Using Benchmarking and KPIs. Andrew Whitehead, Director of Finance, Marie Curie

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2 Using Benchmarking and KPIs Andrew Whitehead, Director of Finance, Marie Curie

3 Marie Curie s Activities Supports patients with terminal diagnosis 75% of patients have cancer but increasing range of other conditions 9 hospices Community Nursing services with coverage of 95% of NHS localities across the UK Largest funder of Palliative Care research Services on a shared cost basis with the NHS Balance from Fundraising and 200 shops 3

4 Marie Curie s Finance m Income Expenditure Net Fundraising (38.1) 64.9 Retail 20.5 (15.6) 4.9 Total income generation (53.7) 69.8 Hospices 19.0 (38.2) (19.2) Nurses 23.5 (42.1) (18.6) Other caring services 0.2 (7.3) (7.1) Research and Policy - (3.9) (3.9) Total charitable activities 42.7 (91.5) (48.8) Central Services & Comms - (20.4) (20.4) Pay award - (1.0) (1.0) Depreciation and other 1.2 (4.5) (3.3) Total business as usual (171.2) (3.7) 4

5 Marie Curie s strategic objectives 1. We will reach more people and their families living with a terminal illness 2. We will improve the way terminally ill people are cared for across the UK 3. We will manage our charity as effectively and efficiently as possible Source: Marie Curie strategic plan

6 Benchmarking definition A measurement of the quality of an organisation's products, programs and activities and their comparison with standard measurements, or similar measurements of its peers. Source: Business Dictionary 6

7 Support costs: Information available from accounts Top 11 comparable charities ranked by fundraising income Year end Total expenditure Support costs Support costs Governance costs Governance costs '000 '000 % '000 % Cancer Research UK 31-Mar ,800 30, % 1, % RNLI 31-Dec ,900 15, % % Oxfam 31-Mar ,600 27, % 1, % Macmillan 31-Dec ,322 20, % % NSPCC 31-Mar ,890 5, % % RSPCA 31-Dec ,464 11, % 1, % Salvation Army 31-Mar ,275 14, % % British Heart Foundation 31-Mar ,362 6, % % British Red Cross 31-Dec ,800 11, % 3, % Save the Children 31-Dec ,033 28, % % Marie Curie 31-Mar ,544 10, % % Marie Curie 31-Mar ,920 12, % % Average 2012/13 228,454 16, % 1, % Source: Charity's Annual reports 7

8 Support costs: Departmental information is available in SORP accounts but disclosure is not consistent Marie Curie Macmillan Support costs 000 Executive, legal and strategy 601 Finance 1,493 HR 3,148 IT 5,994 Facilities 1,190 Total 12,426 Support costs 000 HR & Facilities 6,614 IT 7,328 Finance, Legal & Secretariat 3,456 Policy and Communications 6,513 Total 23,911 Source: Charity s annual reports 8

9 Finance Count Central Function costs as a proportion of total expenditure - Finance department - HR - IT - CEO - Estates Each element clearly defined 9

10 What is Finance Count? Financial management benchmarking approach specifically designed for the Third Sector Partnership between Agenda Consulting, Sayer Vincent and CFG Annual data collection for charities with turnover greater than 1m Shaped by a Steering Group of FDs in the sector Around organisations provided. Able to compare to overall survey data and selected peer group of up to 10 similar charities 10

11 Highly relevant Peer Group available Action for Children Age UK Alzheimer s Society CLIC Sargent Cancer Research UK Livability Macmillan RNIB RNID RSPB RSPCA Shelter United Response 11

12 How much should the Charity spend on Finance? Finance function costs as a percentage of direct costs: are Peer Group median Overall Survey median Your Score 2012 Your Score 2013 Peers Median Rank Whole sample Median Rank Total cost of the finance function as a percentage of total expenditure % 2.4 7% Finance employees (FTE) as percentage of total employees (FTE) Staffing cost per finance employee (FTE) ( ) Total cost of the finance function per organisation employee (FTE) ( ) % 4.5 0% 41,458 42,514 37,374 35,339 73% ,018 9% 1,940 0% 12

13 Drill down into Finance Costs? Comparison with peer group: are Peer Group median Overall Survey median 13

14 Drill down into Finance Costs? Comparison with whole survey: are Peer Group median Overall Survey median 14

15 Analysis of the sector costs? are Peer Group median Overall Survey median No. of Responses Lowest (10%) Lower Quartile (25%) Median (50%) Upper Quartile (75%) Whole Sample Income Under 5m m- 10m m- 25m m- 50m Over 50m Sector Children/Young People Economic/Employment Education/ Training Grant making Health care/medical research Highest (90%) 15 Housing International development People with disabilities Social care Umbrella body/trade association Other

16 How much should the Charity spend on IT? IT costs as a percentage of direct costs: are Peer Group median Overall Survey median Marie Curie Peer Group median Overall Survey median 2.0% (2.2%) 1.9% (1.9%) 1.5% (1.6%) 16

17 Spend on IT compared with peers IT costs as a percentage of direct costs: are Peer Group median Overall Survey median 17

18 Spend on IT compared with whole survey are Peer Group median Overall Survey median 18

19 Other Comparison across charity types IT function are Peer Group median Overall Survey median Number of Responses Lowest (10%) Lower Quartile (25%) Median (50%) Upper Quartile (75%) Highest (90%) Whole Sample Income Under 5m m- 10m m- 25m m- 50m Over 50m Sector Children/Young People Economic/Employment Education/ Training Grant making Health care/medical research Housing International development People with disabilities Social care

20 Other function costs are Peer Group median Overall Survey median Marie Curie Peer Group median Overall Survey median HR 0.9% (1.0%) 1.6% (1.7%) 1.3% (1.5%) Estate Management 1.3% 1.7% CEO 0.4% 0.3% 0.7% 20

21 Information to funders How much does Marie Curie spend on charitable activities? For every 1 we raise we spend: 72p on our work caring for people with terminal cancer and other illnesses 24p to generate future income 4p on publicity and governance How do administrative costs in Marie Curie compare with other charities? We benchmark our administrative costs against other charities. Our support costs in 2011/12 were 7 per cent, which is in line with the average of the top ten fundraising charities, while a recent benchmarking survey showed that our human resources and finance costs were significantly lower than the average of other charities of comparable size. Source : Marie Curie website 21

22 What about the private sector? Finance function costs as a percentage of direct costs: are Peer Marie Group Finance median Finance Overall Curie Survey Count median Count Peer Survey Group median median Private sector survey Private sector up to 165m Private sector Top performer 1.0% 1.8% 1.9% 1.1% 1.7% 0.6% Private Sector Source: Survey of 450 private sector firms 22

23 Other questions: How much should the Charity spend on transaction costs? Purchase ledger cost per supplier invoice: Marie Curie Peer Group median Overall Survey median 4.19 ( 3.49) 3.52 ( 3.70) 5.01 ( 4.29) Payroll processing costs per head count: Marie Curie Peer Group median Overall Survey median Finance Count 2012 (2011)

24 24 Gift Aid

25 25 Reserves

26 26 Spend on training of Finance staff

27 Non financial KPIs? No of days from year end to production of accounts Suppliers paid by BACS/Cheque VAT recovery Average cost of acquiring new donors Cost of expense processing Creditor and debtor days Finance Count 2014

28 Other benefits of Finance Count Overall report on survey Individual comparison report Drill down to anonymised data to all participants One to one meeting with an experienced consultant Seminars/webinars on current issues with case studies Action Learning sets 28

29 Sector needs to support this initiative Quality of data depends on range of participants Comprehensive reports represent good value Questions have been streamlined Only takes a few hours to complete Not a requirement to complete every question To be offered at low cost to CFG members 29

30 Changes to Finance Count International charities included 23 questions removed Guidance clarified around trading subsidiaries and branches 30

31 Fundraising Where can you get detailed cost income ratios? The Centre for Interfirm Comparisons Fundratios benchmarking study Benchmarking of fundraising ratios by activity 31

32 Cost income ratios for each type of fundraising The table below shows the voluntary income generated per 1 invested in each fundraising activity for the survey group for

33 The 20 Charities taking part in the 2011 Fundratios study are as follows: Addenbrooke s Charitable Trust Association for Intn Cancer Research Bible Society Diabetes UK Livability Trust Marie Curie Cancer Care Practical Action RAF Benevolent Fund Sue Ryder The Scout Association Action on Hearing Loss Asthma UK Crisis Lepra Maggie s Cancer Caring Centre MS Society Prostate Cancer UK Samaritans The Salvation Army Wateraid 33

34 CFIC study Also covers; Growth in each fundraising area Make up of fundraising income by activity Response rates Cost of acquisition Analysis of each component of fundraising income (ie %age warm, cold mailing, direct debit etc) 34

35 Study needs more participants CIFC Ltd 32 St. Thomas Street Winchester Hampshire SO23 9HJ United Kingdom Tel: , 35

36 Charity Shops: Annual survey : 36

37 Charity Shops Survey Charity Growth Income per shop * British Heart Foundation Profit per shop* Profit as %age of income Average shop rent 4.3% 4, % 33,475 Oxfam 1.4% 2, % 24,357 Cancer Research UK 6.4% 2, % 25,750 Barnados 7.1% 1, % 21,398 Average 7.6% 2, % 20,766 *Per week Source: Charity Shops Survey

38 Charity Financials Data available from financial statements of largest 5,000 charities Can be sorted by type of charity Support costs not currently a searchable field but may be available in the future Source: Charity Financials Income Spotlight April

39 Charity Financials Income category Total bn Increase % Prior year % Charitable activities Voluntary Trading Investment Other (3.0) Source: Charity Financials Income Spotlight April

40 Charity Financials Largest charities Turnover bn Lloyds Register 951 British Council 864 Arts Council 695 Cancer Research UK 665 Nuffield Health 661 Save The Children 559 National Trust 460 Cardiff University 559 Source: Charity Financials Income Spotlight April

41 Other options: Benchmarking clubs Groups of similar organisation sharing data on their activities Examples include - Hospice UK hospice costs - International charities : 41

42 FRS 17 Assumptions Discount rate RPI CPI Male life expectancy Guide Dogs 4.6% 3.4% 2.4% 86.9 Royal Opera House 4.6% 3.4% 2.6% 86.9 RNLI 4.4% 3.6% 2.6% 87.9 British Legion 4.5% 3.1% 2.1% 88.9 Barnados 4.6% 3.2% 2.2% 86.0 Source : Large charity s group survey : 42

43 Questions and comments : 43