Not-For-Profit Financials … Capstone Project
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¶ … Financial Plan
The startup funding for PALS 4 Paws is going to be $50,000. This capital is going to be provided by the founding members of the organization, from their own personal capital. This capital was provided at the beginning of 2014. During 2014, there was relatively little fundraising capability as the founders were focused on other aspects of starting the organization.. Today, net assets are at $14,192. Crowdfunding, online ads and special events are the focus on fundraising efforts at present, and there are major fundraising events scheduled for later points.
The initial expenses are related to startup. The organization needs to acquire a space in which to operate, and the physical assets needed to operate. So basic supplies like computers and furniture are part of the buildout. The marketing expenses initially are focused on fundraising costs. For 2014, it is expected that the total marketing expense is going to be around 44.7% of budget, which is a little less than the 50% we had originally expected. For subsequent years, fundraising is going to be the most significant expense, at around 75% of total costs. The objective with this spending level is to build up the organization's capital, and improve the brand exposure. By building up capital resources, Pals 4 Paws will be better equipped to invest in the physical infrastructure needed to perform the organization's mission. Furthermore, Pals 4 Paws is going to work with other agencies, by providing funding, and this requires a high level of donations. Thus, fundraising costs are expected to be fairly high during the buildout phase of the organization.
For the first year, most of the cash flow is going to be dedicated to the initial startup expenses. The initial $50,000 will be almost entirely spent during this time, except for a small portion that is held back as a contingency fund. Spending will be put to general fundraising activities, as well as acquiring the infrastructure needed to run the organization.
It is expected that the organization's net assets are going to decrease further in 2016, but will start to increase after that. This is the result of building the brand and improving our fundraising capabilities. After producing a body of work, we should be able to host fundraising dinners that will generate upwards of $100,000 for the organization. At this point, our net assets will start to increase. Until that point, the organization will be operating on a bare bones budget, keeping things minimal, and relying a lot on small scale donations from online sources and small scale crowdfunding efforts.
The cash flow situation shows that at the beginning of 2016 will be the weakest point in terms of cash flow, with cash flow dipping below the $10,000 mark. But after that point, our fundraising capabilities are going to increase, and that should reverse the course on funding. But until the beginning of 2016, Pals 4 Paws will be operating close to a precarious level in terms of cash flow, with minor cash losses month-over-month, gradually diminishing the cash supply until major fundraising efforts can be completed, thereby improving the cash flow situation.
The statement of financial position is the non-profit equivalent of the balance sheet. This statement shows the assets of the organization, and it shows the liabilities of the organization. this chart illustrates the improving cash flow position that the organization expects to have going forward from 2016 through 2019. The value of the equipment is going to decline over this point in time, which is the result of accumulated depreciation. The depreciation on the fixed assets is on a seven-year straight line method. The straight line method is also used for depreciation of the computers will be over a five-year period. As noted, the financial position is expected to improve in line with increasing success at fundraising. The budget does not show the effects of decisions that have not yet been made -- at such time as the fundraising efforts have delivered strong positive cash flow we will have a better sense of where we will put that money. We may expand our present operation, or we may donate to other agencies. What this means is that the accumulation of cash and the… [END OF PREVIEW]
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