Home » 2015 Finance Report

2015 Finance Report

By Lori Carlson

Another year has come to a close and with it come the joys of IRS reporting. The best part of all these spreadsheets is the stories they tell about how we’ve grown, or not, and let us ponder whether growth has been in the right directions,  see where we’ve made mistakes and how they’ve been corrected. Or not. It’s not that often I can stand 100 feet up over PLF, switch lenses and see the project as something totally binary. It’s revealing in ways great and small and I thought I’d share the things I noticed with the people whose confidence makes all this possible.

Let’s begin with the simple stuff– the growth of the project in general.

PLF Growth 2007-2015

This is total spending, strictly on programs. A nice steady trajectory upward, starting at $50,000 in 2007 and growing more than six times by 2015. We had the beginning of a plateau in 2012 followed by a sharp correction. We’ll talk a bit about the importance of that in a moment. We see another plateau on the horizon in 2016. How or if we’ll address that is also a point of discussion we will take up.

And here is a visual on what has changed since last year.

Compare-2014-15-Programs

What stands out is huge growth in University Scholarships which is SO AMAZING and we want to thank everyone who has believed in our student’s ability to go this far. We could have never dreamed to reach this level of success. Every year we collectively shudder when we see how much university material we have graduating from high school, but people, this is a great problem to have!

And now, here is everyone’s favorite topic: Admin.

What does it cost to administer these programs? How much rent, how many accountants, how many reams of A4, how many computers, how many fund raising events, and lastly, how many salaries? Are we lean enough?  Is the percentage “correct”? And what does “correct” mean?

This graph below shows what is considered “admin overhead” and the dance that is performed by general admin expenses, salaries and fundraising expenses.

Admin Dissection

I love how this chart demonstrates what we have done in our approach to raising funds. We tried some things, then failed, tried another way, found success, tried to build on that, found failure, and then returned to what worked. Success has been found, for now, with this magical formula:

a) keeping enough trained staff working logistics on the ground to keep Ponheary and Lori freed up to focus on fundraising (the staff that makes that possible is represented by the blue line)

b) keep that staff supplied with the things they need to work efficiently (the red line)

c) depend on our advocacy partners around the world to do a great deal of fund raising for us, which is why our green line isn’t out of control.

The red line is “running the office” and includes things like the rent and utilities, paying the accountant, website hosting, postage, office supplies, telephone and internet service.

Fundraising (green line) took another tick upwards in 2015 when Lori attended some pitches in Europe. We earned sixteen times what it cost to attend those pitches, so while I don’t anticipate a future full of international speaking engagements, they certainly do pay off when they hit.

A previous spike in 2013 on the green line is from Ponheary and Lori going to the US, pounding the pavement, and giving presentations. We raised $28,000 on that trip, but frankly, after deducting travel expenses, we can make that much money every month sitting in Cambodia. It was a fun trip, and had benefits outside the tangible, but financially it was a wash. WE THOUGHT WE LEARNED A LESSON ABOUT THAT and thought we probably wouldn’t spend money doing fundraising that way again. Three years later, we think we should give that another go, this time working on Ponheary’s presentation and thinking more critically about where to present. That task seems daunting and we think we need a more professional approach.

We have a lot to think about as we consider where the funds for our continued growth might be. We have exhausted the tourism model; there are only so many people who show up in Cambodia with an interest. We will continue to bring those people into the fold, but there is a plateau in their numbers and we have reached it. Our advocacy partners, from all points on the globe do a tremendous amount of fund-raising for us. We have stretched them to their limits and will do our best to continue to develop more of them.

PLF was able to bring in over $700,000 and pay only $7,500 on fundraising in 2015, largely in part to those two strategies. In order to grow we will no doubt have to start spending more on fundraising. Will it be worth the investment? That question is what has made us think deeply about laying down a strategy. We need to do it right. How to spend the least amount of program money raising the maximum amount of funds for new programs is the topic d’jour at PLF HQ and we are exploring every possibility.

The blue line is admin salaries. Let’s talk about what has happened with staff across time.

(Note that our core staff are young Cambodians and their salary package includes University and/or English tuition)

2006-2008:  $0.00  These are the years it was just Ponheary and Lori, trying to build something, working without salaries.

2009: $2,270  This was the year that Ponheary and I started letting PLF pay our admin expenses.

2010 and 2011: $5,400 each year.  These two years we hired one Cambodian staff member to start managing some field activities so that Ponheary and I could spend more time raising money and focusing on development and still keep our core projects running well.  The benefits of this decision were tremendous. Already in 2009 we had seen that we had reached a plateau in fundraising. Two women alone could not talk to any more people while also keeping an eye on the programs we were building at four schools. We had to make a decision,  ”Should we stay this size forever?” Doing so would mean no high school scholarships nor all the other programs our subsequent growth has wrought. It would also mean that the whole Foundation would fall apart if anything happened to either of us. OR, should we take the a leap of faith, hire some help and believe that we could raise enough money to cover those salaries and then some? It was a gamble that we decided to take.

2012 admin salaries were $16,000, which was two Cambodian staff and Ponheary and Lori.

2013 admin salaries doubled, which reflects the decision to hire our first foreigner,  Travis Thompson, give raises to the two Cambodian staff and Ponheary and Lori

2014 admin salaries went up again as the Scholarship program really took flight and needed experienced staff with competencies in not only controlling complex data, but managing 400 high school and university students and all their teachers. We hired another foreigner to oversee the project and trained Cambodian staff to do the counseling/social work with the students/families.

2015 salaries ticked up a bit with one khmer staff member returning to University and two others getting small raises.

Is it worth it, making investments in staff?

In a word, YES.  More staff has brought stability and refined deployment. We can see revenue far exceeding the cost of adding staff. With that revenue we’ve been able to implement the programs that have brought our students to their fullest potential. Without that staff, we had hit the wall and stalled. It is also worth noting that we keep our staff. Having their cumulative institutional knowledge and building a team that has been together for a while and supports each other is priceless.

Let’s compare the impact of staff on revenue:

Admin to revenue 2007-2015

It’s clear that the decision to hire staff to stabilize our programs and free up the principals for fundraising and goal setting was a good decision. We boldly jumped off the plateau we were entering by bringing on new staff and the growth in revenue (and therefore programs) since then has been steady and in 2015 we continue to reap the benefit.

That plateau will be duplicated in 2016, and it will call for fresh ideas. We are watching trends, comparing this year to last and are not off to a good start in 2016. If we flatline to 2015 by the end of this year, I will actually be surprised.

WHAT IS THE PLAN?

In 2016 we will bring in two critical staff members who will relieve me of 60% or my current workload, allowing more time for grant-writing and pitches. Those two people are:

Accountant: I have been doing the books since inception. As we grow, that job gets bigger too. Especially if you want to keep an eye on things. In Cambodia we don’t have on-line banking, paper checks, credit cards. We have a paper statement book, circa 1962, and stacks of cash. We process an average of 2 cash transactions per hour. Then there is reporting: to the IRS, to donors, to ourselves. It’s a mountain of work and I am not an accountant by trade. This position has been recently filled. Our very first in-house accountant will arrive in May, with great excitement on my part certainly.

Communications: Keeping the website up to date and social media alive was at first my job and then became everybody’s job, meaning it didn’t get done very well at times. What is also lacking now is something that wasn’t a real need before, and that is having someone in house whose work it is to find media outlets; publications who want to write a story about us, someone who wants us to come and speak. We need in-house staff to write those stories, speeches and pitches, someone to find the right places for us to deliver them. Someone to firm up our messaging and make it reach more people.  We are on the hunt for this person now. It’s not going to be easy.

There is a lot of focus on the ratio between admin and programs specifically admin salaries and programs. I can understand this completely and tend to be hyper sensitive to this issue, since most of the charities in Cambodia (and maybe everywhere) are more in the business of salary creation than anything else and I find this personally objectionable. Everyone who contacts me to review our 990 will go immediately to those two numbers and do a quick calculation. What is the right %? I’ve never heard that question answered and I assume that means it’s different for everyone, depending on what kinds of programs they are engaged in (And how much money management is bringing home).

It’s a handy tool, this ratio of admin to programs, and I am grateful our supporters also pay attention to other factors of nonprofit performance:  transparency, governance, leadership, and results. I think for us, the magical number is about 12% admin when we’re not in a growth phase and 15% when we are.

Here is a quick view of where PLF has sat over time on the age-old question “what is your admin percentage?”  I find this graph quite interesting; in it I can see the times we were  falling on our face (2010) and then growing rapidly, then taking a step back to solidify infrastructure (2013) then moving it forward with more efficiency (2014-15)

 ADMIN TO PROGRAMS RATIO 2007-2016

Here’s another view:

ADMIN TO PROGRAMS 2007-2015

It’s worth noting that the programs we’ve added in the last few years require a great deal of oversight. In Cambodia there is a tremendous amount of graft;  we can choose to spend money on staff to keep the money in the tube until it reaches the students directly, or we can forego oversight and let it leak out all over the place, usually in a much larger sum than the salary of the overseer. The programs we’ve added since 2013 are trickier than simply having direct oversight at programs running at primary school and have included high school scholarships, vocational training, university scholarships, workshops, residential care, career counseling, social work. Complex projects require more well-trained staff.

We will always look for ways to get more efficient but will not jeopardize the smooth running of programs by being short-sighted about staff.

Well trained staff does more than just run the programs; they keep us on top of the data: whose scores are slipping and would a home visit help? Who is doing well and do we know why? What percentage of students are taking Computer classes? How many students do we have in advanced English? What English teacher is producing the most highly skilled students? We need to know these things to make informed decisions and that’s impossible without terrific staff.

STABILITY

Something else to share is our goal of  keeping one year’s program budget in the bank at all times. This has been something Ponheary and Lori have worked on since the beginning of PLF, making sure we are as stable as possible. We never want to face any students and tell them a program is over because we had a bad year. Charities, just like for-profit businesses, need to have a plan for every disaster. Holding assets  can smooth out choppy income cycles, finance capital needs for expansion, allow us to make quick decisions and help us sleep at night.

Ever year we sock away more than we spend. This is no accident; we wanted to build stability and we did. This chart tells the story. Blue lines are all the money we spend every year, red lines are all the money you give us every year.

 TOTAL EXPENSES TO INCOME 2007-2015

In 2008 and 2009 you can see us struggling a lot with this idea of “banking one year of programs”.  In 2009, just before we had any staff, you can really see our failure to reach this goal of stability, combined with a failure to begin banking funds for our students entering high school. Things started correcting after the addition of staff, and for the last few years, we have been where we want to be, with about 18 months of program money in the bank.

We expect changes in our balance sheet to appear in 2016 as we dip into it to make investments in the staff we need to jump us off the next plateau.

Finally, let’s have a look at the whole enchilada.

Here is a very difficult-to-read chart showing growth of programs over time.

All Programs 2007-2015

 Here’s what I find interesting in this data:

• Bikes: Steady growth upward over time represents an ever increasing number of students graduating from grade six. It took a dip in 2009 when we didn’t have any staff and weren’t providing the same level of hands-on support at school that we do now. It has plateaued this year. Why? Could it be because in 2015 we graduated 90% of our students from primary school (compared to 40% average nationally). Perhaps we are maxed out on how many students we can award bikes to because virtually everyone in the villages where we work are graduating~!

 Facility: A big spike in 2009 reflects the installation of a considerable amount of solar, preparing for a big push in technology programs. While we were focused on this movement forward, our 6th graders were slipping…we can see that in the bike awards. LESSONS LEARNED: Data is valuable. And more importantly: While looking up at the stars and dreaming about what you’re going to do next, keep your hands firmly on the core! In 2014 we did a lot of facility improvements at all schools, re-building kitchens, laying water works, repairing desks and classrooms, basically doing all the things the government will not do. In 2015 we built the Library at Koh Ker and began work at Romchek school. In 2016 we will expand solar at Knar School Computer Lab and build a new kitchen at Romchek along with dozens of other small facility projects.

• Food-Wellness: Look at the correlation between what we spent on food and what we spent on wellness. In 2010 and 2011 they were about equal. In 2012 we focused more on the health and well-being of our students applied the old adage of “let food be your medicine”. More money spent on food = less money spent on wellness. Healthier children, ready to study. Absenteeism went down, retention went up. Not to mention everyone just feeling better. On the heels of that success came Eyes-Open to help us expand breakfast programs at all locations. Food is an expensive proposition when you’re talking about 600 students having it six days a week, and it’s hard to control theft. With the necessary staff, we’ve been able to really make food meaningful in the last couple of years. In 2014 and 2015 we worked with Blue Heart Charity to install some water wells at Koh Ker and Phome Thmei villages, and scaled up a Food Bank for our most at-risk high school students, accounting for the uptick. Food is now the program where the most money is committed and is a major contributor to the success of all our other programs. Because hungry children can’t learn!

• Libraries: This is a small line item but an important one. I’m proud of what we accomplished in 2014 to make our libraries places where children can come to not only read a constantly rotating selection of books, but to play games, do puzzles, have arts and crafts activities, and even participate in a spelling bee. Construction began late in 2014 of a new library building at Koh Ker School and was completed in 2015. Romchek, our newest school doesn’t have a dedicated library and that might be years out, but meanwhile we are keeping reading corners full of books in each classroom and will continue to train teachers about how to best use them in the class.

• High School Scholarships: Through the roof in 2013 as we had hoped and then growing still a bit more in 2014. In 2015 staff came up with new ideas about how to restructure scholarships and brought some savings. In 2016 I expect to see that trend continue. More students for less money. A big growth in high school scholarships is a very satisfying indicator of how motivated our students are to complete high school and also how solid our primary school program is. Thank you to all the supporters who have believed in our students and built scholarship programs for this effort.

It is paying off; they are smashing to pieces the statistic that says only 4% of rural students will complete high school. This year 25% of PLF students completed high school. That number will continue to grow.

• Dormitory: PLF continues to find ways to support students who are in Siem Reap living far from their families so that they might complete high school or receive vocational training. In 2014 we opened a Boy’s Dorm in the city and ramped up our work with the Ministry of Education to support the Angkor High School Girl’s Dormitory in Siem Reap. In 2015, PLF took 100% control of the project and now has 56 girls in residence.  The girls at the dormitory or the highest performing grade nine girls in the Province and live in districts where there is no upper secondary school. Without this support they either have abandoned school and stayed in their rice fields or would be in Siem Reap, living in dodgy circumstances and at risk for trafficking.

It should be noted that the Dormitory at Srayang is fully funded by PLF Canada, which keeps it’s own set of books and so Srayang Dorm is not included in this report.

• Technology: Computer classes cost a substantial amount of money to run, especially in places where there is no electricity and teachers must be trained from the ground up, but there is no other program with as much impact on our students as technology. We will never stop maximizing funds so we can push technology as hard as possible. In 2015, 462 certificates were awarded. In 2015 PLF fully deployed a pilot project to move technology downstream at Tchey School and students there are now starting at grade 7.  In 2014 we launched the Lab at Knar School with a teacher that is actually from that village as well as collaborating with Engelstoft Foundation to open our 5th lab at Khnart Middle School. In 2015 we stopped expanding and spent time strengthening the teachers and their curricula, doing some fine tuning on what is a very successful project. In 2016 we will install our 6th lab (and the biggest) in at the Angkor High School Girl’s Dormitory.

• University: This category also includes Vocational Training, but does not include teachers who are in school; this is just students. We are very pleased with the substantial growth between 2013 and 2015 and appreciate donors who are helping us build tertiary scholarships for our graduating students. The enormous spike in 2015 is for $28,000 of scholarships that were awarded to girls at Angkor High School Girl’s Dormitory, which saw 100%  complete high school. Many of the grads did exceedingly well and seven of them were awarded scholarships to University. In 2016 we expect a leveling off of University Scholarships, but these kids can often surprise us so we will wait and see what happens in August when exam results come in.

If you made it to the end of this article, I’m impressed!

Numbers can be boring, but for me they tell valuable stories of failed attempts, of false starts, and of incredible success. I hope I’ve succeeded in helping those who want to have a closer look at the numbers understand more what those numbers really mean and I hope that you are as excited as we are about what we’ve gotten accomplished and the direction we’re headed.

graduation

Thank you. Really. We mean it.

Thank you. Really. We mean it.

 

 

Anyone who would like to see a copy of the IRS form 990, please send email to Lori@theplf.org after May 30, 2016.

 

 

  • Glenys

    Thanks for sharing Lori. I read the entire report and am happy to be associated with such an honest and well run organisation that is constantly working hard to improve the lives of these very deserving children and families.

    Glenys Melbourne, Australia

  • Glenys

    Please pass on my congratulations to Ty :)

  • Alma

    Lori, Thank you for a detailed report minus all the verbal padding and grandiose language that is often used by organizations trying to justify how and where donors monies have been spent. Your honesty about mistakes made and lessons learned encourages me to continue to support PLF. I am excited about the direction PLF is going in.
    Alma, CA, USA

  • Jolly

    Lori – Thanks for being so transparent. I appreciate your sharing this level of detail and analysis.