SAMPLE FINANCING STRATEGY

AnyTown Citizens Advice

Financing Strategy 2010-2015

1. Introduction
This document describes how the Board of AnyTown Citizens Advice (ACA) plans to finance the aims
and principles as outlined in the strategic plan. The key purpose of the financing strategy is to ensure
that our core work is maintained and sustained and that we make effective use of all financial support
received.

The financing strategy looks at where ACA is now; where we would like to be in three to five years
time; and what strategies need to be implemented to achieve our financing targets. The Board will
review the strategy annually.

The following concepts and classifications provide a framework for this financing strategy.

a) Classification of Anytown NGO’s activities

Our work can be divided into two areas: key services and projects.

‘Key services’ are the core activities which must be continuously provided to fulfil our strategic
objectives. These form the highest priority for financing and include:

 central advice service at AnyTown main office

 outreach advice desks (in three areas identified as high need)
 home visits to the elderly and disabled
 social policy work as informed by the advice work
 central support (including management, training, administration and equipment)
associated with the above operations).

‘Projects’ are defined as short-term, self-contained activities that augment the key services. These
will come and go over time as project funding, ACA’s priorities and the decisions of the Board
dictate. It is a key principle that the short life of projects should not affect ACA’s sustainability and
its key services.

b) Classification of income 2
We have classified different types of income according to levels of restriction and the continuity
and security of funds. This produces four distinct categories of income (illustrated in the funding
mix matrix in Table 1 below):

 Core financing (unrestricted, longer term)

 Programme funding (restricted, longer term)
 Project funding (restricted, shorter term)
 General fundraising (unrestricted, shorter term)
The most ‘valuable’ type of income is core financing since this offers long-term security and with
fewer restrictions on its use. However project and programme funding is also valuable as it
contributes to overhead costs.
 AnyTown Advice Service – Financing Strategy 2010-2015

Table 1: Funding Mix Matrix

Unrestricted
General fundraising Core financing

Short- to medium-term (1 to 3 years) Medium- to long-term (3 to 5+ years)

Relatively unrestricted Relatively unrestricted
eg Local authority grant, investment
eg One-off grants and public donations
income
Short- Long-
Project funding Programme funding
term term
Short to medium term (1 to 3 years) Medium- to long-term (3 to 5 years)
Relatively restricted Relatively restricted

eg Lottery Fund eg Legal Services Commission (LSC)

Restricted

c) Financial sustainability
ACA seeks to achieve financial sustainability by:

 maintaining a diversified funding mix, with a solid block of core financing and programme
funding to cover key services; and
 generating modest surpluses through general fundraising to build and maintain a reserve for
unexpected expenses and general contingency planning.

2. Where we are now

See Table 2 over-page for the funding mix for 2008/09 and Table 3 for the forecast for 2009/10.

a) Current financing situation:

 In 2008/09 the County Council (CC) and AnyTown Borough Council (ABC) provided approx 50%
of our total income. This percentage has declined to less than 47% in 2009/10. These grants
fall into the category of core financing, a clear strength for the funding base of ACA.
 Around 20% of income is currently in the form of short term project funding – ie restricted and
time limited (1 to 3 years). Project funds have reduced significantly in the last year as major
grants from the Lottery Fund for our outreach work gradually tapers out and ends in 2010.
 Conversely longer term programme funding has increased in the last year from 20% to 29%,
mainly due to the growth of the legal advice contract.
 The remaining 3-4% of income comes from one-off fundraising and miscellaneous income
(including, for example, bank interest and public donations). This is mostly unrestricted
income.
 The overall percentage of unrestricted income has reduced from 54% to 50% over the last two
years.
 General reserves at the end of 2008/09 were sufficient for continuing basic operations for 35
days.

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 AnyTown Advice Service – Financing Strategy 2010-2015

Table 2: Funding Mix 2008/09

Unrestricted funds
General fundraising Core financing

Trusts CC
One-off grants ABC
Misc. income Parish Councils
Bank interest
Gen. Donations
4% 50%

Short term Project funding Programme funding Long term

Lottery Fund LSC

Welfare Rights Unit NHS Partnership
Sure Start AnyVillage Parish Council
Court Desk  

27% 20%
   
Restricted funds

Table 3: Funding Mix 2009/10 (forecast figures)

Unrestricted funds
General fundraising Core financing

Trusts CC
One-off grants ABC
Misc. income Parish Councils
Bank interest
Gen. Donations
3% 47%

Short term Project funding Programme funding Long term

Lottery Fund LSC

Welfare Rights Unit NHS Partnership
Other project fundraising AnyVillage Parish Council
 

21% 29%
   
Restricted funds

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 AnyTown Advice Service – Financing Strategy 2010-2015

b) Key weaknesses and risks:

 The service level agreements (SLAs) with the local authorities specify that services provided by
the ACA will include the central advice service, outreach desks and home visits. However,
Table 3 demonstrates that whereas in 2008/09 73% of total costs are attributable to these
‘key services’ (excluding LSC work), less than 50% of the funding needed actually came from
CC and ABC.
 Short-term project funds are, as a result, having to be used to fill the financing gap for some of
ACA’s key services. This is not sustainable in the long-term and makes key services vulnerable
to cut-back or closure. One recent example is the closure of one rural outreach desk.

Table 3: 2008/09 Analysis of expenses by cost centre

Key
Cost Centre Total Expenses Services Project
Core Advice 88,241 37%
Sure Start 23,322 10%
Legal Services (LSC) 51,477 22%
Rural Anti Poverty 29,793 13%
AnyVillage Outreach 3,132 1%
Mental Health outreach 4,192 2%
Court Desk 9,376 4%
Volunteers training 28,465 12%
TOTAL 237,998 95% 5%

 In the past some projects have not paid their way with regards to central support costs.
Although this situation has improved recently, it is important not to take on projects in the
future unless all costs are fully funded.
 LSC funds are dependent on targets being achieved. Performance short-falls lead to financial
penalties that have to be funded from unrestricted funds. This is a potentially high risk area,
especially as ACA is vulnerable in the event of specialist advisers’ long leave of absence as
there are no funds to pay for temporary cover.
 Reserves of 35 days fall short of the Board’s recommendation of a 60-day cushion.
 General fundraising events, whilst important and relatively successful, are time consuming for
the management team and bring in small sums compared to the input.

3. Where we would like to be

See Table 4 below for the suggested funding mix by 2015.

 In three to five years, all of ACA’s key services to be covered by a mix of core financing and/or
programme funding. This will be in the region of 80% of total income.
 Additional short-term project activities to be funded by separate funding streams and to
include a proportionate contribution to central support costs. Where full funding is not
available for high value projects, the Board to approve, if considered appropriate, an internal
subsidy from ad hoc fundraising. Project funds should be maintained in the region of 10-15%
so that a positive contribution is made to central costs.
 Project funding will not be used to finance key services.

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 AnyTown Advice Service – Financing Strategy 2010-2015

 General unrestricted income from ine-off fundraising to be maintained in the region of 10-15%
of total income and to be used to generate modest surpluses to build up ACA’s general
reserves.
 General reserves to be built up and maintained at a minimum of 60 days and a maximum of 90
days.

Table 4: Suggested Funding Mix 2015

Unrestricted funds
General fundraising Core financing

Trusts CC
One-off grants ABC
Bank interest Parish Councils
Gen. Donations
10-15% 60%
Short
Project funding Programme funding Long term
term

Self contained LSC

‘add on’ projects NHS/Partnerships
AnyVillage Parish Council
 
10-15% 20%
   
Restricted funds

4. How we will get there

a) Increase the level of core financing and programme funding to cover all key services
 Negotiate with ABC/CC to increase levels of support to cover 100% of the defined ‘key
services’. (excluding the work covered by the LSC). This requires a fully-costed budget for each
key activity.
 Explore corporate financing options for activities within key services.
 Explore project funding for new outreach desks.
b) Strategic financing of central support costs.
 The indirect (central support) costs associated with key services to be financed through local
authority and LSC grants.
 All project activities to contribute to indirect costs. Budgets to be prepared for each new
project will clearly identify direct and indirect costs.
 Central support charges to be allocated on a full-time equivalent pro rata basis.
c) Build up reserves
 Annual budgets to include a specified amount each year to be put aside for the reserves fund
until the target level of 60 days has been reached.
 Maximise use of restricted funds to release unrestricted funds for general reserves.
d) Plan the replacement of fixed assets
 Budget to include a specified amount each year for an equipment replacement fund.

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 AnyTown Advice Service – Financing Strategy 2010-2015

 Undertake ad hoc fundraising for specific items of equipment, eg computers, as opportunities

arise.
e) Apply funds to achieve maximum benefit
 Undertake a review of spending to identify areas where savings can be made to release
unrestricted funds.
 Regularly review the allocation of unrestricted funds to projects that are not fully funded. This
should be done by the Board with the business plan priorities in mind.
f) Formulate a fundraising strategy
 Establish a 2-year rolling fundraising strategy to include priorities for funding and new project
and programme funding options.
 Consider the need for and feasibility of recruiting a specialist fundraiser.

5. Key Policies
The following policies support and inform this financing strategy:

 Reserves policy
 Cost recovery policy
 Ethical policy

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The word ‘financing’ is used here to describe all sources of income – from grants and donations to income generating activities and
investments. ‘Funding’ generally refers to narrower sources of income from grant-making bodies.