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University of Wisconsin Oshkosh
College of Education and Human Services
Human Services Leadership
Best Friends Neenah-Menasha
by
Rya Adler
May 12, 2016
Submitted in Partial Fulfillment of the Requirement
for the Course Human Services Financial Sustainability of a Nonprofit
Human Services-385
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Best Friends of Neenah-Menasha is a school based character-mentoring
program in the Fox Valley area that is targeted to middle and high school students.
The educational program is to encourage fun while promoting companionship. The
mission of this organization is “to help young people thrive through the power of
mentoring friendships and supportive family networks.” The vision statement
corresponds well, as it has been stated as” transforming the lives of young people,
their families and our community.”
This organization has many programs such as After School Mentoring, Lunch
Mentoring and Community Based Mentoring; with such a variety of programs there
is quite an array of age groups that decide to become a mentor and to inspire their
mentee. From the mission and vision statement to the program’s data and even the
990 tax forms, the organization has been well supported that it is definitely a well
developed nonprofit.
I
After looking through the 990 tax forms of years 2012, 2013 and 2014 there
are a few changes and trends within the reported data. The first pattern noticed
was that the total program and services revenue was actually declining over this
span of three years (2012 had $1,633, 2014 only $1,473) yet the total expenses of
this organization was rapidly increasing, from $373,925 in 2012 to $407,980. This
trend of decreasing program revenue with increasing expenses and an increase of
accounts payable, primarily in the fiscal year of 2013, is quite concerning especially
for stakeholders and funders.
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Another pattern visible in the 990 forms of Bes Friends Neenah-Menasha
was that the pledges and grants receivable were also decreasing from 2012 to 2014.
In 2012 the total of pledges and grants receivable was $5,200, which dropped
dramatically to $2,690 in 2013 then increased to $4,810 in 2014. Personally, I have
no speculation as to why pledges and grants could have dropped so greatly within
the year, I would like to further investigate this information.
The important trend from reviewing 2012, 2013, 2014 990 forms from this
organization was that 2013 was definitely not an overly successful year for Best
Friends organization. The fiscal year of 2013 had many concerning aspects such as
negative balances for the overall fundraising revenue and other revenue sources.
Although the total revenue from 2012 has grown from $371,663 to $425,917 in
2013, an organization that is losing money in certain income aspects is not desirable
for investors. But even aside from this losing income pattern, in 2013 Best Friends’
total liabilities jumped from $9,887 to $13,886. Best Friends may have had some
discrepancies between this three year sample, and analyzing the organization
overall it developed a substantially larger savings amount, increased from 2012’s
$29,072 to $56,828 the following fiscal year. As well, the organization increased the
assets through land and building values. Following the review of the 2012, 2013,
2014 990 tax forms of this organization, the conclusion that I have made is the year
2013 was an interesting one for this organization; I believe Best Friends may have
tried to further or more intricately develop the programs and services of the
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organization which could have caused some financial decreases that seem to be
beneficial for the nonprofit in the long term future.
Following my personal review of three consecutive 990 forms of the
organization Best Friends Neenah-Menasha, I was quite puzzled by a few aspects of
the data that was recorded.
1. What is the true reason for the dramatic decrease in the receivable grants
and pledges during the year 2013?
2. Did the organization expand the staff, buildings/sites, or add a new program,
which could have lead to some of the interesting changes in 2013?
3. Why and how does the total program and services revenue keep decreasing
throughout these three years?
4. What were some of the changes going on within the organization, board,
society and/or economics that may have affected these years, especially
2013?
5. Why did the accounts payable (or debt) increase from 2012’s $9,887 to
2013’s $13,866?
6. Even though 2013 seems like a financially challenging year for Best Friends,
the fund balances increased dramatically from 2012. How did the overall
balances increase even when the fundraising revenue was a negative
balance?
7. I wonder if the Best Friends organization would agree or disagree, that
despite the financial changes in 2013, they would consider themselves well
developed or mature nonprofit? Why or why not?
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8. After looking at the 990 forms, would this organization be considered
financially sustainable?
By simply looking at the 990 forms of Best Friends Neenah-Menasha from
years 2012 to 2013, there is a slight increase in debt or accounts payable. The total
liabilities increases from $9,887 to $13,866; $3,979 addition to the debt of the
organization. Similarly, there is a fundraising deficit of $3,270 in 2013; perhaps the
organization took out a loan to sustain that income that it lost? Following 2013,
2014 had a decrease in total liabilities, in fact it was specifically $2,695 less. The
amount of debt Best Friends has is not very concerning; as of 2014 the total
liabilities was $11,171, which is reasonably very well managed, as it appears.
Nearly every nonprofit has some sort of debt, with a little over $11,000, a
developing and expanding organization like Best Friends is expected to have some
risk and liabilities.
The total assets of Best Friends organization have increased from 2012 to
2014. By observing the 990 tax forms, in 2012 total assets was $883,079
increasing to $967,764 in 2013 and a year later the assets were at
$989,791. In three years time the total assets gained $106,712 in value.
The increase of this nonprofit’s total assets is actually quite impressive,
especially in this amount of time. I believe this organization has a goal to
become more financially stable or wants to develop more services and
programs, which is why assets have been increasing so dramatically. Best
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Friends could have purchased a building, especially in 2013 because the
990 tax form shows an increase of debt, which could have lead to an
increase in assets for this, nonprofit.
Best Friends Neenah-Menasha began in the early 2010’s with one goal in
mind, to empower young individuals through peer mentoring and networks. The
organization started with one small site and one program in Neenah High School but
then slowly but surely launched into many other schools in the area. The mission of
this nonprofit fit the districts goals, as well as the communities mission of inspiring
young adults to use their full potential in academics and in social environments.
In 2012, Best Friends Neenah-Menasha was functioning successfully but it
was still on a smaller scale with only a few programs and services being offered to
clients. During the 2013 year, a new employee was hired to aid with the expanding
of the organization. Unfortunately, to further develop a nonprofit, the expansion
comes with more expenses, such as salaries. Adding a new employee cost the small,
developing organization an additional $27,091; the expenses were growing like the
vision and goals of Best Friends.
The new employee was the fundraising coordinator, who had just earned
their undergraduate degree from UW Oshkosh and was looking for work in the
nonprofit field, but did not have much experience planning and coordinating such an
important event, like Best Friends’ annual silent auction. Since the employee had
little experience, they accidently went over budget with the auctioning items, as well
made a few too many accounting errors. During the day of the event, there was a
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small turnout of people, which made the fundraiser unsuccessful. The fundraising
event revenue had a deficit in 2013, precisely $-3,270. Due to the employee’s poor
judgment, they were terminated before the following year.
Now that the Best Friends Organization successfully started up in now two
schools in the Neenah- Menasha area, the board wanted to expand and add more
services or programs that reached the community on a much larger scale, which is
why in 2013 Best Friends introduced the program of Community Mentors.
Community Mentors is outreaching positive adults to mentor students in
environments outside of schools and the academic aspects. When creating this
program, the nonprofit had some trouble fundraising the start up of outreaching
and advertising community members. Although the fundraising event was not as
successful as 2012’s, the total assets of the organization began to increase over the
span of 2012 to 2014, which is due to the increase of programs and property.
The value of land and building’s of Best Friends has increased from 2012 to
2013 by approximately $2,500, which could support that the organization began to
expand in the year of 2013. But what the 990 tax forms show, is that although there
was an increase between those years, there was a decrease in value during 2014;
the value dropped by $3,200 during the year.
Regardless of the unknowledgeable new employee and lost of fundraising
revenue, Best Friends had a respectable total revenue amount in the year of 2013.
The total revenue was exactly $425,917, leap from 2012’s $317,663. Despite the
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setbacks, Best Friends Neenah-Menasha has displayed the capability of success,
especially between the years 2013 and 2014.
After recovering from the complications in 2013, Best Friends tried to plan
accordingly for 2014. Thanks to a different more capable employee, the annual
fundraiser was a success, as it brought in a little over $6,500 in revenue. There was
also much less in terms of liabilities, to be exact $2,695 was paid off by the
organization within the fiscal year. As well, the total revenue rose to $452,452, a
$26,535 increase from 2013. Needless to say, the year of 2014 was much more
successful than 2013 as Best Friends made choices to better sustain and develop the
organization.
After researching Best Friends Neenah-Menasha’s 990 tax forms I would
have to applaud the organization for generating more revenue as well as increasing
the total assets in such a small amount of time, from years 2012-2014. I would have
to say that financially or budget wise the nonprofit is doing well supporting
themselves, as there is little to no debt in the total fund balances. The growth and
development an organization this size has made since the first implementation is
impressive and should be classified as strength for this organization. Although Best
Friends made a great accomplishment of developing not only the entire
organization, but the services and programs as well, there are some weaknesses
within the finances. One weakness observed from the tax forms, was in 2013 there
seemed to be an increase in short term liabilities. This makes me wonder if the
organization had a plan in place just in case some of their funding was cut or was
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not as much as expected, such as the deficit amount during the 2013 fundraiser. The
organization lost money on that event and seemed to have had some liability made
in order to cover the cost or loss.
One recommendation I would like to make for Best Friends is to proceed
with some financial planning, specifically forecasting. In chapter 8 of Financial
Sustainability for Nonprofit Organizations by Emmanuel Jean Francois, forecasting
can be described as a technique that is used to predict future financial performance
(2015, p.118). To forecast, the organization uses five years worth of financial
information to analyze the upcoming year’s performance. So for Best Friends, I am
suggesting that they look over the past five years of the incoming funding,
specifically the fundraising event to suggest what the next fiscal years will look like.
This recommendation is being made so that fundraising events like 2013’s do not
happen again or if they do the organization is prepared and financially ready for the
loss and increased liabilities.
The second recommendation I suggest to this nonprofit is to create a
strategic action plan for their fundraising. After reviewing the 990 tax forms and
budget, the fundraising event is barely bringing in funding. My thought is if the
organization is looking for fundraising income, maybe the organization should try
more than one approach to upgrade funding. Fundraising is a great tool to increase
funding but also to outreach to the community, which can attract new supporters
for the organization’s cause. Chapter 11 states that a strategic plan for fundraising
includes diversifying the fundraising sources through examples like, strategic donor
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fundraising or membership development (François, 2015, p.174). The second
aspect of the strategic plan is to adopt a management system for donors some ways
to implement this is to create a community of loyal donors, outreach to new donors
through social media or plan a casual event with donors. I think creating a plan for
new fundraising sources that goes above an actual fundraising event could be
beneficial for this organization.
Another recommendation I have for Best Friends of Neenah-Menasha would
to implement or increase partnerships within the surrounding communities. As of
right now, I am not knowledgeable about the partnerships Best Friends has but
more is always better. If a nonprofit has partnerships the organization is more
likely to succeed and grow. According to Chapter 20, partnerships “enhance the
visibility of partner organizations, helped them meet the needs of their members or
clients, helped them to obtain funding and helped them recruit and retain
volunteers and board members (Francois, 2015, p. 308). Partnerships can
contribute so many different aspects that aid an organization in financial
sustainability, whether they are indirectly associated with the finances or not.
Forming partnerships with other nonprofit organizations or community businesses
could be a small yet very beneficial for Best Friends.
The final recommendation I would suggest to this organization would to
create or review idea of their financial sustainability plan. After reviewing Chapter
3 from Francois, I realized there are many aspects to a financially stable nonprofit
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and being prepared for anything like a crisis, financial challenge or when the time
comes to further develop. Understanding, as well as outlining, the collateral,
inherent and environmental factors is important as understanding the nonprofit’s
value in profitability, financial growth, liquidity, efficiency, effectiveness and
especially solvency (Francois, 2015, p. 172). After reviewing Best Friends’ fiscal
year of 2013, it seemed like a financially “off” year, meaning there were just a few
too many financial challenges, like the failure of the fundraising event and increase
in debt. If there was a strategic plan in place the debt would have been minimized as
the nonprofit could have been able to depend on it’s solvency.
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(Best Friends expenses from 2014 990 tax form and theprojected expenses of 2015)
Above is the 2014 budget of Best Friends and in the right column is the
calculated budget for 2015 that will be affected by my recommendations to the
organization. By analyzing the 2012, 2013 and 2014 expenses and revenues I
created the projected budget 2015, which has an estimated revenue value of
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$484,388 and expense total of $428,523. The numbers calculated for 2015 were
from a combination of the previous information found on the 990 tax forms, but to
be on the safer side with budgeting, I chose to closely tie the numbers with 2013’s
information, which was slightly higher in expenses. These totals are significantly
different than the Best Friends previous years but I believe with my
recommendations above, the nonprofit will successfully grow.
As stated above, I recommended that Best Friends should really promote
partnerships that can lead to endorsement, outreach to the community and decrease
of costs, which is why there is a little over $15,000 increase in profit although there
are subtle increase in the expenses and budget. Partnering with other nonprofits
and small businesses in the community can allow Best Friends to save money, spend
close the previous year’s expenses and ultimately further develop financially.
In 2015, I also predicted if the nonprofit, Best Friends, uses the fundraising
tools and strategies that were mentioned in my recommendations I believe the
fundraising revenue could increase from $22,513 in 2014 to $29,880 (or more) in
2015. Expanding fundraising income from just events to reliable funders could
significantly improve the finances of the Best Friends organization in years to come.
Overall, Best Friends is still a developing yet strong nonprofit organization. If
my personal financial suggestions are taken into consideration, Best Friends could
become a very stable, successful organization in the next three years. By forecasting
budget and expenses, creating a strategic fundraising plan, partnering with the
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community and improving the strategic financial plan, Best Friends could thrive
with enough profit to implement more services in surrounding communities.
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References
Francois, EJ. (2015). Financial Sustainability: For Nonprofit Organization. New York,
NY: Springer Publishing Company, LLC.
