[foundation-board] OKF management reports for February 2013

[Laura James]

First of all, I would say our forecasting is still in development.  Key
points:

* expenditure forecast is extremely conservative/generous and doesn't
include likely cost savings from Q2 on
* understanding of what projects make real surplus vs a loss is still at an
early stage as we are refining our handling of project finance including
overheads (literally this week)
* stronger forecasting of likely projects and grants would be valuable
* a very rough alternative model based on ball park estimates shows a
modest surplus on the year rather than a cash burn
* significant effort is being invested by Rufus and me in fundraising this
year, with a focus on larger grants funding work closer to our core areas

Further detail below.


In both forecasts I assume maximum costs (such as contractors working flat
out without holidays) and also a generous amount of additional costs to
support the transition of certain staff to an employment basis; we do not
account for potential cost savings in staff and expenses, although there
are several areas where we do hope to be able to cut costs (planned to
address in Q2 in the 2013 operating plan). As such both forecasts are very
conservative on the expenditure side, probably unrealistically so.  (Rufus
will add that I am invariably pessimistic too and this is reflected in the
forecasts.)

The cash position depends not on the level of activity, but on our ability
to generate surplus. Many of the additional projects the optimistic
forecast assumes we can secure do not generate surplus but are grants
delivered on a basis of exact cost matching and so they do not help change
the runway. This should  not be the case for Services unit consultancy
work, which we hope generates surplus, but as this side of our work is
still very new we have little data to show what sort of surplus can be
generated in practice, whilst developing new areas of work and product
features, and maintaining reasonable team morale.   In the forecast model,
we have to make judgements for grant work around how much the work can pay
for existing activity, rather than needing additional team to deliver the
projects; again, we are still learning about how this looks for us in
practice and so the model is conservative in this regard. We have only been
tracking project resource for a year, and to date our cash based accounting
has not given us helpful information on project surplus, as we have only
done very basic handling of overheads and our uneven income and expenditure
patterns. With the new finance processes in place this coming week it will
become possible to assess project positions and to more accurately track
which of our activities are funded directly, which will enable much richer
forecasting with more data behind it.

At present forecasting is done centrally; more involvement of the unit
heads, especially those looking at fundraising, will help our predictions
of future revenue and costs. We are looking to coordinate our grant raising
in particular more strongly in the coming weeks and also to provide
stronger leadership to team members who are involved in small grant
applications to ensure we are operating efficiently and directing our
efforts wisely.

Finally, the unit-based budgets which are produced from ball park estimated
numbers, rather than the more detailed cost and income model, suggest a
modest surplus on the year. As such I think there are grounds for some
optimism :)  My goal is to get better data in the next couple of months, to
get a clearer picture of real costs after we make some efficiency savings,
and to have a much more rigorous model by the end of Q2. In the meantime,
Rufus and I are focussing our fundraising efforts on larger scale grants
for core and community funding, and also actively exploring new funding
routes for H2 and beyond.

Best regards,

Laura



On 24 March 2013 19:34, Ben Laurie <ben at links.org> wrote:

> Slightly concerned that even the optimistic forecast is heading
> definitely downwards.
>
> Any comments on that?
>
> On 24 March 2013 18:15, Laura James <laura.james at okfn.org> wrote:
> > Please find our (confidential) management reports for February attached.
> >
> > The Management report covers operational issues (including some new
> > forecasting for 2013 such as top level unit budgets and core funding
> sources
> > and allocations) and leadership report; the OKF Report covers the
> activity
> > of the units.
> >
> > Best regards,
> >
> > Laura
> >
> > --
> >
> > Dr Laura James
> >
> > Co-Director
> > Open Knowledge Foundation
> > http://okfn.org
> > Promoting Open Knowledge in a Digital Age
> >
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-- 

Dr Laura James

Co-Director
Open Knowledge Foundation
http://okfn.org
*Promoting Open Knowledge in a Digital Age*
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