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Financial Statements
Management Discussion and Analysis

     MANAGEMENT DISCUSSION AND ANALYSIS 


INTRODUCTION 

The following discussion and analysis should be read in conjunction with the audited financial statements and the accompanying notes. The financial statements have been prepared in accordance with the Canadian accounting standards for not-for-profit organizations. All amounts are expressed in Canadian dollars. Any reference to “we” or “us” or “our” refers to March of Dimes Canada (MODC). All areas are graded following the same guidelines outlined on page 6 of the printed version of our Annual Report.

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FINANCIAL MANAGEMENT AND PERFORMANCE

The Finance Department is responsible for financial planning and analysis, management and reporting for MODC and its subsidiaries. The department ensures compliance with both the Canada Revenue Agency and Canadian accounting standards for not-for-profit organizations. The corporate Finance team is responsible for treasury, budget development, financial transactions, contract and lease management, insurance audit, and all financial policies and procedures. In addition, three specific finance teams provide direct support to three program departments, Fund Development, and Business and Administrative departments.

2014-2015 was an excellent financial year for MODC. Gross revenue increased by 11.2% over 2013-2014 and generated a net operating surplus of $1.55 million, exceeding the budgeted surplus target by 163%. Net surplus was 27% higher than the prior fiscal year.

Growth in government grants, predominantly for Independent Living Services, accounted for 59.9% of the revenue growth, but grants do not contribute to surplus. Revenue growth of $2.15 million was due to the implementation of the Personal Support Workers’ Wage Enhancement Program introduced by the Ontario Government, directed to front line Independent Living Services employees. Passport Program payments to people with developmental disabilities, who are clients of the Ministry of Community and Social Services in Ottawa, increased by $2.28 million, accounting for 20.8% of the growth. Fees, predominantly in Employment Services, accounted for 15.7% of the growth. Fund Development accounted for the remaining 3.6% of the revenue growth. Employment Services generated a surplus of $1.42 million, an increase in net performance of $600K from prior year. Proprietary Independent Living Services generated a net surplus of $473.7K, 12.5% lower than prior year. Fund Development produced $2.96 million in net revenue, 97.8% of its forecasted net.

In 2014-2015, of the total expenditures, 90.7% were spent on direct service delivery, 2.8% on fundraising, and 7.0% on administration and amortization. However, $38.7 million or 36.3% of expenditures were not charged any administration, either being precluded by policy, government contract or because they were within administrative cost centres. This includes all home and vehicle modification grants, assistive device expenditures on device acquisition and maintenance, and consumer expenses under the Passport program. Excluding these, the true cost of administration was 11.0% on all program activity.
 

The 2014-2015 operating surplus of $1.55 million represents 1.43% of total revenue for the fiscal year, with 98.57% of the revenues spent on service delivery and operations in the year the revenue was received. Surplus funds were transferred, by Board resolution, to the following funds:

  • green bulletThe Major Capital Reserve Fund: 
    This fund covers major capital projects for repair or replacement at MODC national headquarters. The Board allocated $300,000 to this fund toward future major capital improvements and repairs slated for the next five years.

  • green bulletThe Paul Martin Sr. Rehabilitation and Biomedical Research Fund: 
    The Board has agreed to endow an Early Career Professorship in the Department of Occupational Science and Occupational Therapy at the University of Toronto and a commitment of $1.5 million over six years was made. A donor gift of $100,000 towards this financial commitment was received at year end and allocated to this fund. $500K was transferred to the University as a first payment against this commitment.

  • green bulletThe Recreation Fund:
    The Board allocated $100,000 toward the future replacement of one of the accessible buses and for MODMobility®, our accessible transportation service.

  • green bulletProgram Development and Evaluation Fund:
    In 2012, this fund was created to test and evaluate new models of service, especially outside of Ontario. This is necessary as we move into provinces where MODC is not yet an established service provider. The Board allocated $200,000 to this fund.

  • green bulletThe Haas Assistive Technology Fund:
    The Board allocated $150,000 to replenish this donor-designed fund. In 2015-2016 the special initiative will be redesigned and renamed.

  • green bulletThe Dr. Maxwell and Betty Yan Conductive Education Fund:
    $110,000 was added to train three Canadian students to become Conductors.

  • green bulletThe Major IT Capital Fund:
    This new fund established with an initial $400,000 is for future large information technology system replacements and upgrades.

  • green bulletThe Stabilization Reserve Fund:
    This fund is used for working capital and to ensure continued financial viability against loss of business or financial shortfalls. The goal is to build this fund to a size equivalent to three-to-six months of non-funded operating costs. The Board allocated $938,772 to this fund, which remains below the six-month target.

Total assets as of March 31, 2015 were $25.50 million, up from $22.05 million the previous year. Cash and restricted cash were $12.8 million, up from $10.2 million. Working capital is at $7.29 million, up from $5.74 million at the same time last year.

Total capital purchases were $498,865; $212,444 was financed from funded programs and $286,421 from the donor funded annual capital budget. Amortization for the latter was $376,020.


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PROGRAM PERFORMANCE 

MODC tracks both the number of consumer services delivered and the number of service hours each represents. Both are reported to realistically portray the volume and intensity of each service, as these vary significantly. Either statistic alone does not provide a true picture of service volume. For example, some services are delivered in groups and some to individuals. Some are short and infrequent, such as the provision of information, while others such as attendant care are delivered with greater frequency and intensity.




PROGRAM​​​

NUMBER OF CONSUMERS


TOTAL SERVICE HOURS​
2014-2015
Actual
2014-2015
Forecast
2013-2014
Actual
2014-2015
Actual
2014-2015
Forecast
2013-2014
Actual
green square bulletIndependent Living
green bulletBeFriending®
green bulletNornthern Medical Clinics

4,310

4,200

3,883

2,695,507

​2,600,000

2,404,878
green square bulletEmployment Services
9,589 8,500 7,505 293,311 260,000 257,520
green square bulletPassport Program
​​1,947 ​​1,800 1,690 ​​​12,877 12,000 ​​10,300
green square bulletAccessAbility® Services
​​​8,724 ​​​8,800 ​​​7,475 ​​​82,581 ​​85,000 85,085
green bulletRecreation
green bulletTravel
green bulletModMobility®
​​​
5,675
​​​
5,500
​​​
4,652
​​​
55,377
​​​
60,000​
​​​
58,312
green square bulletLife Skills Transition
​​​​6,170 ​​​5,575 ​​​5,175 ​​​​64,342 ​​​68,850 62,000
green square bulletPeer Support and
   Volunteer Services

​​​23,700 ​​​​26,000 ​​​​25,500 ​​​​112,715 ​​​​112,885 ​​​110,000
green square bulletConductive Education®
​​​​355 ​​​​325 ​​​​380 ​​​​7,672 ​​​8,500 ​​​9,761
TOTAL ​​​60,470 ​​​60,700 ​​​56,260 ​​​3,324,382 ​​​3,207,235 ​​​2,996,856​


Last fiscal year over 60,000 units of consumer service were delivered representing 3.32 million service hours. This is a 7.5% increase in consumer services and a 10.9% increase in hours of service. The reason for this growth differential is that the area of greatest service expansion, Independent Living, is our most hour-intensive and includes group-delivered rehabilitation services for people with brain injury and falls prevention classes for seniors.​​     


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PLANNING AND EVALUATION 

Annual program plans are developed and submitted to management which creates a consolidated plan for presentation to the Board each March, for implementation during our next fiscal year, effective annually April 1st. Plans relate to strategic goals from our five-year strategic plan and each plan’s goals and objectives cover three areas: on-going activities, new or expansion initiatives, and quality improvements. Each objective has measurable performance indicators and each plan must identify related risks and mitigation strategies. The current Five Year Strategic Plan was approved by the Board in March, 2013. It is available on-line to any interested party.

Plans are evaluated twice each year: at forecast in November and following the end of the fiscal year and completion of the audit in July. The Program Research Department coordinates consumer satisfaction surveys, completed confidentially by program participants, and provides critical feedback to management to improve service delivery. As well, this department works with all departments on specific research projects and conducted a survey of Board Effectiveness, repeating a survey conducted every 3-4 years. External interviewers and data analysts are used to maintain confidentiality. This department also works with each program department to establish program logic models and charts, evaluate processes and pilot projects, and works with external research bodies on joint research and program evaluation projects when appropriate.

All programs establish key performance indicators that include measures related to program efficiency and effectiveness, service volumes, and participant satisfaction. With the exception of the variances noted under the program performance section, service goals were met and program participant satisfaction remained stable in 2014-2015. No significant changes in consumer satisfaction from prior surveys were identified in any program.


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UNDERSTANDING AND MANAGING RISK

For over a dozen years March of Dimes Canada has implemented an organization-wide program for assessing and monitoring risk, and the Board’s Risk and Audit Committee oversees the external financial audit, supervises/guides the internal audit function, in addition to evaluating the Internal Audit Consultant, and management’s performance on various statutory compliance requirements, and reports results to the Board of Directors. In 2014-2015, the Internal Audit Consultant supported the internal ISO audit process and evaluated the external ISO audit contract. In addition, he completed audits of credit card security, mobile devices policy and security, Information Technology access and security, undertook a review of MODC’s compliance with privacy legislation, and supported a forensic review of March of Dimes Canada Non-Profit Housing Corporation’s financial controls and expenditures. On an annual basis, the Internal Audit Consultant reviews the expenses of the CEO and President to ensure compliance with MODC policies and to report to external funders. MODC also has a whistleblower policy in place which is monitored by the Internal Audit Consultant and the Risk and Audit Committee Chair. There were no calls received in 2014-2015.

March of Dimes Canada recognizes the following key risks to its operations:  

  • green bulletThe majority of the organization’s funds come from government and crown corporations in the form of grants or fees to purchase specific services. The organization is therefore vulnerable to changes in legislation, government funding priorities, or policies affecting its approach to service delivery, contract changes, retendering, or termination of contracts.

  • green bulletMost revenue received is designated for specific uses and cannot be retained or used for other purposes.

  • green bulletMarch of Dimes Canada is vulnerable to changes in the political, economic and social environments which affect funding through purchased services or donor support.

  • green bulletA number of key services are dependent on discretionary dollars raised through fund development, business operations and proprietary services. These programs are at risk when budget targets are not achieved.

  • green bulletStrategic goals, such as building the brand and expanding services across Canada, require an investment of funds and community building with little guarantee of immediate return on the investment.

Our Government Relations and Advocacy Department, in conjunction with senior management, monitors government policy and identifies opportunities and risks while cultivating proactive relationships with government at senior levels to address the issues impacting people with disabilities as well as to mitigate risk to the organization. This department produces information on such policies for public consideration, and cooperates on issue-specific actions with other non-profit organizations in the community service sector. Engagement with government is seen as key to retaining MODC’s credibility and moving the disability agenda forward.


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HUMAN RESOURCES 

The Human Resources Department is committed to the responsibility of managing our most valuable resource – our dedicated, hard-working and talented employees. Their broad range of contributions has created a unique culture from which our success has grown. This department handles recruitment, employee development and training, labour and employee relations, performance management, payroll and benefits.

Periodically, MODC commissions a Quality of Work Life Study from a firm that specializes in this field and provides external comparators, normed scales and data, and confidentiality to our employees to ensure a true picture of working life at MODC. This survey assesses employee engagement and engagement drivers related to the job, the local work environment and the organization as a whole.

While no survey was conducted in 2014-2015, all departments continued to follow-up on the results of the 2011-2012 survey and action plans that evolved from it. In 2014, Employment Services became the first program to create a dedicated intranet site to address employee issues and improve communication across the Employment Services team. Other departments are likely to build on this experience. The next survey will take place in September 2015. Results and recommendations will be shared with the Board.


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PERFORMANCE MANAGEMENT AND COMPENSATION

All employees are individually evaluated annually based on a comprehensive performance contract and a set of core competencies for their particular job. Managers are also evaluated based on achievement of program goals and key performance indicators from their annual program plans. Pay is based on merit under a comprehensive salary structure with regular comparators to similar organizations and the marketplace. The policy of March of Dimes Canada is to provide fair compensation, and to be in the midrange in the marketplace regarding pay levels for most staff and in the 75% range for senior management. As well, all employees are eligible for a pay bonus for exceptional performance.

For senior management, bonuses are based fifty percent on meeting personal job goals and fifty percent on corporate goals that are submitted to the Executive Compensation Committee of the Board for initial approval. Results are evaluated at year-end by the Committee, which then reports to the Board of Directors.


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FUND DEVELOPMENT DEPARTMENT

The Fund Development Department plans and executes all fundraising activities: Direct Mail, Community Campaigns, Major and Planned Gifts, Special Events and Community Relations. The Department delivers and evaluates activities with support from external consultants, volunteers and corporate partners.


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MARKETING AND COMMUNICATIONS

A small team supports MODC brand with public relations and media, graphic design and print (from letterhead to the annual report), e-newsletters, social media platforms, exhibits and specific events such as “Opening Doors for Accessibility,” which highlights MODC programs and services.


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INFORMATION TECHNOLOGY

Management systems are centrally designed, networked and supported with a 24-hour help desk. Layers of redundancies, back-up systems, a secondary hot site and off-site data storage protect the organization in the event of system failure, damage, or natural disaster. The 2014-2015 Information Technology privacy and external security audits all concluded that the organization’s systems meet funder security standards and comply with federal privacy legislation. A cyber security audit is scheduled to be conducted in 2015-2016 by Collins Barrow.


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INTERNAL CONTROLS

A number of internal controls are in place which are reviewed annually and signed-off by management; these support part of the annual external audit. Employees and volunteers annually sign off on MODC’s Code of Business Conduct and related policies, and provide proof of professional designations, insurance and other requirements to perform their duties. An extensive in-house training program is managed to ensure staff achieve and retain certification requirements, receive and complete required job skills and training in a timely fashion, and are able to achieve the goals of the organization.

In 2014-2015, MODC invested $419,471 in staff training. This was a drop from $495,804 the previous year. This change was due to a decrease in funding from the Local Health Integration Networks for regional Personal Support Workers and other training for MODC’s Independent Living Services employees.

Extensive policy and procedure manuals are in place and are regularly updated for all programs and administrative departments such as Finance, Human Resources and Information Technology.

Reliability of financial reporting, including budgeting, monthly statements, financial analysis and transactional procedures is monitored by both management and the Finance Committee. Sub-committees on employee pensions and corporate investments select and monitor the performance of external fund managers against set targets.

Governance and management functions are clearly delineated and the Internal Audit Consultant reports separately and confidentially to the Board through the Risk and Audit Committee.

Emergency preparedness is now part of management planning, and includes business continuity planning, which is periodically reviewed and updated.


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GOVERNANCE

As of May 8, 2013, a continuance was granted by the federal government which resulted in combining the operations of Ontario March of Dimes and March of Dimes Canada as one federally-chartered charity, under the Ontario March of Dimes charitable number and the March of Dimes Canada name. The previous March of Dimes Canada charitable corporation now exists as March of Dimes Canada Foundation, but operating plans have not been developed for this Foundation. Ontario March of Dimes Non-Profit Housing Corporation is now federally-chartered as March of Dimes Canada Non-Profit Housing Corporation and will pursue opportunities outside of Ontario to provide accessible, affordable supported housing for people with disabilities.

March of Dimes Canada is governed by a 25 person Board with representation of the skills needed for decision-making and accountability including finance, legal, risk, audit, human resources, operational management, as well as social and health services, research, and consumer advocacy. In addition, the Board is comprised of men and women across the adult age spectrum with representation of people with disabilities, ethnic diversity and the broad geography in which MODC operates.

The Board of Directors meets a minimum of six times per year and has five working committees: Risk and Audit, Finance, Nominating and Governance, Executive Compensation, and CEO Evaluation. The Board contributes to and approves a five year strategic plan drafted by management and annual plans that provide an operational blueprint to fulfill the strategic plan. The annual plan is accompanied by a budget and a mid-year forecast is produced, that once approved, serves as the revised budget and plan. Monthly statements are monitored by the Finance and Executive Committees.

The Nominating and Governance Committee is responsible for evaluation of Board members and Board effectiveness, recruitment of new members, as well as Board training and orientation. This Committee considers skill requirements within the Board at the time of recruitment and targets recruitment to fill any gaps. Board member evaluation includes participation and attendance, as well as the quality of the contribution of each member. Initial terms on the Board are typically three years, with one-third of the Board elected each year.

Management works closely with the Board, its committees and subsidiary boards, providing necessary information for decision-making, planning, agenda building, and policy development. 

Board members may play an important role in representing the organization’s position or interest in consultation with government bodies or funders. MODC has begun to organize out-of-province community or regional volunteer committees to build the capacity to represent MODC in other jurisdictions. These complement those in Ontario and currently exist in Vancouver, Calgary, Montreal and Halifax.

March of Dimes publishes its annual audited financial statements and meets all legislated compliance requirements including the filing of a T3010 form each year with Canada Revenue Agency. Information is posted on the CRA website. In addition, transparency is achieved through the annual report which is posted on-line, preparation of various reports to government and other funders, audited expenditure reports for government, a robust risk management program, and the contracted services of an independent audit firm who is accountable to the Risk and Audit Committee, which reports to the Board. In 2014, March of Dimes Canada won the Award for Excellence in Financial Reporting Transparency from the Voluntary Sector Reporting Awards. As Ontario March of Dimes, this award had also been won in 2012.

Transparency includes an open environment for questions, complaints, challenges, all to lead to improvements, quality service, and good communication. MODC annually gathers feedback from clients via customer surveys; every three years we have an independent Quality of Life Survey of employees; we have recently posted a Complaints policy, begun to update all Privacy policies with clients, which is posted on the website as well. We do donor complaints tracking, and from time to time, we hold focus groups or surveys in communities to gather input on our services or on the needs of people with disabilities. In 2014-2015, MODC achieved accreditation under the Standards Program of Imagine Canada.

The March of Dimes Canada Non-Profit Housing Corporation and the Rehabilitation Foundation for Disabled Persons U.S. will continue to operate under separate charitable numbers with independent Boards of Directors. The members of these corporations are the Directors of MODC.


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OUTLOOK

Over the past three years, we have transitioned into a national charitable organization building our brand in Canada. These have been years of unusually strong financial performance, which exceeded our expectations and permitted the organization to build reserves, and invest in material growth and infrastructure. We look forward, with cautious optimism, to expanding services into new communities across all provinces, building new alliances and partnerships, and increasing resources, all with the goal of bringing the services of MODC to Canadian residents with disabilities, wherever they reside, and creating a society where Canadians everywhere have equal access to all services, facilities, information, and feel a high degree of inclusion and independence.



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© 2015 March of Dimes Canada. All rights reserved.