Financial Planning
Financial management of an ELCC program can be the most demanding challenge for a non-profit program. The challenges of trying to get enough revenue to meet the expenses so that you can achieve the twin goals of making programs affordable for the parents at the same time as paying appropriate wages and benefits to the staff. Ultimately, this problem will not go away until governments assume a great role in the financial of ELCC programs. In the meantime, this section of the resource will provide some advice to minimize the headaches involved.
There are three critical responsibilities for a non-profit Board
- Financial Planning
- Financial Management
- Fundraising
Financial Planning
- Approving and developing budgets
- Start-up budget
- Operating budget
- Cash Flow Forecast
- Fundraising and Capital budget
- Long-range planning
Budgeting and financial planning can be intimidating if you have not had a lot of experience with it. Undoubtedly, it can be time-consuming. Three useful suggestions:
- Recruit someone with financial expertise (especially not-for-profit) to your board of directors;
- Keep it simple - there is no reason to make the budgeting overly complex.
- Develop your financial plan on the basis of conservative estimates and assumptions.
The Start-Up Budget
This is a one-time budget covering start-up costs. It should include:
- Capital costs for construction and/or renovations
- Down payment or rental deposit
- Furnishings, equipment and office supplies
- Salary and benefits for any staff hired before opening
- Legal and accounting fees
- Incorporation and name search fees
- Payments on borrowed funds
- Insurance
- Bank charges
- Cushion to cover operating costs
- Advertising and promotion costs
- Telephone and internet installation
The Operating Budget
Once again, the time you took to develop the organization's vision and objectives will stand you in good stead. The purpose of financial planning and the budget is to provide direction for the organization. The objectives have been established and the job of the budget is to work out how to achieve them with the financial resources available.
It will include revenue such as parent fees, government subsidies and grants, donations, fundraising income, bank interest, etc. Expenditures will include salaries and benefits, rent and/or mortgage payments, program expenses, administration expenses, building expenses.
Salaries and benefits will take up the bulk of the expenditures (often between 85-90%); program expenses 5%; Building expenses 5% and administration approximately 2.5-5.0%.
For a fuller discussion of budgeting, please see Cowperthwaite Mehta Chartered Accountants
This resource includes a full discussion of the following:
- Which period to budget for - when is your fiscal year?
- Preparing the budget for the board - deciding on budgetary objectives (surplus, deficit, balanced)
- Estimating average fee per child revenue for the year
- Estimating expenses in terms of average per child variable cost (for the year)
- Estimating monthly fixed costs
- Preparing Cash Flow Statements
- Preparing the Balance Sheet
Another useful resource can be obtained from Westcoast Childcare Resource Centre: Preparing the Treasurer's Financial Reports to the Board of Directors (2003) Information for new volunteer treasurers. (PR-F-207 - $5.00).