Deep Dive: Financials Page

The Financials Page in the nonprofit plan collects the set of numbers most often requested by foundations on their grant applications. It is a subset of the numbers found on a typical financial statement. As a 501c3 organization, a charity is required to publish their most recent financials, so this information should already be in the public domain. Foundations, however, don't want to seek this information out; they want just the numbers they want, and in the format they want it.

The financials contain numbers from the prior year, current year and next year, with the majority of the information coming from the current year.

'Prior year' asks for the budgeted and actual revenues, expenses and net income. Comparing budget to actual lets foundations evaluate a charity's planning skills, establishing how much confidence we should have in the budgeted numbers for next year.

A particularly important item is the list of funding sources, and the percentage raised from each. This shows how diverse the funding base is (or isn't), and the stability or vulnerability of that base.

The expenses are broken out to show how much is spent on fundraising, administration and programs. This is important because foundations and donors want the majority of their money to go to programs, not salaries and overhead.

Another item asks about any unusual events which may have impacted the numbers. This gives the charity an opportunity to talk about internal and external challenges that are threatening its viability.

A similar set of numbers is collected for the current year, but with two versions: the current year-to-date, and the projected full year numbers. This provides another reality check; if the YTD numbers are significantly different from the projected numbers, a red flag goes up in the minds of potential donors.

Next year numbers follow the same pattern, but reflect budgeted numbers only.

Once again, the credibility of these numbers is impacted by the accuracy of budgeted numbers from prior years. One would also expect the Next Year numbers to incorporate the impact of challenges mentioned for prior and current years, if they are ongoing issues. To not acknowledge these impacts in next year's forecast would indicate a lack of realism in the planning process.

The final pages in the nonprofit plan are the Program Pages, including a page for General Operating Support.

Deep Dive: Strategic Plan Page

The Strategic Plan page of the nonprofit plan focuses on information that describes the organization as a whole.

It has small sections for general information, such as 'year founded' and '501c3 status', contact information and key personnel information.

The heart of this page, however, focuses on strategic plan information.

The main topics in the strategic plan are purpose, populations served, goals and strategies, impact, SWOT (strengths, weaknesses, opportunities and threats) and resources.

When an item has been completed, the note is outlined in green. When a group has been completed, its header is outlined in green. This gives a quick visual overview of the structure of the plan and its current state of completeness.

When the planner clicks on a note, a dialog box opens.

In the first version of the solution, the long and short answers required two separate columns in Excel. Now they are two separate 'fields' in each note. The long answer is written first, because it is easier to be verbose. Crafting a pithy short answer from the long answer is a second step. Both answers are required because many grant proposals are documented in online systems with restricted word counts. If the targeted foundation has this type of submission system, the short answers should be selected when running the proposal generator.

The planner can also choose to work in the outline view of the KnowtPlan model (KnowtPlan is the current name for this special-purpose variant of KnowtShare). The outline view may be the preferred option for the more text-oriented user.

This view also uses green color-coding to communicate the plan's state of completeness, Both views let the planner type in answers or cut-and-paste from another document.

We are also developing an import option from Microsoft Word as a way to initially populate the plan. Ongoing revisions, however, will need to be done directly in the KnowtPlan system.

In my next post, I will give a brief overview of the other sections of the Nonprofit Plan.

Overview of the New Nonprofit Planning Model

My last post described how I came to the realization that our collaboration tool KnowtShare is a better tool for capturing content for the Grant Proposal Generator than Microsoft Excel. It's better because the required content is NOT a simple list of questions and answers, but a business plan - a plan specifically designed to meet the needs of nonprofits.

I knew it would be mechanically easy to build a hierarchical plan using KnowtShare, but I needed to decide the best approach for thinking through the model I wanted to capture.

I decided to use the bottom-up, intuitive approach to building a tree. I had the leaves of the tree -- they were the individual questions/information items gleaned from the series of foundation grant applications we had analyzed. Using the bottom-up approach, I began grouping these into small groups and creating headers for the groups. Sometimes these headers were new items; sometimes I used an existing note as the header. For example, I decided to use the Executive Director's Name as the header for the Executive Director's contact information.

Then I grouped my first level groups into higher level groups, and wrote headers for those new groups. I continued in this fashion until I reached one, comprehensive group, which was the overall plan. This basic process is called creating an Affinity Diagram, and I describe it in more detail in my book The Shape of Knowledge. Often this method is used to help a group of people develop a shared model, but I find it is a good approach for individuals as well!

The top level of the tree became my page headers: Strategic Plan, Financials and Program Plans. One of the challenges I faced while designing this nonprofit business plan was how to handle the program-specific content for multiple programs. I decided to make each Program Plan a separate page or branch of the tree, and that each should contain an identical template of questions.

I also decided to automatically generate a program page called "General Operating Support" for every plan (because every charity writes grant proposals for operating support) and then let the charity generate additional pages, one for each of their major programs. In this way, the plan is customized to match a charity's particular offerings. When it is time to generate a grant proposal, the charity will need to select one of these programs as the basis for their funding request.

In the next post we'll take a closer look at the composition of each of the major planning sections.