Turning Around The Fiscally Distressed Organization

1. Turning Around The Fiscally Distressed Organization Susan Rich, CPA, MBA SUNY Old Westbury, Long Island Financial Management Services (LIFMS)

2. Introduction • We will explain what causes fiscal distress. • You will learn to properly diagnose distress causation. • Does anyone here have a personal interest in this area?

3. Agenda • What are the major causes of fiscal distress? • What are various options to resolve each of these areas?

4. There is no “cookie cutter” approach or “one size fits all” turn-around strategy. Organizations often have longstanding unresolved problems that have existed for long time periods. There are often people in an organization who are resistant to change and do not want the boat rocked.

5. Systemss Revenue Model Staffing Consultants Funding Sources Fiscal Discipline Value Propositon Board Ownership Overview • Lack of $ does not create fiscal distress • Fiscal distress is only a symptom of a deeper organizational problem • The reason can be a combination of the puzzle pieces below

6. Vocabulary-Defining Terms Used In This Training • Staffing- the people who work in management and program • Systems-the automation in fiscal and program • Consultants- someone paid from outside • Revenue Model & Funding - sources and uses • Fiscal Discipline- making difficult choices • Board Ownership- taking responsibility • Value Proposition- return on investment

7. Staffing • Organization over staffed • Some staff overpaid- maybe due to longevity • Staff has low skill level and/or work ethic • Staff is untrained • There has been inadequate cross training • The finance department is not doing it’s job to communicate, provide timely and accurate reporting, or implement checks and balances to control spending

8. Systems • Organization relies on external high cost expertise • Has not developed internal skills • Work done manually and lack of automation • Lack of proper system integration • You can observe obsolete technology still in use

9. Consultants • Organization relies on high cost consultants (such as fundraisers) instead of investing and sending management for training • Bids are not utilized or sent out periodically • No transfer of knowledge to in-house staff • Organization becomes dependent on consultants-there is no “end game”

10. Revenue Model & Funding Sources • Funding streams are not diversified and come from single or few sources • Unfunded programs are prevalent and continue to operate in the absence of funding • Funder rates or budgets have remained stagnant over a long time period while costs have gone up every year

11. Fiscal Discipline • Implementing an organizational budget and sticking with it • Making hard and difficult decisions on a timely basis • Taking swift and decisive action when conditions change and not remaining passive

12. Board Ownership • Having a board who is interested • Board members attend meetings • Board members engage in healthy and constructive differences of opinion • One person does not dominate • Board members are willing to vote for and drive change when needed

13. Value Proposition • The organization has changed with the times and remains current and relevant • The clients of the organization still exist and want services • The organization is willing to “think outside of the box” and try new things • Third parties (grantors, govt. funders, donors) feel there is positive “ROI”

14. Implementation Steps • We have gone thru a checklist of each of the areas that contribute to distress • Performing a “turn around” requires a careful walk-thru of an organization, identifying the problem areas and ranking findings • Often outside assistance is needed to develop a sound plan, make recommendations and drive the change-especially if there is significant internal resistance or politics

15. Contact Information Susan Rich, CPA Long Island Financial Management Services 3535 Jerusalem Avenue Wantagh, New York 11793 516-557-2325 x4 susanrichcpa@optonline.net