriptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-9 Figure 3.2. The Components of a Job Description. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-9 Example: Job Description. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-11 Develop Performance Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-12 Example: Performance Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-13 Establish a Performance Appraisal and Review Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-15 4. Management Accounting Some Key Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-2 The Use of Management Accounting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-5 Example: Cost Analysis Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-8 Management and Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-9 Example: Understanding the Needs of Stakeholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-11 Constraining and Driving Forces. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-12 Quality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-13 5. Financial Accounting Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5-3 Methods of Recording Accounting Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5-5 The Income and Expenditure Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5-7 Example: Income and Expenditure Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5-8 The Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5-10 Example: Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5-12 6. Budgeting Performance Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-5 Example: Performance Indicators. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-6 Preparing a Budget. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-7 Service Volume Budget. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-8 CONTENTS 3 Revenue Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-10 Example: Estimate Fee Revenue for a Revenue Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-11 Expense (Cost) Budget. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-12 Example: Expense Budget of a Health NGO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-12 Example: Estimate Costs for Drugs and Medical Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . .6-14 Capital Budgets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-15 Cash Budgets/Forecasts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-16 Example: Cash Flow Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-17 Budget Variance Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-18 7. Cost Accounting The Need for Cost Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-4 Example: Cost Recovery Levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-4 How Is Cost Accounting Typically Utilized?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-6 Overview of Basic Cost Accounting Concepts, Procedures, and Terms. . . . . . . . . . . . . . . . . . .7-8 Example: Cost Analysis Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-9 Example: Direct and Indirect Costs — Norplant Insertion . . . . . . . . . . . . . . . . . . . . . . . . . .7-11 Allocation of Overhead Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-12 Example: Commonly Used Allocation Bases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-12 Example: Indirect Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-13 Example: Allocating Indirect Costs by Cost Center . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-14 Example: Total (Full) Costs by Cost Center . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-14 Example: Allocating Costs by Direct Apportionment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-15 Example: Allocating Costs by the Step-Down Method. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-17 Cost Behavior — Fixed and Variable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-18 Example: Fixed and Variable Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-18 Break-Even Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-20 Example: Break-Even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-20 Example: Break-Even Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-21 Approaches to Costing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-22 RVU Costing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-24 Example: Relative Value Unit Costing Using the Ranking Method . . . . . . . . . . . . . . . . . . . .7-25 Example: Relative Value Unit Costing for Staff Time Using the Objective Data Method. . . .7-26 Example: Relative Value Unit Costing for Medicines Using the Objective Data Method. . . .7-27 Example: Allocating Costs Using the Objective Data Method. . . . . . . . . . . . . . . . . . . . . . . . .7-28 8. Marketing Planning What Is Marketing? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-4 Figure 8.1. Components of a Marketing Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-5 Formative Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-6 Example: Designing Interview and Survey Questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-8 4 Example: Implementing Interviews. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-9 Figure 8.2. Health Care Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-11 Strategy Development. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-12 Figure 8.3. The Components of Effective Marketing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-15 Message and Media Development and Implementation. . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-16 Example: Conveying the Benefits to Patients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-16 Monitoring and Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-21 Example: An NGO Marketing Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-22 Example: Monitoring and Evaluation Worksheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-27 9. Board Roles and Responsibilities The Board and Senior Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-4 The Primary Functions of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-5 Responsibilities of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-7 Figure 9.1. Ten Basic Responsibilities of Nonprofit Boards. . . . . . . . . . . . . . . . . . . . . . . . . . . .9-7 The Structure and Size of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-11 Figure 9.2. Sample Duties for Chairperson of the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-12 Board Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-13 Managing the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-14 Example: Board Member Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-16 10. Internal Controls The Elements of Internal Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10-4 Creating an Internal Control Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10-6 Warning Signs of Inadequate Internal Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10-8 Internal Control Questionnaire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10-10 Example: General Control Environment Questionnaire. . . . . . . . . . . . . . . . . . . . . . . . . . . .10-11 Example: Internal Control Questionnaire for Cash Management . . . . . . . . . . . . . . . . . . . .10-12 Example: Internal Control Questionnaire: Medical Inventories and Supplies. . . . . . . . . . .10-14 Example: Internal Control Questionnaire: Payroll. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10-15 Example: Internal Control Questionnaire: Purchases and Expense Management . . . . . . .10-16 Example: Internal Control Questionnaire: Petty Cash Management. . . . . . . . . . . . . . . . . .10-17 11. Fraud Prevention Reasons for Fraud. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-4 Figure 11.1. The Fraud Triangle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-4 Symptoms of Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-6 Fraud Prevention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-8 CONTENTS 5 12. Fundraising Preparing to Apply for Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12-4 Writing a Funding Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12-7 Learning from a Fundraising Process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12-8 Annex A. Glossary Annex B. Suggested Training Schedule Annex C. Suggested Interim Exercises Annex D. Bibliography List of Examples Example: Guide for Organizational Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1-14 Example: Strategic Planning Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-6 Example: SWOT Table for Afya Clinic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-13 Example: Mission Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-14 Example: Vision Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-14 Example: Programmatic Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-15 Example: Organizational Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-15 Example: Programmatic Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-16 Example: Organizational Objectives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-16 Example: Strategic Planning Workshop Agenda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-22 Example: Staffing Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-6 Example: Organizational Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-8 Example: Job Description. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-11 Example: Performance Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-13 Example: Cost Analysis Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-8 Example: Understanding the Needs of Stakeholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-11 Example: Income and Expenditure Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5-8 Example: Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5-12 Example: Budget Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-18 Example: Performance Indicators. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-6 Example: Estimate Fee Revenue for a Revenue Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-11 Example: Expense Budget of a Health NGO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-12 Example: Estimate Costs for Drugs and Medical Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . .6-14 Example: Cash Flow Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-17 Example: Budget Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-18 Example: Cost Recovery Levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-4 Example: Cost Analysis Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-9 Example: Direct and Indirect Costs — Norplant Insertion . . . . . . . . . . . . . . . . . . . . . . . . . .7-11 Example: Commonly Used Allocation Bases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-12 6 Example: Indirect Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-13 Example: Allocating Indirect Costs by Cost Center . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-14 Example: Total (Full) Costs by Cost Center. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-14 Example: Allocating Costs by Direct Apportionment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-15 Example: Allocating Costs by the Step-Down Method. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-17 Example: Fixed and Variable Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-18 Example: Break-Even Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-20 Example: Break-Even Chart. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-21 Example: Relative Value Unit Costing Using the Ranking Method . . . . . . . . . . . . . . . . . . . .7-25 Example: Relative Value Unit Costing for Staff Time Using the Objective Data Method. . . .7-26 Example: Relative Value Unit Costing for Medicines Using the Objective Data Method . . . .7-27 Example: Allocating Costs Using the Objective Data Method . . . . . . . . . . . . . . . . . . . . . . . . .7-28 Example: Designing Interview and Survey Questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-8 Example: Implementing Interviews. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-9 Example: Conveying the Benefits to Patients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-16 Example: An NGO Marketing Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-22 Example: Monitoring and Evaluation Worksheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-27 Example: Board Member Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-16 Example: General Control Environment Questionnaire. . . . . . . . . . . . . . . . . . . . . . . . . . . .10-11 Example: Internal Control Questionnaire for Cash Management . . . . . . . . . . . . . . . . . . . .10-12 Example: Internal Control Questionnaire: Medical Inventories and Supplies. . . . . . . . . . .10-14 Example: Internal Control Questionnaire: Payroll. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10-15 Example: Internal Control Questionnaire: Purchases and Expense Management . . . . . . .10-16 Example: Internal Control Questionnaire: Petty Cash Management. . . . . . . . . . . . . . . . . .10-17 List of Figures Figure 1.1. Eight Characteristics of Effective Leadership and Management . . . . . . . . . . . . . .1-8 Figure 1.2. Harmony of Sustainability Efforts and Stakeholder Interests. . . . . . . . . . . . . . . . .1-9 Figure 1.3. The Importance of Communication. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1-10 Figure 1.4. The Process of Sustainability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1-12 Figure 2.1. The Three-Stage Strategic Planning Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-4 Figure 2.2. SWOT Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-11 Figure 2.3. Sample Work Plan Table. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-19 Figure 3.1. Developing a Human Resource Management System . . . . . . . . . . . . . . . . . . . . . .3-4 Figure 3.2. The Components of a Job Description. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-9 Figure 8.1. Components of a Marketing Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-5 Figure 8.2. Health Care Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-11 Figure 8.3. The Components of Effective Marketing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-15 Figure 9.1. Ten Basic Responsibilities of Nonprofit Boards. . . . . . . . . . . . . . . . . . . . . . . . . . . .9-7 Figure 9.2. Sample Duties for Chairperson of the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-12 Figure 11.1. The Fraud Triangle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-4 Acronyms CYP Couple year of protection (of contraceptives) CIDA Canadian International Development Agency DFID Department for International Development (UK) EU European Union FP Family planning IUD Intrauterine device MCH Maternal and child health NGO Nongovernmental organization PP Purchase price PUL Period of useful life RH Reproductive health RVU Relative value unit SP Salvage price STD Sexually transmitted disease SWOT Strengths, weaknesses, opportunities, and threats TBA Traditional birth attendant UNDP United Nations Development Program UNFPA United Nations Population Fund USAID United States Agency for International Development UNICEF United Nations Children’s Fund [...]... Chapter 1 Key Elements of Sustainability Purpose Introduce the concept of sustainability Target Skills 1 Describe and define the primary types of sustainability 2 Identify the principal characteristics of sustainability and explain how they interact 3 Describe financial sustainability Key Elements of Sustainability 1-3 Key Elements of Sustainability Sustainability is a measure of an organization’s ability... health care service delivery organizations by targeting three types of sustainability: organizational sustainability, the sustainability of services, and financial sustainability Note that financial sustainability, while critical, is only one aspect of an organization's overall sustainability; organizations must also build a broad range of organizational, technical, and human capacities Therefore, in... Definition of Staff Duties Skills, Roles, Knowledge, Experience Key Processes Technology Materials Staff Information Methods Key Elements of Sustainability 1-13 Conclusion This chapter introduced the different elements of the process of sustainability The remainder of this manual provides background knowledge, exercises, and tools to help you implement this process 1-14 Fundamentals of NGO Financial Sustainability. .. consider the broad impact both within and outside the organization and over time Sustainability requires a full commitment at all levels of the organization Exercise 2.1 Describe/discuss how strategic planning would benefit your organization 1-4 Fundamentals of NGO Financial Sustainability The Types of Sustainability Financial sustainability can be gauged by an organization’s net income, liquidity, and... stakeholders’ goals and objectives 3 Ask your key stakeholders to make the same list and compare the two 1-10 Fundamentals of NGO Financial Sustainability The Role of Communication The importance of communication to the process of sustainability cannot be overstated The principal traits of a sustainable organization revolve around good communication and dialogue: a sustainable organization maintains... sixmonth period of the TBA training program Sustainability of services means that the services provided, and/ or the health impact made, continue long after the original or primary donor funding is withdrawn 1-6 Fundamentals of NGO Financial Sustainability Factors that Influence Sustainability Exercise 1.1 List some internal factors within your organization’s “control” that you think affect sustainability. .. several years? 1-18 Fundamentals of NGO Financial Sustainability X Market Position (interview senior managers, all levels of staff, clients; obtain any records or studies available; * questions 1-4 are priority questions) 1 * What is the availability and quality of public services in their operating areas? 2 * Who are other private and NGO providers of services? 3 * What types of services are available... products, and changes should be made whenever necessary 1-12 Fundamentals of NGO Financial Sustainability Figure 1.4 The Process of Sustainability Reconcile Assessment Driving Forces and Constraints Vision Values Mission Needs Assessment Strategy Budgets Qualitative Quantitative Financial Situational Environment Outcomes Social Design of Organization (Structure) Costs Policies Priorities Markets Clinical... the one recommended by the designers of this manual, but it is not the only approach It should be modified to meet the needs of users 4 Fundamentals of NGO Financial Sustainability Classroom Instruction Trainer-Led 3-4 Days Enrichment Period with Interim Assignments 2-3 Weeks of Workplace Experience Successive Classroom Instruction Trainer-Led 3-4 Days Organization of the Manual The twelve chapters in... annual financial statements for last four years 2 Obtain last audited financial report 3 Does the company use any computer system? 4 Has a system to track costs by cost center been implemented? What type of system is in place to track costs? 5 Are there cost centers? 6 How are cost centers defined, and how are overhead costs allocated? 1-16 Fundamentals of NGO Financial Sustainability 7 What types of costs . three types of sustainability: organizational sustainability, the sustainability of services, and financial sustainability. Note that financial sustainability, . characteristics of sustainability and explain how they interact. 3. Describe financial sustainability. Key Elements of Sustainability 1-3 Key Elements of Sustainability Sustainability