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 Department is responsible for treasury, budget development, financial transactions, contract and lease management, audit and all financial policies and procedures. In addition, regional financial teams provide direct support to three program departments, fund development, and businesses.
2013-2014 was an excellent financial year for MODC. Gross revenue increased by 5.1% over 2012-2013 and generated a net operating surplus of $1.22 million, exceeding the budgeted surplus target by 160%. Net surplus was 16.9% lower than the prior year, but this was due to unanticipated bequests received in 2012-2013.
Growth in government grants, predominantly for Independent Living Services, accounted for 67.8% of the revenue growth. Fees, predominantly in Employment Services, accounted for 22.8% of the growth, and program recoveries for the Passport Program accounted for 17.2%. This was partially offset by declines in net revenue in Fund Development and businesses. Employment Services generated a surplus of $819,300, a decrease in net performance of $77,400 from prior year. Independent Living Services generated a net surplus in proprietary services of $541,000, 21.8% higher than forecast. Program recoveries grew by $821,500 due to growth in the Passport Program, which served 110 additional consumers. Fund Development produced $2.98 million in net revenue, 97.8% of the forecast net. Net expenses in donor-funded programs were $186,400 lower than budget. Businesses generated a net of $112,600, $16,600 higher than the prior year. Administrative costs were unchanged from the prior year.
In 2013-2014, 89.7% of expenditures were spent on direct service delivery, 2.7% on fundraising, and 7.6% on administration and amortization. However, $29.0 million or 30% of expenditures were not charged any administration, either precluded by policy, government contract or because they are 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 is 10.8% on all other program activity.
The 2013-2014 operating surplus of $1.22 million represents 1.25% of total revenues for the fiscal year. 98.75% of the revenues were spent on service delivery and operations. Surplus funds were transferred, by Board resolution, to the following funds:
- The Major Capital Reserve Fund:
This fund covers major capital projects for repair or replacement at MODC national headquarters. The Board allocated $150,000 to this fund toward three future major capital improvements and repairs slated for the next five years.
- The 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. The commitment of $1.5 million over five years will be made with an initial allocation from this fund of $1.0 million. The Board allocated $100,000 towards the future commitment.
- The Recreation Fund:
MODC operates ModMobility, an accessible transportation service for groups of elderly or disabled travellers in the Greater Toronto Area. The Board allocated $150,000 toward the replacement of one of the accessible buses.
- Program 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 $100,000 for this fund.
- The 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 of three-to-six months of non-funded operating costs. The board allocated $876,656 to this fund, which remains $2.12 million below the six-month target.
Total assets as of March 31, 2014 were $22.1 million, up from $20.6 million the previous year. Cash (including $225,200 restricted cash) and short-term investments are $10.4 million, up from $9.3 million, $1.1 million higher than last year. Working capital is at $5.74 million, up from $4.64 million at the same time last year.
Total capital purchases were $811,585; $509,936 was expensed from funded programs and $301,651 from the donor funded capital budget. Amortization for the latter was $674,645.
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.
2013-2014
Actual |
2013-2014
Forecast |
2012-2013
Actual |
2013-2014
Actual |
2013-2014
Forecast |
2012-2013
Actual |
 Independent Living
BeFriending®
ABI and Clinics
|
3,883 |
3,600 |
3,550 |
2,404,878 |
2,000,000 |
2,004,000 |
| Employment Services |
7,505 |
8,000 |
7,250 |
257,520 |
200,000 |
211,560 |
|---|
| Passport Program |
1,690 |
1,700 |
1,584 |
10,300 |
14,000 |
9,200 |
AccessAbility® Services
|
8,475 |
8,000 |
8,217 |
85,085 |
76,000 |
78,800 |
Recreation
Travel
ModMobility
|
9,452 |
5,200 |
7,913 |
58,312 |
63,800 |
55,200 |
| Life Skills Transition |
175 |
-- |
-- |
62,000 |
-- |
-- |
| Peer Support Services |
25,500 |
26,000 |
26,400 |
110,000 |
120,000 |
120,000 |
Conductive Education®
|
380 |
250 |
370 |
9,761 |
9,000 |
14,580 |
| TOTAL |
57,060 |
52,750 |
55,284 |
2,996,856 |
2,482,800 |
2,493,340 |
|---|
In 2013-2014, over 57,000 consumer services were delivered representing almost three million service hours. This is a 3.2% increase in consumer services but a 20% 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 service and includes group-delivered rehabilitation services for people with brain injury and fall prevention classes. Life Skills Transitional Services is included for the first time, which though available in several locations, was not previously tracked. With the introduction of L.I.F.E. in the Greater Toronto Area, all related programs will be tracked and cumulated under this heading. Program expenditures grew by $5.6 million or 6.3%, with most growth in Independent Living Services, Employment Services, AccessAbility Services and ModMobility.
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 at the beginning of 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 and produced and distributed in 2013-2014. A shorter version was created for the first time to share with donors, funders and interested community members, and is available online.
Plans are evaluated twice each year: at forecast in November and at fiscal year-end, and completion 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. As well this department works with the Human Resources Department on surveys of the quality of work/life from our employees’ perspectives. External researchers and interviewers are used to maintain confidentiality. This department also works with each program department to design programs using logic models and charts, evaluate processes and pilot projects, and works with external research bodies on joint research and program evaluation projects as required.
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 2013-2014. No significant changes in consumer satisfaction from prior surveys were identified in any program.
UNDERSTANDING AND MANAGING RISK
March of Dimes Canada established an enterprise risk management framework 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 external financial audit, approve internal audit projects, audit management performance on various statutory compliance requirements and report results to the Board of Directors. In 2013-2014, the Internal Audit Consultant supported the internal ISO audit process and tendering of the ISO auditor contract. In addition, he completed audits of the Peer Support Program and Information Technology, undertook a review of MODC’s compliance with privacy legislation, and supported a forensic review of March of Dimes Canada Non-Profit Housing Corporation expenses. 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.
March of Dimes Canada 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.
- March of Dimes Canada is vulnerable to changes in the political, economic and social environments 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 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.
HUMAN RESOURCES
The Human Resources Department is dedicated to the responsibility of managing our most valuable resource – our dedicated, hard-working 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 management.
Periodically, MODC commissions a Quality of Work Life Study. This study has been contracted to Metrics@Work, 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 occurred in 2013-2014, all departments continued to follow-up on the results of the 2011-12 survey and action plans that evolved from it. In 2012, Employment Services implemented a new functional management structure replacing the previous geographic model. Compounded with staff expansion across Canada, action was required to improve staff alignment with the organization and improve intra-departmental communication. In 2014, Employment Services became the first program to create an intranet site to address
these issues and improve communication across the team. Other departments are likely to build on this experience. The next survey will take place in 2015.
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 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 mid-range 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 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.
MARKETING AND COMMUNICATIONS
Marketing and Communications, though a small team, supported all fundraising activities and programs with public relations and media, graphic design and print of all materials from letterhead to the annual report, e-newsletters, social media platforms and more. A three-year plan was developed to complement the Strategic Plan.
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 2013-2014 Information Technology privacy and external security audits all concluded that the organization’s systems meet funder security standards and comply with federal privacy legislation.
INTERNAL CONTROLS
A number of internal controls are in place which are reviewed annually and signed-off by management; these 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 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.
Extensive policy and procedures manuals are in place and regularly updated for all programs and corporate resource departments such as Finance, Human Resources and Information Technology.
Reliability of financial reporting, including budgeting, monthly statements, financial analysis and transactional procedures are 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.
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 empowerment. 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 of the Board is responsible for evaluation of existing Board members, 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.
March of Dimes publishes its annual audited financial statements and meets all legislated compliance requirements including the filing of a T3010 each year with Canada Revenue Agency. Information is posted on the CRA site. In addition, transparency is achieved through the annual report which is posted online, 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 auditor who is accountable to the Risk and Audit Committee which reports to the Board. In 2012, March of Dimes won the Award for Excellence in Financial Reporting Transparency from the Voluntary Sector Reporting Awards.
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 and this is posted on the website as well. We do donor complaints tracking and from time-to-time hold focus groups or surveys in communities to gather input on our services or on the needs of people with disabilities. In 2014-15, MODC will apply for 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.
OUTLOOK
Over the past two years, we have transitioned into a national charitable organization, with the goal of enhancing our brand and simplifying governance. They have been years of unusually strong financial performance, which exceeded our expectations and permitted the organization to build reserves and invest in 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.