april, 2010 prepared for: board of directors economic scenario planning for name of foundation...

April, 2010

Prepared for: Board of Directors

Economic Scenario Planning for Name of Foundation

Community Foundations Leadership Team

2

I. Introduction

II. Expected Scenario

III. Alternate Scenarios

IV. Discussion

Contents

3

With the Help of the CFLT’s Economic Scenario Planning (ESP) Model We Have Developed a Five-Year Forecast for Our Foundation

Introduction

In response to the worsening economy, the Community Foundations Leadership Team (CFLT) created the “Confront the Brutal Facts” task force to help community foundations better understand the challenges of the current economic climate and its impact on budget and business decisions

Based on the task force’s recommendation, the CFLT commissioned CF Insights and FSG Social Impact Advisors to create an Economic Scenario Planning (ESP) model (“stress test”) for community foundations available free of charge as an assessment and forecasting tool to answer pressing questions, such as:

– Under what circumstances will the foundation’s assets return to pre-recession levels?

– How will the foundation’s income statement be impacted if the market does much better or much worse than expected?

– What adjustments need to be made to spending policies if absolute grant levels are to be maintained in the coming years?

– How much of a gap in administrative fees might the foundation be facing / how much revenue from other sources does the foundation need to generate in the coming years?

– What impact would a major new gift have on the foundation?

– Can the foundation afford to increase its operating expenses in the coming years?

– Will the foundation have enough operating cash?

We have used the ESP model to create three scenarios for what the next five years could look like for our foundation and look forward to discussing these with you today

4

Today We Will Present Our Assumptions, Show How They Impact Our Operating Model, and Discuss Key Implications for the Foundation

Our goal for today is to discuss these and related topics and determine the best course of action as the foundation heads into the next year

Introduction

• First, we will present a five-year forecast based on our current expectations of market performance, donor behavior, spending policy elements, alternative revenue growth, and operating expenses

• Next, we will show how changes to these assumptions would impact core operating indicators

• The key findings from these analyses highlight several important discussion topics:

Key Finding Discussion Topic

Insert key finding here Insert discussion question here



5

I. Introduction



IV. Discussion

Contents

6

Key Assumptions

Our Expected Scenario Is Based on [the Latest General Economic Outlook and Local Trends We’ve Experienced in the Past Few Months]

Expected Scenario

Expected Scenario

Summarize scenario qualitatively here

Category Assumption Rationale

MarketPerformance

Insert assumption Insert rationale

DonorBehavior


SpendingPolicy


OtherRevenues


OperatingExpenses


7

Summarize Results in Headline Here

Expected Scenario

Comments

• Insert comments here

Assets

35,000 35,000 35,000 35,000 35,000 35,000

$0K

$10,000K

$20,000K

$30,000K

$40,000K

$50,000K

Historical Year 1 Year 2 Year 3 Year 4 Year 5

Gifts

2,500 2,500 2,500 2,500 2,500 2,500

$0K

$1,000K

$2,000K

$3,000K

$4,000K


Grants

2,500 2,500 2,500 2,500 2,500 2,500

$0K

$1,000K

$2,000K

$3,000K

$4,000K


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Expected Scenario

Personnel

Non-Personnel

Comments


Revenues

750 750 750 750 750 750

$0K

$500K

$1,000K


Operating Expenses

530 530 530 530 530 530

200 200 200 200 200 200

730 730 730 730 730 730

$0K

$500K

$1,000K


Surplus / Subsidy

20 20 20 20 20 20

-$250K

$0K

$250K


9


Expected Scenario

Comments


Months of Cash in Operating Reserve

6.0 6.0 6.0 6.0 6.0 6.0

$0K

$5K

$10K


Fee Revenue % of Operating Expenses

80% 80% 80% 80% 80% 80%

0%

50%

100%

150%


Grants % of Assets

5.0% 5.0% 5.0% 5.0% 5.0% 5.0%

0%

5%

10%


10

I. Introduction



IV. Discussion

Contents

11

[ABC] Scenario

These Two Alternate Scenarios Test How Key Operating Indicators Would Be Impacted if Some of Our Assumptions Panned Out Differently

Alternate Scenarios

[XYZ] Scenario


MarketPerformance

Describe key differences or write “none” Describe key differences or write “none”

DonorBehavior


SpendingPolicy


OtherRevenues


OperatingExpenses



Key Differences to Expected Scenario Key Differences to Expected Scenario

12


Alternate Scenarios

Assets

33,000

35,000 35,000 35,000 35,000 35,000

40,000 40,000 40,000 40,000 40,000

32,000 32,000 32,000 32,000 32,000

$30,000K

$35,000K

$40,000K

$45,000K

$50,000K


Expected ABC Scenario XYZ Scenario

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Alternate Scenarios

Comments


Comments


Comments


Expected Scenario Gifts

2,500 2,500 2,500 2,500 2,500

$0K

$1,000K

$2,000K

$3,000K

$4,000K

Year1

Year2

Year3

Year4

Year5

ABC Scenario Gifts

2,750 2,750 2,750 2,750 2,750

$0K

$1,000K

$2,000K

$3,000K

$4,000K

Year1

Year2

Year3

Year4

Year5

XYZ Scenario Gifts

2,250 2,250 2,250 2,250 2,250

$0K

$1,000K

$2,000K

$3,000K

$4,000K

Year1

Year2

Year3

Year4

Year5

14


Alternate Scenarios

Comments


Comments


Comments


Expected Scenario Grants

2,500 2,500 2,500 2,500 2,500

$0K

$1,000K

$2,000K

$3,000K

$4,000K

Year1

Year2

Year3

Year4

Year5

ABC Scenario Grants

2,750 2,750 2,750 2,750 2,750

$0K

$1,000K

$2,000K

$3,000K

$4,000K

Year1

Year2

Year3

Year4

Year5

XYZ Scenario Grants

2,250 2,250 2,250 2,250 2,250

$0K

$1,000K

$2,000K

$3,000K

$4,000K

Year1

Year2

Year3

Year4

Year5

15


Alternate Scenarios

Comments


Comments


Comments


Expected Scenario Surplus / Subsidy

20 20 20 20 20

-$250K

$0K

$250K

Year1

Year2

Year3

Year4

Year5

ABC Scenario Surplus / Subsidy

35 35 35 35 35

-$250K

$0K

$250K

Year1

Year2

Year3

Year4

Year5

XYZ Scenario Surplus / Subsidy

-15 -15 -15 -15 -15

-$250K

$0K

$250K

Year1

Year2

Year3

Year4

Year5

16


Alternate Scenarios

Expected ScenarioRevenue Mix

500 500 500 500 500

35 35 35 35 35

150 150 150 150 150

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2011 2012 2013 2014

Asset-Based RevenuesOperating Endowment / Reserve Revenues

Other Revenues

ABC ScenarioRevenue Mix

500 500 500 500 500

35 35 35 35 35

150 150 150 150 150

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2011 2012 2013 2014

XYZ ScenarioRevenue Mix

500 500 500 500 500

35 35 35 35 35

150 150 150 150 150

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2011 2012 2013 2014

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I. Introduction



IV. Discussion

Contents

18

How Do Our Assumptions and Results Compare to Our Peers?

To come

Discussion

• If you’ve participated in a peer learning group, you can use this space to show what you’ve learned about how your peers are thinking about the coming years

OPTIONAL

19

Based on the Results of the Economic Scenario Planning for Our Foundation, Several Key Discussion Topics Have Emerged

Discussion

Key Finding Discussion Topic




Secondary Finding Discussion Topic



april, 2010 prepared for: board of directors economic scenario planning for name of foundation...

Documents

foundation introduction

expected scenario

foundation heads

key assumptions

discussion question

operating model

discussion contents

key findings