Financial Management Final Paper.docx

PAI 749 Final Project Paper: United Way Central New York
Group 1: Giovanna Erkanat, Casey Graml, Lanjun Peng, Ryan Shindler, & Seth Walter
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1.0 Introduction
Based upon our analysis of fiscal statements from 2013 to 2017, the United Way of
Central New York (CNY) is a generally profitable and properly managed organization, despite a
developing trend of troubling cash flow and unviable liquidity. The organization has been
collecting more of the money it is owed and at a faster rate, and spends a good proportion of its
funds for its programs, which all promote its ability to meet its mission and values. Where the
organization could improve is regarding cash flow, where it is collecting a larger proportion of
revenue with restrictions, and seeing a decline in income from investments. Finally, one unique
attribute of CNY is that it functions as the fiscal agent for six small (but growing) community
organizations. While these organizations do serve the mission of CNY, their growing proportion
of total revenues and expenditures may begin to mask the long-term financial health of CNY.
The basic structure of this 101 year old non-profit organization falls somewhere between
a philanthropic foundation and a charity; acting as a mediary that connects small and medium
sized donor funds with local organizations who focus on serving the health, education, and basic
needs of the community. The financial statements that we reviewed reflect this commitment to
community-supporting programming, and received an unqualified statement of support from
their general audits for each of the five years we examined.
1.1 Mission and Values
The mission of the United Way Central New York (CNY) is straightforward and on par
with other United Ways across the country: “To improve lives by mobilizing the caring power of
our community.” The organization aims to act as an expert on the Central New York community
for its donors so that their contributions can make the greatest possible impact. CNY also
facilitates volunteering by connecting expert volunteers with partner organizations. While this is

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a large part of CNY’s public persona (and described extensively in the notes), it is not reflected
in its financial statements due to the non-monetary nature of the work. CNY also aims to use
donations to make wise investments to grow contributions and support much of the operational
cost though non-donor dollars. Finally, in all that they aim to do, CNY pledges to be held
accountable to donors. Program budgets and financial statements are public and the CFO is
accessible to anyone that may have questions.
1.2 CNY Programs
United Way branches generally strive to strengthen their whole communities rather than
addressing only one or two problems. CNY does this through two main areas of programming:
community impact grantmaking and Other Community Programs. Community impact
grantmaking is focussed on three areas: education, health, and basic needs. All three areas
provide local nonprofits with program operating grants. About $1.13 million is given out for
education programs such as an inclusive preschool for AccessCNY, education advocacy for
ARISE, and Huntington Family Centers educational support programming. Approximately $1.15
million is provided to organizations focussing on community health such as Catholic Charities
programs that support families dealing with mental illness and Contact Community Services
crisis intervention suicide and crisis counseling. Basic Needs grants total at around $1.21 million
and support local housing, food and other services that move people towards personal stability.
All the impact grant funding is locally focussed and targeted at outcomes-managed programs that
provide successful interventions, promoting CNY’s mission and values.
The second area of programming focus for CNY is Other Community Programs. CNY
acts as the fiscal agent for six collective impact initiatives that are externally (non-CNY grants)
funded. These initiatives and programs are governed independently of CNY, and include:

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● 211CNY: Is a coalition of organizations that operates a phone line that helps residents
find basic services and better provide information to vulnerable populations in the area.
● The Early Childhood Alliance of Onondaga: Is a group of stakeholders that are creating
an integrated local system of early childhood care and family support services.
● HOPE: Is a coalition that brings underserved populations together to create opportunities
for inclusion through education, economic stability, housing, and health.
● Work Train: Is an initiative that connects people with work in industries that need
workers and provides training for these workers to be successful.
● Literacy Coalition: Is a coalition who aim to solve the problem of low literacy through
programming such as the Imagination Library.
● Housing and Homeless Coalition of Central New York: A group of stakeholders that
assess need and creates community plans to serve vulnerable residents.
These Other Community Programs could be seen as falling under CNY’s mission of
understanding the needs of the community and providing for the greatest possible impact. By
engaging community partners in collective impact programs, CNY widens its impact beyond
community grantmaking and utilizes community expertise to make change at ground level.
2.0 Strengths
CNY is generally a profitable organization, ending 2017 with an increase in net assets of
7.51% over the previous year. Over the past 5 years, this ratio (change in net assets over total
assets) ranged from -8.63% to 13.93%. These numbers are important because profit/loss margins

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too low can put the organization at risk during economic downturns, and margins too high would
mean that CNY is not properly leveraging its assets towards its mission. By maintaining a
profit/loss margin within 10% of total net assets shows that CNY is achieving this goal on
average over the 5 years. The profitable years (FY13, 14, & 17) and loss years (FY15 & 16)
coincide with other organizations as well, so it is reasonable to think of this loss as a regional
phenomenon instead of the organization’s personal operational issue. All profit/loss figures are
summarized in Appendix A.
Another strength of CNY is that it is collecting more unpaid pledges every year,
particularly in FY17. The organization’s receivables are collected in full 2.26 times per year for
FY17, an increase of 42% when compared with the average collection period of 1.84 times over
the previous four years. This increase aids cash flow by making more unrestricted cash available
for operating expenses each year. As CNY predominantly depends on contributions, the
collection of these pledges is essential for its achieving its program targets. As we will show
later, however, this trend is not enough to make up for other shortfalls in available cash, but is
still a positive trend overall.
Finally, CNY has a responsible program service ratio, meaning that funds are being
focused primarily on the grants rather than administration costs. The program services ratio is a
calculation of total programming expenses as a percentage of total expenses. From FY14 to
FY17, the CNY’s program ratio stayed constant around 79%, meaning that 79 cents of every
dollar went towards community programming while only 21 cents went towards administrative
costs. The industry standard for this ratio is 75%, so the CNY is operating at a level above what
is generally deemed acceptable. Beyond supporting its mission of using its funds to support the
community, this also promotes accountability to donors. With so much of its funding going

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directly towards community programs, donors can feel secure that most of their money is also
going directly towards community needs.
2.1 Other Community Programs
In addition to these positive financial trends, there is another area that has shown growth
over the past 5 years: Other Community Programs. Revenues increased from $478,786 in FY13
to $1,459,246 in FY17. While expenses kept pace with revenues for these initiatives (resulting in
no net gains in revenue from functioning as the financial agent) this overall trend of growth has
improved financial indicators for CNY as a whole. One example would be the asset turnover
ratio, or the amount of revenue the organization makes off of existing assets, which increased
from $0.64 in FY15 to $0.76 in FY17. When revenues from other community programs are
removed, this ratio has remained stagnant at $0.60 over the same time. This is an example of
why when examining revenues, we must be careful about attributing improvements to CNY.
2.2 Summary
CNY has been general profitable between FY13 and FY17 and saw favorable growth in
pledge collection rates. However, strong growth in turning assets into revenue was primarily
driven by the Other Community Programs initiatives, and are not the results of changes in
CNY’s operations.
3.0 Weaknesses
The availability of unrestricted cash over the past four years has been the primary
weakness of the CNY’s financial health, resulting in a diminishing ability of the organization to
pay off its outstanding liabilities. Since 2014, the amount of unrestricted cash available has
decreased by two thirds. In 2014 the organization had $631,375 of unrestricted cash, which fell
to $338,979 by 2016. FY17 continued this trend, and if it weren’t for a $300,000 loan, would

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have seen unrestricted cash drop to $242,513 (See Appendix C). While total cash amounts have
remained stable since 2014, the amount of unrestricted cash as compared to total cash has been
dropping while the amount of restricted cash as compared to total cash has risen.
3.1 Significance of Unrestricted Cash
The decreasing proportion of unrestricted cash is problematic because the organization
needs cash to cover its operating expenses which cannot be paid for using restricted cash. A
major reason for this high level of restricted cash is that, by policy from the national office, all
cash donations are restricted from use for one fiscal year after a pledge is received. The other
reason is that donors placed conditions on their donations that it be used for specific programs or
after specified time periods. Due to these restriction, CNY has resorted to several stop-gap
measures to cover expenses in the short term such as selling off investments and acquiring loans.
3.2 Causes of Decreasing Unrestricted Cash
While there are many small changes year to year that contribute to the decreasing
proportion of unrestricted cash, the two largest sources of declining unrestricted cash were: an
increased vigor in paying down liabilities and a substantial decrease in investment income. In
2014, 2016, and 2017 there were decreases in operating liabilities (i.e. payables) of $283,736,
$270,418, and $331,668, respectively. This represented a decline in outstanding liabilities for
these years of 8.3%, and suggests that the decreases in unrestricted cash those years were, in part,
due to paying off more operating liabilities. During this same period, the amount of unrestricted
revenue that investments produced dropped 33% from on average $97,121 in FY13 thru 15 to
just $64,970 in FY17.
3.3 Liquidity

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The organization has been using unsustainable methods to solve its unrestricted cash
difficulties. First, it has been selling its liquid investments to cover its operating expenses. Each
year has seen a decrease in liquid investments, namely cash and cash equivalents. This shows in
the current ratio that looks as the amount of available assets per dollar of liability. Declining
from 0.92 to 1 in 2014 to 0.84 to 1 in 2017, neither of these numbers approach the recommended
2 to 1 ratio. Further, in FY17 the organization used a $300,000 loan to boost its unrestricted cash
reserves to make payments on liabilities. If CNY does not resolve its unrestricted cash problems
it will have to continue to rely on loans to cover operating expenses. Loans are an expensive and
inefficient way to solve cash flow problems, and may become unsustainable in the long term.
4.0 How Does United Way of CNY Compare?
When comparing United Way CNY to other similar United Way organizations, the
primary difference that we identified was that CNY had a much smaller investment portfolio.
This smaller investment pool has resulted in a much smaller stream of unrestricted revenue
coming from investment income, further exacerbating the cash flow challenges that CNY faced
in 2017 and 2016. However, the organization is performing as expected when it comes to the
proportion of each donated dollar dedicated to programing, as well as the speed at which the
organization is collecting on their donations. Where appropriate, comparisons were done using
2016 data instead of 2017, as that was the most recently available data for all three comparison
organizations. All figures discussed below are summarized in Appendix B.
4.1 Comparison Organizations
The United Way of Rochester and Toledo were selected as comparable organizations
because of their similar demographics, regions, and organizational structure. CNY serves a

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population of 844,000 people, is located in a “rust belt” city in the northeastern US that has a
poverty rate of 32%, and an unemployment of 6.2%. We chose these metrics to select our
comparisons because they provide a quick reference as to the pool of the potential donors, as
well as the level of need in the community for programs offered by United Way’s grantees. Our
hope was that these metrics would control for much of the variation in communities and
accurately represent how CNY compares to its peers.
First is the city of Rochester, NY. Being in NY, Rochester faces a similar state and
federal government environment (public service donors and other competing support programs)
and has a population slightly larger than CNY at 1,082,000. Its poverty rate is comparable at
33% and unemployment rate is 7.1%. Second, we looked at Toledo, OH. Toledo has a slightly
smaller population (651,000) and a slightly lower poverty rate (27.5%) and unemployment rate
(5.3%).
4.2 Investments
CNY has consistently maintained between 49% and 51% of its total organizational value
(total net assets) as investments over the past 5 years, much below Rochester (86%) and slightly
below Toledo (57%). This lower investment level compounds the problems discussed earlier
regarding unrestricted cash flow by limiting potential unrestricted income from investments, a
stream of revenue that United Way offices often use to support operational expenses.
4.3 Liquidity
With an asset to liability ratio of 0.84, CNY appears dangerously below the benchmark of
$2 of unrestricted (current) assets for each $1 of liability. Our comparisons reveal a less dire
pattern among United Way offices. Rochester is also below par with a value of 1.21 assets per
liability, and Toledo has an abysmal 0.57 per 1 of liability. This comparison further emphasizes

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CNY’s need for unrestricted cash but tempers the initial severity of their underperformance since
United Way’s on the whole tend to operate below the benchmark 2/1 ratio. Perhaps a better ratio
for CNY would be the 1.20 level that Rochester maintains, and not the recommended 2/1.
4.4 Programing
With a program ratio (proportion of every donated dollar spent on programing) of 79%,
CNY is performing slightly above the industry standard of 75%, and directly in line with
Rochester (83%) and Toledo (80%). These numbers indicate that the cash flow problems at CNY
do not originate from excessive overhead or administration costs, as their support services share
of expenses are in line with what we would expect to see in this organization.
4.5 Receivables Collection
Finally, we looked at the rate that CNY is collecting pledges and other receivables and
did not find an outlier here either. By comparing unrestricted revenues to the amount owed but
uncollected (receivables), we can extrapolate that CNY collected all of the money owed 2.26
times in FY17. This number is on par with Toledo (2.31 times/year), but far below Rochester
(4.19 times/year). This may indicate that CNY has room to improve but is not currently
underperforming in this area. From this analysis, we are less concerned that the cause of the cash
shortfall is based on uncollected revenues, but instead lies with the type of revenues being
collected (restricted revenues).
4.6 Other Community Programs
There are no comparable programs in either Rochester or Toledo to the Other
Community Programs that CNY reports. This indicates that they are a unique element to CNY
and should be scrutinized carefully as to the impact of the programs on CNY as a whole.

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5.0 Recommendations
CNY’s cash flow problems that we discussed above weaken the organization’s ability to
meet its mission. In order to provide for a more sustainable future, we recommend that CNY
make an effort to increase unrestricted cash, increase investments, spin off Other Community
Programs, and only payback liabilities when due.
CNY must increase the portion of unrestricted cash assets by encouraging more
unrestricted donations and investment income. The organization has seen an increasing
proportion of their cash assets exist as restricted cash- from 27% in FY14 to 59% in FY17-
resulting in the need for a $300,000 loan in FY17(See Appendix C). This is unsustainable, and
while its restricted cash accounts can and should increase, they must maintain an unrestricted
cash reserve large enough to support their operational expenses.
Diversifying and developing a more sophisticated portfolio of investments is essential to
the long-term success of the organization. While CNY is achieving its mission, the organization
should reform its investing habits and adopt a more robust investment portfolio, with the
proportion of total assets held as investments roughly in line with the comparable organizations.
Such a portfolio must accomplish the following: invest in sufficient cash and cash-like resources
so the CNY can meet operating expenses; approaches a moderate amount of risk in order to
allow a possibility of a large return on investment without being completely vulnerable to market
changes; select investments that are not an anathema to the values of CNY; and comply with
non-profit rules on investment. We recognize that the organization's assets are small, so it may
be a slow process to build a robust portfolio.
In order to more accurately communicate CNY’s organizational health to donors, they
should investigate removing Other Community Programs from its financial statements. As it

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stands, these independent initiatives use CNY as a fiscal agent- hence why their revenues and
expenses appear in the financial information of the organization. By spinning off Other
Community Programs to function fully as separate entities, CNY would more accurately depict
its own profitability and growth in its financial statements. CNY will need to decide if the
initiatives and coalitions encompassed by Other Community Programs truly serves its mission or
if this effort is just causing the organization to overextend its expenses.
Finally, in order to avoid another cash shortage in the midst of profitability, CNY should
maximize payment schedules with its suppliers, paying only what is needed and nothing more so
that the organization can reliably meet financial obligations with the cash on hand. In order to
resolve this issue, the organization should reform its payment schedules- lag salary payments by
two weeks, renegotiate rent and audit and legal services.
6.0 Conclusion
CNY wisely orients its activities to provide a wide impact in the health, education, and
basic needs of their Central New York community and overall achieves its mission through the
two program areas of Community Grants and Other Community Programs. The organization is
generally profitable and is investing most of its funds into the community. Nevertheless, the
organization should make some changes in order to be maintain long-term viability. CNY must
generate more unrestricted cash, build a larger investment portfolio, investigate removing Other
Community Programs from its financial statements, and maximize payment schedules in order to
avoid cash shortages. If the United Way of Central New York enacts some of these
recommendations, it could reduce unnecessary costs, benefit from more strategic investments,
and have the means and flexibility to grow and further execute its mission.

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References
United Way Central New York. Mission and History. http://unitedway-cny.org/mission-and-
history/
United Way Central New York. Our Initiatives. http://unitedway-cny.org/our-initiatives/
*Financial Statements provided upon request by Betsy R. Foote, Vice President of Finance &
Operations at the United Way of Central NY
PO Box 2129
Syracuse, NY 13220
Phone: 315-428-2205
FAX: 315-428-2227
Email: bfoote@unitedway-cny.org
Most recent Audit for FY17 available online: http://unitedway-cny.org/wp-
content/uploads/2013/05/Audited-Fin-FINAL-2016-17.pdf
Demographic data obtained from:
● The US Bureau of Labor Statistics: https://www.bls.gov/cps/cps_htgm.htm
● The US Bureau of the Census:
https://www.census.gov/quickfacts/fact/table/toledocityohio,lucascountyohio/PST045216
Audited Financial Statements, United Way of Toledo:
https://www.unitedwaytoledo.org/assets/files/financials/General-Audit.pdf
Audited Financial Statements, United Way of Rochester:

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https://www.uwrochester.org/getattachment/About/Financial-Information/United-Way-of-
Greater-Rochester,-Inc-2017-FS-Final.pdf.aspx?lang=en-US
Supplemental Formulas, Tables, and Graphs
Appendix A:
CNY Profit/Loss 2013 2014 2015 2016 2017
Change in Net Assets $94,508 $486,466 ($193,446) ($262,120) $246,759
Net Assets $3,006,084 $3,492,550 $3,299,104 $3,036,984 $3,283,743

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Return on Net Assets Ratio =
Change in Net Assets/Net Assets 3.14% 13.93% (5.86)% (8.63)% 7.51%
Unrestricted Revenue & Support $5,843,875 $5,891,800 $5,840,848 $6,069,143 $6,700,587
Total Receivables $3,172,683 $3,172,683 $3,403,135 $3,317,512 $2,967,892
Average Collection Period=
Unrestricted Rev & Sup/Total Receivables 1.84 1.86 1.72 1.83 2.26
Appendix B:
* Indicates FY2016 CNY Rochester Toledo
Population Served 844,000 1,082,000 651,000
Poverty Rate 32.10% 33% 27.50%
Unemployment Rate 6.20% 7.10% 5.30%
Profit/Loss (8.63)%* (6.40)%* (5.09)%*
Investments/Total Asset
Ratio 49%* 86%* 58%*
Program Ratio 79.02% 83.26% 80.20%*
Liquidity 0.87* 1.21* 0.57*
Receivables Turnover Ratio 2.26 4.19 2.31*
Appendix C:
2014 2015 2016 2017

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Unrestricted Cash $631,375 $487,929 $338,979.00 542,513
Restricted Cash $370,181 $421,884 $647,739.00 765,782
Total cash
$1,001,55
6 $909,813 $986,718.00 1,308,295
Unrestricted Cash/Total
Cash 63.04% 53.63% 34.35% 41.47%
Restricted Cash/Total Cash 36.96% 46.37% 65.65% 58.53
**Restricted vs. Unrestricted Cash tracked separately since 2014, no information for 2013 restricted cash

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