Improvement measures on Sight Savers - Essay Example

Improvement measures on Sight Savers Sight Savers International was founded on 5 January 1950 as the British Empire Society for the Blind. It was in the 1950s that Sight Savers International made their initial ground breaking in fighting avoidable blindness. They founded their organization on a survey by Dr. Freddie Rogers in Nigeria and Ghana in 1953 that concluded that the majority of blindness cases were preventable, which led to a program of disease control for river blindness, also known as onchocerciasis. They launched their first mobile eye units in 1960, using trained staff to treat eye conditions using land rovers for transport in Kenya and Uganda. It was in 1970 that they decided on training in-country staff at the local level in the provision of eye care, setting up their first surgical training program in Bangladesh. Working with partners has enabled them to treat more than 200 million people for potentially blinding, and blinding conditions, as well as over 7 million operations meant for the restoration of sight. In 2009, Sight Savers International decided to implement changes in the way that they work to bring long-term change, at which point they launched a new strategy. They hope that this will support their partners in carrying out basic and essential care and rehabilitation of eyesight. They are also working towards influencing governments. Sight Savers International is investing in small-scale project models that will demonstrative of the best possible practices. It is their hope that, in the future, the governments in their countries of work will replicate it and that they will have accomplished their work in sixty years and hand over to the governments. However, they have several strategic issues that need to be resolved before this can be accomplished. Key Strategic Issues and Key Performance Indicators for Sight Savers Sight Savers International faces several strategic issues. These are; How to plan ahead for the future in the uncertain financial times The value of their budget is low because it is out of date and requires to be changed Their volunteer board of directors is made up of non-financial specialists who meet for only 20 hours every year in formal settings. This makes it difficult for the organization to exhibit effective governance The organization is also grappling with how to leave their finances to professional outsiders without losing control of the organization’s activities. Sight Savers International can use several key performance indicators to define, as well as measure their progress towards their goals. In order to plan for an uncertain future, one thing that they have to do is improve the level of confidence and trust in the organization from the public. The first KPI here is the overall level of confidence and trust in their charity organization from the public, which they can carry out using an independent survey every two years (Marr, 2012: p22). Their target here should be to improve their ratings continuously over their 2007 baseline. The second KPI would be a survey by stakeholders of the effectiveness of their charity sector’s main regulator, which would also be carried out by an independent survey (Marr, 2012: p22). They should also measure the confidence and trust in their charity as compared with other professions and organizations every two years in order to be informed on their standing. The organization should also seek to achieve service delivery standards that are acceptable to their main clients. Their first KPI under this strategy would be the percentage of their clients who said that they did a commendable job across their area of operation (Molyneaux, 2009: p11). Second would be the average individual or charity rating at initial contact point who said that their services as provided were those that they required. Third would be the increase in use of their services across their area of operations. They should also use the average time that they take to deal with issues brought up by their clients as a key performance indicator. Another key performance indicator would be the increase in the publications that they send out directly to their client base on the services that they provide (Molyneaux, 2009: p11). Sight Savers International should also enhance their transparency and accountability through making key information concerning their charity readily available to the client base and the public at large (Müllner, 2009: p19). They can do this by comparing themselves to other charities that perform similar functions around the world. One KPI would be the proportion of other charities for which their recent annual returns and due accounts were held. Another KPI would be the proportion of charities that file annual returns within the legal deadline of 10 months. They should also use the proportion of the charity sector’s total income for which annual returns and accounts, have been filed according to the legal deadline of 10 months. Finally, they should use, as a KPI, the proportion of sector charities that have a budget of more than £1 million for which their recent information returns are held in the legal deadline of 10 months (Müllner, 2009: p19). Sight Savers International also needs to improve the effectiveness of their work through improving investigation, prevention, and detection with clear outcomes being reported. One KPI that they can use here is the percentage of assessments on compliance that they carry out correctly (Parmenter, 2012: p31). They could also use the number of compliance visits that are carried out yearly to their clients. Another is the percentage of investigations by regulatory bodies, which end in one or more of the specified impacts that protect charities from misconduct, mismanagement, or abuse. They could also use the percentage of inquiry reports that are published within 92 days of the completion of the proactive process of investigation. Finally, they should publish a yearly report that includes the duration taken by these statutory inquiries, making reports on the impacts that these investigations have, and operation of the organization’s compliance work (Parmenter, 2012: p31). These KPIs should aid in resolving conflicts of interest, protection of their reputation, and protection of the charity assets when the board of directors includes “outsiders” with financial knowledge. Finally, Sight Savers International needs to promote understanding of their requirement for public benefit operation in the future. On key performance indicator that they can use for this is through results of public consultation responses on advances of ethical or moral belief system with regards to public benefit (Parmenter, 2011: p28). Another is an individual case reports of the assessment of public benefits according to agreed plans by the incoming board. They should also used published evidence based reports that assess other charities’ trustee awareness and their awareness and attitude towards benefits provisions. Budgetary Control Factors for profit vs. Non-profit organizations For-profit organizations are organizations that do business for profit. In these organizations or firms, the people who are most interested in business’ finance are the investors, shareholders, management, and the general public for the public companies, suppliers, tax authorities, and lenders (Landskroner, 2012: p33). For this reason, in the budgeting process, all these stakeholders have to be factored into the budgeting process for profit reasons, tax reasons, or dividend reasons. Not-for-profit organizations are defined as entities that normally do not possess transferable interests of ownership and are operated and organized exclusively to provide charitable, health, religious, educational, and social services. Contributors, members, and other providers of resources do not receive direct financial returns in any capacity from the organization. Therefore, the budgeting process is mainly aimed at the provision of services rather than accruing profits, taxes, and dividends for the stakeholders (Landskroner, 2012: p33). Whereas the business stakeholders are more concerned with the organization’s bottom line in profit organizations, the stakeholders in organizations that are not for profit are more concerned with the appropriate allocation and utilization of resources with reference to its mission (Shim et al, 2012: p22). Accounting in non-profit organizations is focused, therefore, on tracking the organization’s received contributions and the manner in which they are spent. Therefore, budgets prepared for purposes of business do not give any meaningful information since the stakeholders are more concerned with how the money is to be spent and not the residual accounts. Both profit and non-profit organizations comply with the generally Accepted Accounting Principles that are also referred to as GAAP. Non-profit organizations do this during their budgeting process in order to reassure the stakeholders that the budget given is actually reflective of their financial position (White, 2010: p54). Non-profit organizations are also required to follow GAAP rules during budgeting to attain unqualified audit opinions from chattered firms of accounting. Another key difference concerning the two types of organizations with regards to budgetary control is the fund accounting concept, which, instead of focusing on profitability, focuses on accountability. While for profit organizations have a general ledger that is a single balancing account, their counterparts have funds or general ledgers. This framework of accounting allows the for profit organizations to divide their resources into different accounts to identify individual funding sources, as well as their use (White, 2010: p55). Accounting records for non-profit organizations, therefore, are representative of a collective fund where each has a different purpose and needs to be balanced individually. This allows for account segregation of resources during the budgeting process. Subsequently, financial reports detail revenues and expenditure for every fund, while also summarizing financial activity across every fund. This differs with business financial reports that may retain individual expense accounts and revenue while still blending balance sheet accounts. In addition, the financial statements for profit organizations focus on; meeting lending covenants, return on investment, and net income. Another significant difference with regards to profit and not-for-profit organizations has to do with revenue. Non-profit organizations, like profit organizations, can have earned revenues that come from sold goods, interest, provision of services, rent received, or royalties that come from their resources (Broadbent & Cullen, 2012: p33). However, different from profit organizations, they also receive revenues directly from grants and donations. In their budgetary control, they may use various optional methods of accounting in recognition of these contributions. The deferral method employed in recognition of revenues when they incur expenses that are related to the revenue directly. The method of restricted funds segregates the funds on a basis of the restriction that contributors place on the use of these funds (Broadbent & Cullen, 2012: p33). These are permanently restricted, temporarily restricted, and unrestricted. These have a significant effect on the budgetary control process. Unrestricted assets do not have any external restrictions, and they are availed for general use. They include grants, donations, or general operating funds that do not have any constraints. Temporarily restricted assets possess restrictions imposed by the donor and based on a period of time that is defined or on the performance of activities that are defined (Dropkin et al, 2012: p61). For example, this might include grants that are received to carry out a specified program or donations meant to support projects that the donor is specific on. The donations may be used following the elapse of the time or after the event specified takes place. Permanently restricted assets are those donations that are restricted by the donor for a time or a designated purpose that never reaches expiry. One example of this would be an endowment where the non-profit organization maintains funds, as an ongoing investment, with the investment returns and interest being used for purposes that are specified. Under the restricted method for non-profit organizations, contribution revenue is recognized in the duration that the contributions are received (Dropkin et al, 2012: p61). The classification, however, is important for the determination of how the contributions will be budgeted for since special rules apply to each one of them. Other key differences affect the budgetary control process for profit and non-profit organizations. For example, an entity that is for profit has a budget that indicates asset availability for distribution to the shareholders through retained earnings. On the other hand, non-profit organizations calculate the total assets on hand, in addition to the availability of net assets or those assets meant for suture services (Dropkin et al, 2012: p68). The statement of net earnings meant for profit entities, or statement net asset changes is depictive of how permanently or temporarily restricted net assets have been altered from one time to another. Challenges and problems still facing Sight Savers Despite the resolution of these issues, the economy that is still in trouble will have a significant effect on the Sight savers, as well as other charitable organizations, in the future. All types of non-profit organizations, including Sight Savers, are likely to face significant issues from this fallout. The first issue has to do with philanthropy and the wealthy so called 99%. Economic inequalities are expected to raise tricky problems for most donors (Vernis et al, 2011: p26). The widening gap between the poor and the rich has come into sharper focus in the new decade. With philanthropy becoming an elevated symbol of status for the wealthy, they are facing tough issues regarding the benefits they get from the society. The issue has seeped slowly into the debate concerning charitable deductions with most governments, including the UK government, contending that it is time to include a tax break to benefit high-income citizens. There are more calls fro the rich to focus more of their wealth in fighting against poverty instead of paying for the building of new structures (Vernis et al, 2011: p26). This year, there is an especially audible call for broadening of opportunities for all as a philanthropic agenda. With the issue of taxation becoming an increasing reality, it will have a major effect on their budgeting process. Sight Savers International and other charitable organizations are also facing pressure emanating from decreasing government aid. With no end in sight to the financial crisis and budgetary issues facing major governments in the world, charitable organizations are facing new demands to fill the voids created by decreasing government aid. This is geared to ensure that they also bridge the activities that were provided by a foreign government aid, for example, free eye clinics in Kenya (Vernis et al, 2011: p28). However, it will be very difficult for Sight Saver International to match the financing provided earlier by the government. In order to help in tempering the fallout from budget cuts to foreign aid, non-profit charity organizations like Sight Saver International may have to increase their lobbying and advocacy activities. Sight Saver International and other charity non-profit organization will also have to deal with generational tensions. It will become essential to make peace between generation Y and the baby boomer generation. Most charity organizations, Sight Savers included, have had to deal with a decaying economy in their home countries for the last five years (White, 2010: p47). There are fewer jobs for new graduates with the older generation having no savings to retire comfortably. The staffing of their charity regional headquarters, especially in Africa and Asia, is now up for grabs with the strategy to employ a professional board of directors and more professionals in the field. Friction between the more experienced and older employees with seventy hour weeks and the younger employees with more professional papers is due to give the organization a headache in the workplace (White, 2010: p48). This can be dealt with through equitable employment and, maybe, implementing retirement benefits for their older employees. Sight Savers International also faces increased pressure to show results, which will not be fully dealt with using the strategies they have brought up. To counter this, they have to move the conversation away from discussions about overhead costs (White, 2010: p59). Sight Savers International continues in its quest for good measures of their effectiveness with donors becoming more interested in how their donations are used. The share of money that Sight Savers spends in its administration, or overhead costs, is now under more scrutiny from experts in the non-profit sector, as are other non-profit organizations. As of yet, there is no perfect evaluation of to replace the current measures as given in the key performance indicators and it will take time to emerge with one. Before then, however, there is trouble brewing, especially in Africa, where these organizations are accused of being used, by their governments, to influence policy (White, 2010: p60). Until an acceptable measurement is found, this will continue to be the case to the detriment of organizations like Sight Savers. Finally, Sight Savers faces competition, especially through innovation, from social enterprises. It is now a fact that they require new approaches to help them overcome the activity of social enterprises, which do not give the quality of service that they do. There is excitement about various organizations that use for-profit organizational models to solve environmental and social problems that show no signs of slowing down (Vernis et al, 2011: p36). Several countries in Asia have created corporate structures that let organizations incorporate into their business social purpose and put social aims alongside profits. What this trend means for the non-profit organization, Sight Savers International included, is still unclear (Vernis et al, 2011: p36). It possibly, these hybrids will siphon off grants and financial support that traditionally went to charities, especially since the same group of people who provide grants and donations runs these organizations. References Landskroner, R., 2012. The Nonprofit Manager's Resource Directory. New York : John Wiley & Sons. Marr, B., 2012. Key performance indicators : the 75 measures every manager needs to know. Harlow : Pearson Financial Times Pub. Molyneaux, I., 2009. The art of application performance testing. Sebastopol : O'Reilly Media, Inc. Müllner, A., 2009. Calculating the influence of improvement measures on corporate KPIs. München: GRIN Verlag GmbH . Parmenter, D., 2012. Key performance indicators for government and non profit agencies : implementing winning KPIs. Hoboken: John Wiley & Sons. Shim, J., Siege, J., Shim, A., 2012. Budgeting basics and beyond. Hoboken : Wiley. White, D., 2010. The Nonprofit Challenge : integrating ethics into the purpose and promise of our nation's charities. New York : Palgrave Macmillan. Broadbent, M. & Cullen, J., 2012. Managing Financial Resources. London: Routledge. Dropkin, M., Halpin, J., La T., 2011. The Budget-Building Book for Nonprofits: A Step-by-Step Guide for Managers and Boards. Hoboken: John Wiley & Sons. Parmenter, D., 2011. Key Performance Indicators: Developing, Implementing,and Using Winning KPIs. Hoboken: John Wiley & Sons. Vernis, A., Iglesias, M., Sanz, B., Saz-Carranza, À., 2011. Nonprofit Organizations : Challenges and Collaboration. Basingstoke : Palgrave Macmillan. Read More