Adv Topics Macro SW
Adv Topics Macro SW SW 799
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This 10 page Class Notes was uploaded by Adan Schiller on Thursday October 29, 2015. The Class Notes belongs to SW 799 at University of Michigan taught by Staff in Fall. Since its upload, it has received 14 views. For similar materials see /class/231513/sw-799-university-of-michigan in Social Work at University of Michigan.
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Date Created: 10/29/15
MNIVERSITY OF MICHIGAN SCHOOL OF SOCIAL WORK SW 799 Advanced Topics in Macro Social Work Minicourse on Budgeting and Fiscal Management John Tropman Instructor 3841 School of Social Work Building 7347636275 663341 1 H 6457191 Cell July 10th and 17 2008 Room 3816 SSWB 830 AM 430PM This minicourse offered over two days will focus on three or four key skills in the area of budget and scal management The rst is budgeting and it emphasizes the kinds of budgets standard functional performance among others as well as the process of budget building bottomup top down zero based and a variety of budget documents The second topic is financial management which builds upon the budgeting material and looks to see ifyou are tracking on your budget budget variances risk management and consider the various overall nancial measures that assist in tracking performanceROlROE etc The third session introduces the concept of PUMA Professional Unit Method of Analysis It is a form of activity based costing that looks at who is doing the actual work ofthe agency and who is supporting that work This calculation produces the front roombackroom ratio and we will compare ratios of different organizations in session We then look at the cost of providing an either a worker say an adoption worker to perform that activity or the cost of the activity an adoption leading us to consider costworker week or hour output as one measure or cost per outcome an adoption as another It is hoped that insessions teams of practioners and students can work together on practical exercises using financial data from practioner s agencies or student s placements The fourth element if there is time will be applying the total compensation model to employee compensation and looking at the compensation system ofthe organization Approximately 23 of each session will be lecturediscussion and 13 application SW 799 Advanced Topics in Macro Social Work Minicourse on Budgeting and Fiscal Management MATERIALS ARE ON C TOOLS NelsonEconomy MANAGING FOR DUMMIES Chapter 18 Budgeting Accounting and Other Money Stuff M L Flynn Budgeting in Community Organizations Principles for the 90s but it is still okl J and E Tropman Index of Dissimilarity and the Professional Unite Method of Analysis Marci Thomas Managing the Finances of Nonpro t Organizations Clara Miller The LookingGlass World of Nonprofit Money Managing in For Pro ts Shadow Universe Resource J Tropman 2002 The Compensation Solution San Francisco Jossey Bass ASSIGNMENTS This is a Rapid Intelligence Workshop We have only 2 days I hope that you can look at the material ahead of time and come prepared having done the reading You are also requested to bring a budget statement from your agency as well as workload numbers Your assignment for purposes of a grade will be selected as an application of material which will be decided upon during the class sessions and due one week afterthe class ends July 24th Grading will be SU It can be done in groups MINNERSITY OF MICHIGAN 2 SCH 00L OF SOCIAL WORK SW 799 Advanced Topics in Macro Social Work Minicourse on Budgeting and Fiscal Management 652008 SESSION 1 July 10th Morning INTRODUCTION BUDGETS Flynn Budgeting in Community Organization Thomas Managing the Finances of Nonprofit Organizations Prepare the skills application exercise on p 273 SESSION 2 July 10th Afternoon FINANCIAL CONTROLS Read Activity Based Costing attached Read Macmillan Matrix attached SESSION 3 July 17 Morning Read Tropman and Tropman Index and PUMA SESSION 4 July 17th Afternoon TOTAL COMPENSATION MODEL Skim The Total Compensation Solution MINNERSITY OF MICHIGAN SCHOOL OF SOCIAL WORK SW 799 Advanced Topics in Macro Social Work Minicourse on Budgeting and Fiscal Management 652008 Activity Based Costing From Wikipedia the free encyclopedia Jump to navigation search Activity based costing ABC is a method of allocating costs to products and services It is generally used as a tool for planning and control This is a necessary tool for doing value chain analysis The concepts of ABC were developed in the manufacturing sector of the US during the 1970s and 80s During this time the Consortium for Advanced Manufacturing International now known simply as CAMI wwwcamiorg provided a formative role for studying and formalizing the principles that have become more formally known as ActivityBased Costing Robin Cooper and Robert Kaplan r r of the Balanced Scorecard brought notice to these concepts in a number of articles published in Harvard Business Review beginning in 1988 Cooper and Kaplan described ABC as an approach to solve the problems of traditional cost management systems These traditional costing systems are often unable to determine accurately the actual costs of production and of the costs of related services Consequently managers were making decisions based on inaccurate data especially where there are multiple products Instead of using broad arbitrary percentages to allocate costs ABC seeks to identify cause and effect relationships to objectively assign costs Once costs of the activities have been identified the cost of each activity is attributed to each product to the extent that the product uses the activity In this way ABC often identi es areas of high overhead costs per unit and so directs attention to finding ways to reduce the costs or to charge more for costly products edit Detailed description Activitybased costing was rst clearly defined in 1987 by Robert S Kaplan and E Bruns as a chapter in their book Accounting and Management A Field Study Perspective Harvard Business School Press 1987 ISBN 0875841864 They initially focused on manufacturing industry where 39 39 39 39 J and I J quot quotJ improvements have reduced the relative proportion of the direct costs of labor and materials but have increased relative proportion of indirect costs For example increased automation has reduced labor which is a direct cost but has increased depreciation which is an indirect cost Traditionally cost accountants had arbitrarily added a broad percentage onto the direct costs to allow for the indirect costs However as the percentages of overhead costs had risen this technique became increasingly inaccurate because the indirect costs were not MINIVERSITY OF MICHIGAN 4 SCFIOO L OF SOCIALWORK SW 799 Advanced Topics in Macro Social Work Minicourse on Budgeting and Fiscal Management 652008 caused equally by all the products For example one product might take more time in one expensive machine than another product but since the amount of direct labor and materials might be the same the additional cost for the use of the machine would not be recognised when the same broad 39oncost39 percentage is added to all products Consequently when multiple products share common costs there is a danger of one product subsidising another Like manufacturing industries financial institutions also have diverse products which can cause crossproduct subsidies Since personnel expenses represent the largest single component of noninterest expense in nancial institutions these costs must also be attributed more accurately to products and customers Activity based costing even though developed for manufacturing can therefore be a useful tool for doing this This extended use of ABC to financial institutions was presented in 1990 in an article appearing in the Journal of Bank Cost and Management Accounting Volume 3 Number 2 by Richard Sapp David Crawford and Steven Rebishcke There was also a subsequent article in 1991 in the same Journal Volume 4 Number 1 Direct labor and materials are relatively easy to trace directly to products but it is more difficult to directly allocate indirect costs to products Where products use common resources differently some sort of weighting is needed in the cost allocation process The measure of the use of a shared activity by each of the products is known as the M driver For example the cost of the activity of bank tellers can be ascribed to each product by measuring how long each product39s transactions takes at the counter and then by measuring the number of each type of transaction edit Limitations Even in activitybased costing some overhead costs are difficult to assign to products and customers for example the chief executive s salary These costs are termed 39business sustaining and are not assigned to products and customers because there is no meaningful method This lump of unallocated overhead costs must nevertheless be met by contributions from each of the products but it is not as large as the overhead costs before ABC is employed Although some may argue that costs untraceable to activities should be quotarbitrarily allocatedquot to products it is important to realize that the only purpose of ABC is to provide information to management Therefore there is no reason to assign any cost in an arbitrary manner Management accountants can be creative in finding other ways to represent these costs on internal reporting statements Tool MacMillan Matrix 1 Nonpro t staff are often uncomfortable discussing competitiveness or resource allocation 7 not because we don t understand these ideas but because we like concentrating on the people we 1 httpwwwctcnetorgwhataction7pageiid39 MINIVERSITY OF MICHIGAN 5 SCFIOO L OF SOCIALWORK SW 799 Advanced Topics in Macro Social Work Minicourse on Budgeting and Fiscal Management 652008 help through our work Recent environmental changes 7 shifts in funding priorities increased home computer usage and a proliferation of community technology programs 7 require us however to use these concepts to ensure that we truly are meeting the needs of the people we want to help The MacMillan Matrix can help your CTC discover the program areas that are most needed in your community and that you are in the best position to provide The Matrix is based on the following assumptions Nonprofits should avoid duplicating services This will ensure that limited resources are used well and quality of service is maximized Nonprofits should focus on a limited number of highquality services rather than providing many mediocre services Nonprofits should collaborate so that a continuum of service can be provided with each partner focusing on specific pieces The MacMillan Matrix will help you assess current and prospective programs according to four criteria 7 t with your organization s mission attractiveness to funders and participants whether the service is provided elsewhere and organizational capacity Below is an adapted MacMillan Matrix for CTCs Program is Very Program is Not Attractive to Funders Attractive to Funders and0r Community and0r Community MaCMIIIan Participants Participants Matrix for CTCS Several FewNo Several Orgs Offer Org offer Orgs Offer Similar Similar Similar Programs Orgs 0ffer Programs Programs Prgg ll s G 23233 5 Keep and Keep and Keep and d 0 gemth Compete Grow Collaborate Subsrdize O D Give Weak 9399 Grow Your Give Away Capacity Away to Collaborate F and Capacrty or to Other Other or Stop Credibility Give Away Orgs T Orgs POOR FIT Give Away Give Away Each current and prospective program should be put into the appropriate square Those program ideas that fall into top row good fit and high capacity should be kept The programs in the top rightmost cell are those programs that your CTC is wellsuited to MINIVERSITY OF MICHIGAN SCFIOO L OF SOCIALWORK SW 799 Advanced Topics in Macro Social Work Minicourse on Budgeting and Fiscal Management 652008 provide and that are most needed but are difficult to fund These are the programs that you should consider subsidizing with general operating funds Those program ideas in the bottom two rows should usually not be undertaken Resources Alliance for NonPro t Management MacMiIIan Matrix FAQ MacMiIIan Matrix 159age HowTo Guide and MINNERSITY OF MICHIGAN SCFIOO L OF SOCIALWORK SW 799 Advanced Topics in Macro Social Work Minicourse on Budgeting and Fiscal Management 652008 Worksheet free from the Forbes Group but requires filling out a form No Comments so far Leave a comment or suggest a resource Question2 How can we do a competitive analysis Answer Nonprofits have not traditionally been thought of as organizations that need to be competitively oriented Unlike forprofit businesses which compete for customers and whose very surviva depends on providing services or products to satisfied paying quotclientsquot many nonprofit organizations operate in a nonmarket or grants economy one in which services may not be commercially viable In other words the marketplace may not supply sufficient resources to support an adequate ongoing provider base Moreover the customer client does not decide whic provider gets adequate ongoing funding In fact many nonprofits are considered quotsolesourcequot the only place to get the service so there is not necessarily any choice in which provider receives funding even if the client does have some say Consequently nonprofit organizations have not necessarily had an incentive to question the status quo to assess whether client needs were being met or to examine the costeffectiveness or quality of available services The competitive environment has changed however funders and clients alike are beginning to demand more accountability solesourced nonprofits are finding that their very success is encouraging others to enter the field and compete for grants and grant money and contributions are getting harder to come by even as need and demand increase This last trend increasing demand for a smaller pool of resources requires today39s nonprofits to rethink how they do business to compete where appropriate to avoid duplicating existing comparable services and to increase collaboration when possible The MacMillan Matrix for Competitive Analysis of Programs The MacMillan Matrix is an extraordinarily valuable tool that was specifically designed to help nonprofits assess their programs in that light The matrix is based on the assumption that duplication of existing comparable services unnecessary competition among nonprofit organizations can fragment the limited resources available leaving all providers too weak to increase the quality and costeffectiveness of client services The matrix also assumes that trying to be all things to all people can result in mediocre or lowquality service instead nonprofits should focus on delivering higherquality service in a more focused and perhaps limited way The matrix therefore helps organizations think about some very pragmatic questions Are we the best organization to provide this service Is competition good for our clients Are we spreading ourselves too thin without the capacity to sustain ourselves Should we work cooperatively with another organization to provide services Using the MacMillan Matrix is a fairly straightforward process of assessing each current or prospective program according to four criteria described below 1 Fit Fit is the degree to which a program quotbelongsquot or fits within an organization Criteria for quotgood fitquot include congruence with the purpose and mission of the organization ability to draw on existing skills in the organization and ability to share resources and coordinate activities with programs ththWWW 39 quot nrOPAO frateuic 39 quot icaniweidoicompetitive faq MINNERSITY OF MICHIGAN 8 SCFIOO L OF SOCIALWORK SW 799 Advanced Topics in Macro Social Work Minicourse on Budgeting and Fiscal Management 652008 2 Program Attractiveness Program attractiveness is the degree to which a program is attractive to the organization from an economic perspective as an investment of current and future resources ie whether the program easily attracts resources Any program that does not have high congruence with the organization39s purpose should be classified as unattractive No program should be classified as highly attractive unless it is ranked as attractive on a substantial majority of the criteria below high appeal to groups capable of providing current and future support stable funding market demand from a large client base appeal to volunteers measurable reportable program results focus on prevention rather than cure able to discontinue with relative ease if necessary ie low exit barriers low client resistance to program services intended to promote the selfsufficiency or selfrehabilitation of client base 3 Alternative Coverage Alternative coverage is the extent to which similar services are provided If there are no other large or very few small comparable programs being provided in the same region the program is classified as lllow coveragequot Otherwise the coverage is quothighquot 4 Competitive Position Competitive position is the degree to which the organization has a stronger capability and potential of s H to deliver the program than other agencies a the g quality credibility and market share or dominance Probably no program can be classified as being 39n a strong competitive position unless it has some clear basis for declaring superiority over all competitors in that program category Criteria for a strong competitive position include good location and logistical delivery system large reservoir of client community or support group loyalty past success securing funding superior track record or image of service delivery large market share of the target clientele currently served gaining momentum or growing in relation to competitors better quality service andor service delivery than competitors ability to raise funds particularly for this type of program superior skill at advocacy superiority of technical skills needed for the program superior organizational skills superior local contacts ability to conduct needed research into the program andor properly monitor program performance superior ability to communicate to stakeholders and most cost effective delivery of service After each program is assessed in relation to the above four criteria each is placed in the MacMillan matrix as follows For example a program that is a good fit is deemed attractive and strong MINIVERSITY OF MICHIGAN 9 SCFIOO L OF SOCIALWORK SW 799 Advanced Topics in Macro Social Work Minicourse on Budgeting and Fiscal Management 652008 competitively but for which there is a high alternative coverage would be assigned to Cell No 1 Aggressive Competition High Program Attractiveness Low Program Attractiveness 39 asyquot Program quotDifficultquot Program Coverage Coverage Coverage Coverage High Low High Low GOOD Strong 1 Aggressive 2 Aggressive 5 Build up the 6 quotSoul of the FIT Competitive Competition Growth Best Competitor Agencyquot Position eak 3 Aggressive 4 Build 7 Orderly 8 quotForeign Aidll Competitive Divestment Strength or Get Divestment or Joint Venture Position Out POOR 9 Aggressive Divestment 10 Orderly Divestment FIT Once all programs have been placed in the appropriate positions on the matrix an organization can review its mix of programs sometimes called a quotprogram portfolioquot and decide if any adjustments need to be made Ideally an organization would have only two types of programs The first would be attractive programs programs that attract resources easily in areas that the organization performs well and can compete aggressively for a dominant position These attractive programs can be used to support the second program type the unattractive program with low coverage The unattractive program is considered unattractive by funders with low alternative coverage but makes a special unique contribution and in which the organization is particularly wellqualified These programs typically fall under Cell No 6 the soul of the agency These programs are known as the quotsoul of the agencyquot because the organization is committed to delivering the program even at the cost of subsidizing it from other programs An organization cannot afford to fund unlimited quotsoulsquot and it might have to face some difficult decisions about how to develop a mix of programs that ensure organizational viability as well as highquality service to clients For example five years ago there was little funding for case management by AIDS Service Organizations Unwilling to let clients fend for themselves in getting the help they needed many organizations devoted staff time to this service At the time this was a quotsoul of the agencyquot program These days this program is more attractive ie fundable though there is also growing alternative coverage Therefore organizations in a strong position to serve the clients well with cultural competence and program expertise should aggressively compete those in a weak competitive position should get out of the business Articulating Previous Strategies Most organizations operate within the guidelines of certain program and organizational strategies although often these have neither been recognized or articulated as actual strategies Once an organization is in the process of strategic planning however it is time to make explicit these unspoken strategies and incorporate them into this deliberate consideration of the organization39s future directions This should happen as part of the situation assessment look for past patterns of operation or allocation of resources these are your previous strategies analyze whether those MINIVERSITY OF MICHIGAN 1 0 SCFIOO L OF SOCIALWORK