In the mission-oriented nonprofit world, it can sometimes be difficult to get your team to focus on the relationship between money coming in and the organization’s ability to effectively deliver programs and services to its constituents. While top-line measures are exciting they can also be distracting and counterproductive if they are not properly accounted for and effectively presented. Peeling back the covers on your finance organization can help your team, executive director, staff and board members truly understand your financial situation and see how finances directly impact programs. Financial operations reviews deliver insight. Reviews help organizations move beyond budgets and expenses into staffing, policies and processes. You will learn… • The 5 “must ask” questions • The 3 reports you should study • The secrets of financial management • How to determine financial viability of new programs and link money with mission

1. Measuring Performance: Linking Money to Mission
Rebeka Mazzone, CPA
Accounting Management Solutions, Inc.
www.amsolutions.net
June 23, 2010
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3. Measuring Performance: Linking Money to Mission
Rebeka Mazzone
Accounting Management Solutions, Inc.
June 30, 2010

4. About Us
• For more than a decade,
Accounting Management
Solutions, (AMS) has provided
accounting support and financial
management leadership at the
consulting CFO, controller and
accounting manager level to
dynamic companies throughout
the Northeast.

5. Objectives
• Discuss why scorecards
are important
• Learn how scorecards are
used as a form of measure
• Understand the differences
between scorecards, KPIs,
dashboards, benchmarks
• Getting started

6. Characteristics of Effective Financial
Reporting
• No surprises for management –
paralyzed by indecision
• Link to strategic plan
• Plan linked to budget
• Measures: Key Performance
Indicators (KPI) based on strategy
• Easy to understand
• Meaningful information

7. What do reports tell us?
• Strategic plan – Where do we want to go?
• Budget – How do we plan to get there?
• Statement of Activity – How did we do?
• Statement of Position – Where are we now?
• Statement of Cash Flow – How did we
use our money?
• Cash Flow Projection – Do we have
enough to get us there?

8. Understanding the Financial Condition
• Reports should be designed for the audience.
• There are 4 levels of reporting:
1. Transaction Detail – Finance Department/Department
Managers
2. Detailed Financial – Finance Department/Department
Managers
3. Management Financial Summary – Exec. Director/Finance
Committee
4. Board Financial Summary – Full Board
Too much detail prevents users from focusing
on the risks and opportunities.

9. Benefits of Scorecards
• Power to capture relationship between financial and
non-financial data
• Ability to predict and manage future outcomes
• Effectively present financial data to non-financial
people
• Drive strategic objectives throughout organization
down to individuals
• Align business activities

10. Example: Revenue and Expense

11. Example: Revenue and Expense Per Student

12. Example: Revenue and Expense Per Student

13. Example: Revenue and Expense Per Student

14. EXAMPLE: Organizational Scorecard
Key Performance Measures: Non Programs

15. Going to School on Performance
• Balanced Scorecards =
Grade Point Average
• Dashboards = Report card
• KPIs = Class grade
• Benchmarks = Class rank

16. Inputs & Outcomes

17. Getting Started
GETTING STARTED

18. Create a Cross-functional Team
• Project Champion
• Clear leadership to drive vision
• Core Leadership Group
• Assess core processes
and programs
• Limit team size
• Team orientation
• Requires long term commitment

19. Understand Your
Audience
• Who will be using
the scorecards?
• What impact do scorecards
have on resource allocation
and program decisions?
• What is the key information
they need to understand to
make strategic decisions?
Achieving strategic goals is the priority

20. Create Buy-in and Ownership
• Top leadership support
• Cross functional /
representative teams
• Keep an open dialogue
during planning stage
• Keep the process
transparent

21. Enterprise Performance Management
System (EPMS)
VISION / Board &
Executive
MISSION
Director
Organizational Scorecard
Executive
Director &
Departments
Departmental Scorecards
Departments
& Individuals
360 Review

22. Starting Point
1. Examine mission
and strategic plan
2. Set goals tied to your
mission
• Short-term
• Long-term
3. Remember:
Change takes time

23. What is the Goal?
• Organization-wide scorecard
• Used to drive strategic plan objectives
• Departmental scorecards
• Informed by Organization-wide scorecard
• Is generally division-specific (e.g. responsibilities and measures
are unique to each department)
• Individual Performance Reviews
• Align individual performance to organizational goals
“Measures start with a top down approach, but
ultimately some will rise up from individual plans”

24. Strategic Goals & Objectives

25. Deciding What to Measure
• Mission and program
effectiveness
• Anticipated growth
• Benchmarking / peer
comparison
• Major financial statement
line items and ratios
• Consider the relationship
between money and
people

26. Deciding What to Measure:
External Drivers
• Legal & compliance • Facilities
• Public perception • Remaining life
• Going green/sustainability • Capacity
• Safety • Square foot per student
• IT • Consumer satisfaction
• Competition • Cost per square foot
(maintenance, utilities)

27. Deciding What to Measure:
Four Pillars
• Financial measures – create • Operational Capacity
value
• % time building /
• Profitability by program classrooms occupied
• Ability to meet obligations
• Consumer satisfaction
• Budget success (Individuals/donors/
• Human Capital grantors)
• Staff/Consumer Ratio • Retention
• Staff cost per individual • Completion Rates
served
• Cost of success rates (link
• Quality of programs/
$ to outcomes)
education
• Diversity ratios

28. List and Prioritize – Critical
HIGH
Value to
Institution
& Mission No Value to
Mission or
Customers
LOW
Value to HIGH
Customers

29. Strategic Objectives: Example
Mission:
To assist low-income adults in realizing their full
potential through literacy, employment, advocacy and
community involvement.
Strategic Objectives:
• Enhance the delivery of services by building on
the diversity of student strengths.
• Expand the scope and array of our
educational services.
• Expand the base of our advocacy in the state and
community for adult basic education.

30. Strategic Drivers: Example
• Increase service area by 10% over the
next 3 years
• Enhance the Organization's admissions
and marketing efforts
• Expand the “family service” continuum
to better support parents.
• Establish operating reserves
• Determine the effectiveness of our
programs and services through
evaluations and outcomes studies.

31. Organizational Scorecard
Key Performance Measures: Programs
Individual
Programs
Quantity
Quality

32. Organizational Scorecard
Goals:
linked to
Four budget
Pillars Key Performance Measures: Non Programs
Change in Revenue per Student
Change in Expense per Student
Operating Income (loss) by department
Avg. # Students per FTE

33. 360 Performance Review
360 Leadership Assessment

34. What should measures look like?

35. Key Performance Indicators (KPIs)

36. Scorecard Example
Exceed Goal Moderate
Goal Risk

37. Key Performance Indicators
• KPIs can be both quantitative and qualitative
• Cannot simply be the money
• Programmatic outcomes are the mission
• Finance is the backbone
• Need to trend over time

38. Key Performance Indicators (cont’d)
• KPI Review Cycle
• Annual scorecard
• Quarterly scorecard
• K.I.S.S.
• Simple to operate
• Simple to understand
• Simple call to action

39. Review Data For…
• Reliability
• Accessibility / availability
• Accuracy
• Timeliness – past is used
to set future goals
• Communicability – Does
your audience understand
it?

40. Challenges
• Year One:
• Benchmark year
• Lots of information not available
• Goal – prioritize and focus
• Year Two:
• Measurement tools in place
• Review measures
• Ongoing: Reassessment
Some measures might not be available
each year

41. Keys to Success
• A strategic plan and
leadership support
• Clearly defined goals &
organizational priorities
• Transparency across the
organization

42. Benefits
Do You See Any Benefits?
• Easier to understand – 1 hour Board meeting
• People outside of finance can now understand
• Ties money to outcomes to measure effectiveness
• Ability to monitor outcomes over time
• Monitor opportunities for
improvement
• Better ability to
communicate value

43. Cautions!
• Visions must be aligned
• Independent of any one
department
• Sustained effort
• Start small
• Project manager vs. project
champion
• Consistent measures/valid
data

44. Next Steps
• Measure key executive performance
• Each department/division to implement
• Share this with staff; help drive
goals and measures
• Data warehouse – move from Excel
to database

45. For More Information
• Rebeka J. Mazzone
CPA, Director Rhode Island Region
Accounting Management Solutions, Inc.
rmazzone@amsolutions.net
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