Secure funding

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Innovate
Continuous Improvement & Benchmarking

Learning objectives

Have the skills to:
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Identify different sources of funding Develop a cash flow forecast Offer benefits for a sponsor Prepare a proposal Identify sponsors Document an agreement

Sources Cash flow Benefits Proposal Sponsors Agreement

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Continuous Improvement & Benchmarking Module: Secure funding

Sources of funding for improvements


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Increase in general tax Additional specific tax Customer fees/ charges Re-allocation of budget headings Sponsorships Loans Grants tied and untied Sale of assets (and possible lease back) Call in outstanding debtors Delay discretionary capital works Build, Own, Operate, Transfer schemes (BOOT)
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Continuous Improvement & Benchmarking Module: Secure funding

Develop a cash flow forecast

Revenues (cash inflow)
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Customer fees or charges – do this first if applicable Other known revenues Capital investment Change over costs Recurrent operations Ongoing repairs, maintenance Contingency allowance
4 Cost the full service, or just the incremental costs and revenues

Costs (cash outflows)
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Continuous Improvement & Benchmarking Module: Secure funding

Cash flow forecast
Cash flow forecast for the introduction of improved public toilets
Year Cash inflow Current budget allocation from council State government grant for this project already secured Normal government subsidy we get to-day Toilets in operation New users per toilet (person visit) New user charge quantity New use charge fee rate Total new user charges Total cash inflow Cash outflow Recurrent labour Recurrent consumables Recurrent utility charges - water, electricity New toilet construction number New toilet construction unit cost New toilet construction total cost Total cash outflow Net cash flow position per annum Cumulative net cash flow position 1 100,000 200,000 10,000 20 500 10,000 10 100,000 410,000 2 100,000 10,000 170 500 85,000 10 850,000 960,000 3 100,000 10,000 220 500 110,000 10 1,100,000 1,210,000 4 100,000 10,000 270 500 135,000 10 1,350,000 1,460,000 5 100,000 10,000 270 500 135,000 10 1,350,000 1,460,000

80,000 15000 5000 20 5,000 100,000 200,000 210,000 210,000

680000 127500 42500 150 5,000 750,000 1,600,000 (640,000) (430,000)

880000 165000 55000 50 5,000 250,000 1,350,000 (140,000) (570,000)

1080000 202500 67500 50 5,000 250,000 1,600,000 (140,000) (710,000)

1080000 202500 67500 0 5,000 1,350,000 110,000 (600,000)

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Continuous Improvement & Benchmarking Module: Secure funding

A funder will be looking for……
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What is the peak amount of cash required ? Is the service ever self funding ? When will cash flow turn positive ? Is there capacity to repay a loan ? How long will it take to repay a loan ? Will an interest charge make the service unaffordable ? Does the City have assets to secure the loan ?
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Continuous Improvement & Benchmarking Module: Secure funding

Benefits for a sponsor
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Public exposure Recognition Access to a customer list Potential to up-sell to the customer Naming rights Exclusivity in the market place Association with safety, the environment, public responsibility, health, growth, opportunities, education
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Continuous Improvement & Benchmarking Module: Secure funding

Preparing a proposal
1. 2. 3. 4. 5. 6. 7. 8.

Project overview – purpose, outcome Cash flow forecast Assumptions and risks with finance Amount of sponsorship sought Benefits that may be offered to a sponsor Special conditions or exclusions Role of the sponsor in the project On-going role in the service provision
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Continuous Improvement & Benchmarking Module: Secure funding

Who may be a sponsor for improvements
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Retailers Manufacturers Energy utilities Financial services Private schools Sector specialists – IT, Transport State and Federal Governments NGOs
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Continuous Improvement & Benchmarking Module: Secure funding

Agreements
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Simple letter Formal contract
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Names and addresses Nature of the project; purpose, outcome, benefits Amount of funds Payment profile and trigger points for instalments Repayment requirements Conditions on repayments Security; guarantees on the repayments Rights and privileges of the donor/ sponsor Limitation on both parties to protect the rights and privileges
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Continuous Improvement & Benchmarking Module: Secure funding

Update the Implementation plan

With terms and conditions that require a specific action:
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Open a Bank account Request an instalment payment Report project progress to the sponsor Hold progress meetings Provide evidence of milestone achievements Confirm sponsor’s benefit is in place Report upon sponsor’s benefit condition/ status Report upon project take-up/ utilisation
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Continuous Improvement & Benchmarking Module: Secure funding

Disclaimer

The views expressed in this Toolkit are the views of the authors and do not necessarily reflect the views or policies of the Asian Development Bank (ADB) or Asian Development Bank Institute (ADBI), or their Board of Directors, or the governments they represent. ADB and ADBI do not guarantee the accuracy of the data included in this CD-ROM and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with ADB official terms.

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Continuous Improvement & Benchmarking Module: Secure funding

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