Management Discussion & Analysis
INTRODUCTION
The following discussion and analysis should be read in conjunction with our audited consolidated financial statements and the accompanying notes. The consolidated financial statements have been prepared in accordance with the Canadian Generally Accepted Accounting Principles (GAAP). All amounts are expressed in Canadian dollars unless otherwise noted. Any reference to "we", "us" or "our" refers to March of Dimes Canada and Ontario March of Dimes. Grading or rating performance is explained in the subsequent narrative.
OVERVIEW
March 31, 2012 marks the end of the 2011-2012 fiscal year and our 60th anniversary as a charitable organization in Canada. Over that period, we grew from raising $14,000 to eradicate the threat of polio in 1951 to revenues in 2012 of $86.21 million, assisting over 53,000 people with disabilities to live more independent lives in communities across Canada.
Creating an Inclusive Society: Our 2008-2013 Strategic Plan
2011-2012 is the fourth year of our current five-year strategic plan. Over the next year, we will be developing a new strategic plan covering 2013-2018. Our current plan has eight key objectives. Below is a summary of our performance to date against these goals:
1. March of Dimes will continue to grow over the next five years
The plan targeted annual revenue at $113,500,000, which will not be achieved due to the loss, after 12 years, of the Labour Market Re-Entry contract with the Workplace Safety Insurance Board of Ontario (WSIB). It is significant to note the loss was not due to any service issue but to the WSIB's decision to bring service in-house. Fee revenue will be the major area of shortfall. However, government grants and fundraising revenues are on target.
2. March of Dimes will expand its constituency in many directions: geographic, demographic, generic
Growth of services outside of Ontario has met or exceeded targets. Service has grown steadily in Quebec and Atlantic Canada over the past four years. In 2011 we began to build relationships with all provincial governments and have been operating programs in Western Canada as well as in the East.
3. March of Dimes will become a single brand under which the organization will publicly operate
We are on track to complete the integration of March of Dimes Canada and Ontario March of Dimes programs under a single operating entity by the end of the planned period.
4. Governance and the roles of volunteers will be a priority of the Board and staff
Over the past four years there has been growth and strengthening of volunteer development and management, particularly in support of service delivery. Service volunteers have expanded in Peer Support, DesignAbility®, Stroke Recovery, and Acquired Brain Injury Services. The Ontario March of Dimes Board has been addressing governance issues as we shift from a provincial to a national organization for both Ontario March of Dimes and our Ontario March of Dimes Non-Profit Housing Corporation.
5. The partnership model will drive our approach to innovative programs and business development internally and externally
Our 2008-2013 Strategic Plan “Creating an Inclusive Society” incorporates our value proposition, “One-Stop: Solutions for Independence”, identifying three attributes that together distinguish March of Dimes from other service providers: our range of services, our broad constituency—serving disabled Canadians of all ages—and our service philosophy, empowering people to live independently at home and in the community, maximizing their input and control in the design and delivery of the services they receive. We have worked to build services that bring the knowledge and resources of different departments together to better serve our consumers.
Externally, our businesses, national expansion and program growth is a result of collaboration with both non-governmental organizations and private sector partners in service development and delivery.
6. March of Dimes Canada should take a leadership role in support of caregivers
In 2011 we co-hosted the second Festival of International Conferences on Caregiving, Disability, Aging and Technology, bringing together a diverse group of professionals, caregivers and consumers in six concurrent conferences. In our Peer Support Program we launched our first caregiver support groups and piloted a caregiver training program, and we will expand our support of caregivers and stroke survivors as they cope with the impact of disability and the transition from hospital to home.
7. The source of discretionary revenue will shift from fund development to a more balanced mix of funding sources
While fund development revenue is higher than planned, business revenue has also grown and there is continued contribution from proprietary service fees, though this incurred a loss in 2011-2012. While government grants will continue to grow faster than other sources, we see a continued parallel growth of revenue from services that allow for discretionary expenditures.
8. Implementation of new Information Technology systems will position MODC to improve efficiency and offer administrative services to other organizations
Over the past few years March of Dimes has implemented a new accounting system, improved internal reporting, adopted a new payroll and Human Resource Information System, and a new time and attendance system, and will be adding an online scheduling system shortly. Beginning in 2011 March of Dimes began providing payroll services to smaller community sector agencies.
2011-2012 Financial Performance
In 2011-12 Ontario March of Dimes experienced its largest single year reduction in revenue and expenses, dropping 12% from prior year. This was anticipated, due to the June, 2010 decision by the Workplace Safety and Insurance Board (WSIB) of Ontario to take its Labour Market Re-entry program in-house. Most of the decrease was in reimbursable expenses, related to the purchase of training and materials for WSIB clients. The latter does not impact March of Dimes' bottom line. However, due to loss of service revenue, the past year has been one of restructuring and aligning the Employment Services Department to a changing volume and mix of work.
The largest area of revenue growth was from government grants, which grew by 5% or $3.09 million. The majority of increased funds provided expansion of Independent Living Services.
Fundraising revenue was higher than budget, although slightly lower than prior year actual. Business revenues grew from $90,400 to $399,500 due to growth in consulting related to corporate compliance with the new standards of the Accessibility for Ontarians with Disabilities Act (AODA).
In 2010-2011 Ontario March of Dimes changed its financial statements to increase transparency and comply with new accounting standards. In the revised format, 88.17% of expenditures in 2011-12 were on service delivery, 2.27% on fundraising, 9.10% on administration and amortization. However, $20.8 million or 24.3% of expenditures were for purchases of training and related materials for WSIB clients, home and vehicle modification grants and the purchase and maintenance of assistive devices, for which no administration is charged. Excluding these, the true cost of administration on the balance of program activity is 11.2%.
March of Dimes had an operating surplus for 2011-2012 of $252,519 or 3/10th of 1 % of total revenues. The surplus is transferred each year, by Board policy, to support our stabilization reserve and our capital reserve, providing working capital and funds to maintain our owned headquarters and other properties.
The financial statements in this Annual Report were recast post-audit to fully disclose administrative costs which were allocated in the audit version to each program. The audited statement format will be changed in 2013 to align with this revised format. The 2012 audited statements are available on our website or a hard copy can be provided upon request.
Program Performance
The chart on the following page compares the number of services delivered to consumers and hours of service delivered in each program as compared to the 2010-11 plan and the prior year actual. Both statistics are presented as the form and intensity of each service varies significantly and either statistic alone does not give a true picture of the service. For example, some services are delivered to groups and some to individuals, some are delivered by volunteers and some by front-line employees. Some are short and infrequent, such as provision of information, while others such as personal care, take more time and are delivered with greater frequency.
2010-2011
Actual |
2011-2012
Plan |
2011-2012
Actual |
2012-2011
Actual |
2011-2012
Plan |
2011-2012
Actual |
| Independent Living Services |
3,736 |
3,000 |
3,530 |
1,998,970 |
1,700,000 |
1,829,495 |
|---|
| Employment Services |
12,608 |
9,000 |
13,121 |
315,808 |
180,000 |
295,550 |
|---|
| AccessAbility® Services |
8,220 |
9,000 |
7,220 |
86,300 |
85,000 |
76,287 |
|---|
| Recreation & Integration Services |
11,322 |
10,600 |
2,760 |
75,768 |
88,000 |
116,722 |
|---|
| Peer Support Services |
26,500 |
28,500 |
26,000 |
125,000 |
130,000 |
115,000 |
|---|
| Conductive Education® Services |
350 |
450 |
410 |
9,700 |
17,000 |
14,802 |
|---|
| TOTAL |
62,736 |
60,550 |
53,041 |
2,611,546 |
2,200,000 |
2,447,856 |
|---|
New March of Dimes Canada Ambassador Sheila Shah (seated, third from right) with staff, parents,
family members and participants at the Conductive Education Holiday Party
Consumer service numbers are lower than 2011-2012 plan or prior year due to the discontinuation of our Toronto-based transportation service at the end of 2010-2011. The service was restructured and re-introduced in 2012-2013. Total service hours were 10% higher than plan in 2011-2012, but lower than prior year due to the decrease in service funding.
Program Plans are completed in January, for the fiscal year beginning the following April. Due to this timing, the Plan numbers are established prior to having actual results from the prior year.
Key Performance Indicators (KPI)
All programs establish key performance indicators that include measures related to program efficiency and effectiveness, service volumes, and participant satisfaction. With the exceptions of the variances noted under the program performance section, service goals were met and program participant satisfaction remained stable in 2011-2012.
Understanding and Managing Risk
Ontario March of Dimes established an enterprise risk management approach in 2002, with management implementing an organization-wide program for training and monitoring risk, and the Board establishing a Risk and Audit Committee to oversee the auditing of management and Finance Committee performance, approve the annual audit plan, approve internal audit project reports and report results to the Board of Directors. An Internal Auditor position was created in 2007. A new Internal Audit Consultant was contracted in 2011-2012 and completed audits of payroll, information technology access, our ISO regional audit program, preferred supplier program and purchasing, leases and fixed assets, and contract management.
Ontario March of Dimes recognizes the following key risks to its operations:
- The 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.
- Most revenue received is designated for specific uses and cannot be retained or used for other purposes.
- Ontario March of Dimes is vulnerable to changes in the political, economic or social environment which affect funding through purchased services or donor support.
- A 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.
- Strategic 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 proactively cultivating proactive relationships with government at senior levels to promote the issues impacting people with disabilities, as well as to mitigate risk to the organization.
Performance Management and Compensation
All employees are individually evaluated annually based on a comprehensive performance contract and 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 and a comprehensive salary structure with regular comparators to similar organizations and the marketplace. The policy of Ontario March of Dimes is to provide fair compensation, and to be in the mid-range of the marketplace regarding pay levels for most staff and in the 75% for senior management. As well, all employees are eligible for a pay bonus for exceptional performance.
The Executive Team: Vice-President, Jerry Lucas, President and CEO, Andria Spindel, and
Consultant, Vice President, Marcey Leggett
Program Plans
Annual program plans are developed and submitted to management which creates one plan, presents it to the Board in March, for implementation effective April 1st the next year. Plans relate to strategic goals from our five-year strategic plan and goals and objectives focus on 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 integration strategies.
Plans are evaluated twice each year: at forecast in November and at year end, following the end of the fiscal year and the presentation of the audit in July. The Program Research Department coordinates satisfaction surveys, completed confidentially by both program participants and employees, and provides critical feedback to management to improve service delivery and surveys the quality of working conditions from the employees’ perspectives. External researchers and interviewers are used to maintain confidentiality. This department also works with each department to establish program logic models and charts, evaluate processes and pilot projects, and work with external research bodies on joint research funding and program evaluation projects as required.
Information Systems and Quality
Information systems are used in accounting, human resources, payroll, fundraising, donor and client tracking and management, and on-line case management. In 2010-11 a new accounting system was implemented as well as a new payroll system. Work continues on report generation and integration of data. Ontario March of Dimes also pilot tested the interRAI CHA (Community Health Assessment), a new common intake system to be used across the Ontario health system, and will implement this system beginning in 2012-2013.
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 or damage, or natural disaster.
ISO certification is managed and monitored centrally for Independent Living Services. The Home and Vehicle Modification Program is undergoing the process to achieve certification over the next 12-to-18 months.
Internal Controls
A number of internal controls are in place which are annually reviewed and signed off by management and comprise part of the annual external audit. Employees and volunteers annually sign off on business conduct 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 that staff achieve and retain certification requirements, receive and complete required job skills, and are able to achieve the goals of the organization.
Extensive operational and policy manuals are in place and regularly updated for all programs and corporate resource departments such as finance, human resources and IT.
Reliability of financial reporting, including budgeting, monthly statements, financial analysis and transactional procedures are monitored by both management and the Finance Committee.
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 was updated in 2010.
Governance
This annual report is a consolidated report of two separate corporations: March of Dimes Canada, which is federally chartered and Ontario March of Dimes which is provincially chartered. With the passage of the new Canada Non-Profit Corporations Act, the goal is to operate the service and administration under a single federally chartered entity. The Boards of Directors are developing a new governance structure to oversee this corporation.
Currently, Ontario March of Dimes is governed by a 24 member Board of Directors plus one lifetime member, meeting six times per year. Committees of the Board include the Executive, Finance, Risk and Audit, Executive Compensation and the CEO Performance Evaluation Committee. The Pension and investment Sub-Committees each meet twice annually and report to the Finance Committee. Program advisory committees provide advice to programs and may hear appeals from consumers when these come forward.
The Nominations and Governance Committee of the Board is responsible for evaluation of existing Board members, recruitment of new members, as well as Board training, and Board of Directors effectiveness surveys. This Committee considers skill requirements within the Board at the time of recruitment and targets recruitment to fill these gaps. Board member evaluation includes participation and attendance, as well as the quality of the contribution of each member. Board terms are usually a minimum of three-years, with one-third of the Board elected each year.
March of Dimes Canada and the other subsidiary corporations of Ontario March of Dimes—The Ontario March of Dimes Non-Profit Housing Corporation, the York Durham Aphasia Centre, and the Rehabilitation Foundation for Disabled Persons U.S.-- operate under separate charitable numbers with independent Boards of Directors. The Ontario March of Dimes Non-Profit Independence Corporation conducted no business for several years and then members agreed to surrender the charter of this business trust.
Outlook
2011-2012 was the second of two challenging years, as March of Dimes adjusted to the phase-out of the WSIB contract. We benefited from the growing strength of fund development and programs to bridge this loss. 2012-2013 should show stronger financial performance.
2012-2013 will be the last year of the current strategic plan and the development of our next plan which will continue to focus on our strategic goals and serving people over their lifespan, and keeping them in their communities. Continued growth in Ontario, as well as national expansion, will be key elements of the next plan which will take the organization to 2018.