Financial strategies and plans An example of Caritas Switzerland Hans Krummenacher-Wüest Topic areas What are the particular issues and financial demands related to Caritas Switzerland?  Particularities What are the responses and solutions to these particularities?  Suggested solutions Your questions, suggestions; discussion Hans Krummenacher, Berlin 8.5.2008 Financial strategies and plans (example of Caritas Switzerland) Particularities Hans Krummenacher, Berlin 8.5.2008 Particularities (1/4): financial mechanism Financier Relief Organization Free Earfunds marked funds Primary Task I (Optik HW) Benefit of recipient  Zielkonflikte Primary Task II (Optik Fi) Hans Krummenacher, Berlin 8.5.2008 Particularities (2/4): earmarking and scarcity  Activity fields portfolio matrix Hans Krummenacher, Berlin 8.5.2008 Particularities (3/4): receipts and outgoings are out of sync What typically happens when there is a disaster CHF Income Expenses 31.12.05 Hans Krummenacher, Berlin 8.5.2008 31.12.06 31.12.07 Zeit Particularities (4/4): administrative overheads CaCH im 2005: 6.0 % 2006: 6.5 % Hans Krummenacher, Berlin 8.5.2008 Quelle: ZEWO, 11.2005 Particularities: summary (1/2) Funding does not come via the physical beneficiaries Funds are earmarked It is not possible to fund development of new business ventures (stars) using profitable ones (cash cows) – assuming they exist Cross-subsidy only possible using spare funds, of which there is a scarcity Hans Krummenacher, Berlin 8.5.2008 Particularities: summary (2/2) Fund flows (receipts and outgoings) are completely out of sync time-wise – especially where donations are concerned Not only is the efficiency of the service provision of interest, but also the nature of the overheads – especially administrative Hans Krummenacher, Berlin 8.5.2008 Financial strategies and plans (example of Caritas Switzerland) SUGGESTED SOLUTIONS: ► Couple strategy and financial planning ► Measure target achievement and deviations; discuss remedial action ► Establish profit centres (cost centres) ► Key data Hans Krummenacher, Berlin 8.5.2008 10 Suggested solutions(II/III) ►Establish profit/cost centres (= comparing receipts and outgoings per field of activity) ►Establish fund accounting Hans Krummenacher, Berlin 8.5.2008 18 Each field of activity has a different funding mix… Hans Krummenacher, Berlin 8.5.2008 19 … so planning for each business area should also be separate Caritas Switzerland head office: organisation chart Director* Jürg Jürg Krummenacher Krummenacher *Executive Management Staff Function Caritas Net Board and Director’s Office Sonja Sonja Kaufmann Kaufmann Paul Paul Amstad Amstad Ann-Katrin Wieser Operations: Fairtrade Fairtrade Clothing Clothing Centre Centre Conceptual Studies* International Cooperation* Social Services and Migration Switzerland* Communication* Personnel and Quality Management* Finance & Administration* Carlo Carlo Knöpfel Knöpfel Norbert Norbert Kieliger Kieliger Barbara Barbara Walther Walther Odilo Odilo Noti Albert Albert Schnyder Schnyder Hans Hans Krummenacher Krummenacher - Social policy - Migration policy - Development policy Hans Krummenacher, Berlin 8.5.2008 - Africa - Asia / Middle East / North Africa - Europe / CIS - Latin America - Emergency Aid - Services - Secretariat - Service EmergeAid in Switzerland - Social engagement - Integration and social projects - Legal advice service - Fribourg - Central Switzerland - Secretariat - Information - Fundraising and Marketing - Service Education - Service Communication Caritas Net - Secretariat - Staff Services - Staff Development - Salary Office and Staff Controlling - Service Evaluation and Quality Management - Secretariat - Controlling - Data Processing - Accounting - Technical Services - Secretariat August 20 2007 Planning dates = targets for organizational unit “activities abroad” Fund accounting Hans Krummenacher, Berlin 8.5.2008 21 Funds = “work baskets” Balance sheet 1.1 Profit and loss account (periode) Income/ earnings Balance sheet 31.12 cost/ expense Point in time Hans Krummenacher, Berlin 8.5.2008 t (timeline) Point in time 22 Mobilisation of earmarked funds  Corporate accounting with  profit centre accounting  Funds mobilised only if for an earmarked purpose 23 Hans Krummenacher, Berlin 8.5.2008 Fund accounting  Funding pots – to be administered temporarily on a trust basis …  … before the funds can be mobilised for an earmarked purpose (Funding Regulations 1.1.2005) Hans Krummenacher, Berlin 8.5.2008 24 Mobilisation of earmarked funds IZA: SAM + 13.9 Mio Partial statement: - 0.2 Mio Caritas general Small - 1.5 Mio business- 0.2 Mio Total + 12.1 Mio Hans Krummenacher, Berlin 8.5.2008 25 Financial strategies and plans (example of Caritas Switzerland) SUGGESTED SOLUTIONS: ► Couple strategy and financial planning ► Measure target achievement and deviations; discuss remedial action ► Establish profit centres (cost centres) ► Key data Hans Krummenacher, Berlin 8.5.2008 26 Suggested solutions(III/III) ►Set targets, and … ►… clarify by using key data Hans Krummenacher, Berlin 8.5.2008 27 Targets and key data (related to “efficient service provision”)  Relations between turnover and structural costs:  Dynamic consideration:  Project supervision max 10%  Administrative overheads (inc fundraising) max 8%  Static consideration:  Target turnover: CHF 100 million (min CHF 85 million)  Donation target: CHF 32 million (until 2011)  We lead in terms of externally chargeable administrative overheads (max 8%) and in comparison to sector (in the top 3) Hans Krummenacher, Berlin 8.5.2008 28 Hans Krummenacher, Berlin 8.5.2008 Donations trend 2001 - 2011 Hans Krummenacher, Berlin 8.5.2008 30 Structural costs trend: international cooperation activities 1990 – 2007 (percentages) Hans Krummenacher, Berlin 8.5.2008 31 Thank you for your attention! Hans Krummenacher, Berlin 8.5.2008 32 ... Krummenacher, Berlin 8.5.2008 Financial strategies and plans (example of Caritas Switzerland) SUGGESTED SOLUTIONS: ► Couple strategy and financial planning ► Measure target achievement and deviations; discuss... -47.0 -45.0 -43.0 Financial strategies and plans (example of Caritas Switzerland) SUGGESTED SOLUTIONS: ► Couple strategy and financial planning ► Measure target achievement and deviations; discuss... Krummenacher, Berlin 8.5.2008 Financial strategies and plans (example of Caritas Switzerland) Particularities Hans Krummenacher, Berlin 8.5.2008 Particularities (1/4): financial mechanism Financier