The Approach
The organisation’s total set of activities were broken down into direct project work, and central overheads, some of which were fixed and some of which varied with the scale of particular activities. All possible sources of funding were identified; some ‘restricted’ associated with particular projects, and some ‘unrestricted’.
The spreadsheet was set up so that users could ask the questions ‘what if’: what if certain sources of funding materialised, what if certain projects were cut, what if salaries were increased, what if staff numbers were changed… with the answers in terms of: the overall surplus/deficit; the amount of additional funding needed to break even; the number of clients helped and the overall contribution to the organisation’s objectives.
This was then used in a real-time session with Trustees and Director, giving them insight into the relationship between cost and income, and allowing them to test different management approaches.