FINANCIAL STABILITY
What is Financial Stability?
Financial stability is the state of having sufficient
organizational funds for programs and other organization-related
expenses while also having a steady revenue stream. Financial
stability ensures this prosperous state of affairs annually, not
just for one year.
Why is Financial Stability Important?
Financial stability is important because it allows an
organization to operate at the level it wishes to operate at
without worry about sufficient funds or fear of debt. Furthermore,
financial stability allows an organization to grow due to the
steady revenue produced by fundraising and to other cost-cutting or
cost-overwriting measures.
How to Use This Resource
A large portion of the "Financial Stability" topic is devoted
to online resources for student leaders to use at their own
convenience, share with their peers, and refer back to when
questions, concerns, and issues arise throughout the year. In
addition to the online resources, there may also be related
workshops hosted by the Multicultural Center during the year.
resources for financial stability >
cost-benefit analysis || fundraising || balancing a budget ||
hidden costs & excess
Cost-Benefit Analysis
What is a Cost-Benefit Analysis?
A cost-benefit analysis is a technique to weigh the costs of a
program (or idea) against the benefits of a program to determine
whether the program is worth pursuing. It should be pointed out
that costs mean more than just monetary costs; costs also includes
human resources, time, and supplies needed. In addition, benefits
can range from tangible benefits (i.e. donations, signatures for a
petition, etc) to intangible benefits (i.e. raised awareness,
enlightenment, etc).
Why is a Cost-Benefit Analysis Important?
A cost-benefit analysis is important because it determines the
feasibility of doing a program or implementing an idea before
valuable resources are actually expended. If a cost-benefit
analysis can forecast that the costs of a program exceed the
program's benefits, then it may be in your organization's best
interest not to pursue the program, thus conserving resources so
that they can be used for programs that are forecasted to have
substantially more benefits than costs. Thus, a cost-benefit
analysis helps to conserve resources.
How Do We Do a Cost-Benefit Analysis?
As the name implies, a cost-benefit analysis essentially weighs
the costs and benefits. The general four-step process is as
follows:
- Project all possible costs including funds used, time spent, human resources, and supplies needed. Basically, project all monetary, temporal, human, and material resources.
- Project all possible benefits including those that are tangible and those that are intangible.
- Consider any alternative ways to achieve the benefits listed in step 2.
- Determine which outweighs the other: costs or benefits.
Step 4 is tricky because it is often difficult to quantify
benefits, especially those that are intangible.
Keys to a Strong Cost-Benefit Analysis
- Realistic: An analysis should be grounded in reality. Remember that ideal situations rarely occur so all projected costs and benefits may not occur. In other words, ideal costs and benefits may not reflect true costs and benefits.
- Involvement: An analysis should involve as many people as possible. At least the leaders of the organization should participate. Non-leaders are critical as well because they offer different perspectives and see costs and benefits that may not have been identified.
- Thoroughness: An analysis should be as thorough as possible so that all potential costs, benefits, and alternatives are taken into account. Gathering diverese perspectives assists in producing a thorough analysis.
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Fundraising
The purpose of this resource is not to list fundraising ideas.
Instead, this section outlines particular considerations when
developing a fundraising plan.
A cost-benefit analysis is a critical precursor to fundraising. Many fundraising activities and initiatives raise relatively little funds compared to the amount of resources put into these endeavors. By forecasting in advance the cost-benefit ratio, an organization can determine the feasibility and potential of a fundraising endeavor.
Keys to Strong Fundraising
- Substantial potential: The cost-benefit ratio of a fundraising endeavor should substantially favor the benefit aspect. The greater the ratio favors the benefit aspect, the more potential the endeavor has. If the cost-benefit ratio favors the cost aspect, then the fundraising endeavor may not be worth it when all things are considered.
- Repeatability: Any successful fundraising endeavor that can be repeated fairly easily is more favorable than a one-time only fundraising endeavor because the former gives your organization a steady revenue generator.
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Balancing a Budget
Aspects of a Budget
Each aspect of a budget should be viewed and analyzed
individually as well as with respect to each other.
- Expenses:
- Fixed expenses: Annual expenses that rarely change (i.e. capital expenses).
- Variable expenses: Expenses that are added to the budget depending on the programs and projects scheduled for the current term (i.e. year or semester).
- Revenue:
- Steady revenue: Steady revenue is money that an organization receives on a regular basis (i.e. annual funding, grants, etc).
- Variable revenue: Revenue that an organization gains from programs and fundraising efforts scheduled for the current term (i.e. year or semester).
- Suplus:
- Debt:
A surplus is simply when revenues exceed expenses. An organization can still carry a surplus even when accumulating expenses. When this occurs, the organization is considered financially stable. However, if the rate of expense accumulation is greater than the rate of revenue intake, then the organization is temporarily stable and approaching instability.
A debt is simply when expenses exceed revenues. An organization can still carry debt even with revenue being generated. When this occurs, the organization is considered financially unstable. Once revenues exceed expenses and the rate of revenue intake is greater than the rate of expense accumulation, the organization is financially stable.
Keys to Balancing a Budget
- Careful forecasting: Before each year or semester, outline scheduled programming and project the budget for each program and other endeavors. Be meticulously detailed when forecasting.
- Constant monitoring: The treasurer or financial officer of your organization should constantly review the budget and update the rest of the leadership of any changes or alerts.
- Documentation: All budgets should be typed or written down. Modifications to budgets should also be documented as they occur.
- Fundraising: The treasurer and/or fundraising chair should develop a year- or semester-long plan for fundraising projects. The plan should be detailed with target amounts of funds to raise.
- Cost-benefit analysis: Student organizations need to be able to do more with less so it is imperative that leaders discuss what expenses are important and what expenses are unnecessary. Budgets should be itemized so that the importance of each item can be evaluated.
- Frugality: Although most expenses are legitimate, some expenses are unnecessary when you look at the bigger picture (i.e. T-shirts, walkie-talkies, certain decorations, food, etc). Again, budgets should be itemized so that the importance of each item can be evaluated. Some items may seem nice and cool but they may be unnecessary in the end. For more information, click here.
- Resourcefulness: Expenses can be cut down by using what you already own or what you can borrow from others.
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Hidden Costs & Excess
What is Branding?
Branding is generally the development of a product, line of
products, program, or campaign that is based around a central
theme, concept, image, tagline, etc. A brand can include anything
from a logo to a phrase to an attitude.
- Branding examples:
- McDonald's Golden Arches and the "I'm Lovin' It" campaign
- Nike's Swoosh and the "Just Do It" campaign
Why is Branding Important?
Branding is important because each organization needs to not
only create an identity for itself but also set itself apart from
the competition. Creating an identity is critical because it allows
the general public to immediately recognize your organization with
very little prompts in the media. In addition, an identity for your
organization allows the general public to immediately realize the
difference between you and other similar organizations.
How Do We Brand Our Marketing?
Although there is no cut-and-dry method to developing a
marketing brand, these simple steps should be able to get you
started:
- Brainstorm: Come up with as many ideas as possible that convey the image or reputation you want the general public to have of your organization.
- Build consensus: Carefully decide which idea(s) would be the best at what you want to convey.
- Create: Develop the brand you decided on. Sometimes it's
good to develop variations of the brand so that it can be
customized to different media formats.
- Key questions to ask:
- How do we want the general public to know us?
- What do we want the general public to know about us?
- How can the general public benefit from us?
- How are we different from other similar organizations?
Keys to Branding in Marketing
Branding is a powerful technique in both marketing and public
relations. Keys to branding in marketing include:
- Clarity: Your brand should be as clear as possible so that the general public isn't confused with what your brand is conveying. Your brand should also be as dissimilar to other competing brands as possible. Remember you want to create an identity for your organization.
- Consistency: Your brand should be used in virtually all marketing campaigns and material. For example, any time you see any marketing campaign produced by Nike, you'll always see the Swoosh.
- Repetition:Your brand should be exhibited in the media as often as possible to increase awareness of your organization and solidify your organizational identity.
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