My Experience
I helped The Financial Clinic, a nonprofit organization focused on financial literacy for lower income households, develop their 2013 breakeven analysis. For my project, I looked at the fixed expenses of the Strategic Initiatives department for 2012 and, based on the complexities of serving different types of clients and the organizations variable expense base, developed a model with the Clinic’s finance department. The main aim of this model was to understand how many clients they need to serve per year to cover their expenses.
As The Financial Clinic grows and becomes less dependent on fundraising, breakeven analysis is becoming more critical for the organization. By helping the organization understand the revenue and expense dynamics of serving different client types as well as the time commitment required for each client, the outcome of my project aided the Clinic in becoming more strategic in how it decides which clients to target.
The key skills I utilized during this project related to the financial management and decision-making techniques needed to optimize the goals and objectives of the organization. Based on the existing staffing capacity of the Strategic Initiatives group, I was able to calculate how many clients the organization could serve within a year. Evaluating the complexity of these clients and the revenues generated from each, I was able to predict the minimum number of each client type the Clinic would need to serve and if the Clinic were to go beyond this minimum what additional staffing needs they would need.
As The Financial Clinic rapidly grows, the method by which it distributes its products is changing (the Clinic is moving towards an online solution). This made it difficult to predict how the expenses would change going forward and the breakeven analysis a difficult calculation. In order to simplify the model and make it a useful tool for going forward, it was necessary to make assumptions about the needs of future clients. Because no two clients look alike, a key challenge was building a model that incorporated sufficient flexibility to accommodate the different needs of a client, while maintaining a level of simplicity that made the model easy to use.
A key takeaway from this project was a deeper understanding of how the nonprofit industry works. I also obtained an understanding of the innovation that is taking place in this space, particularly with regard to financial literacy and products for the under-banked population. I attended the closing ceremony of a Fellowship program that The Financial Clinic hosts. A requirement of this program was for the fellows to develop a business plan on how to improve money management tools available to lower-income households. Here I saw how modern technology, such as social networking, is being used to make people aware of all the different options that are available to them in order to improve their social standing and mobility.
