Fiscal Analysis

The “Defensive Interval” is a ratio that is designed to indicate the life of an organization if funding were to be cut. The ratio looks like this: (Cash + Securities + Receivables) ÷ Monthly Expenses. This is looking at what the organization has in liquid funds, assets, and money that it is owed and dividing it by monthly expenses. Note that the cash + securities + receivables equals the total assets.

Regarding the Montana Foundation, this would appear as follows: ($375,544) ÷ (49,551) = roughly 7.56.

This suggests that the Montana Foundation could operate for roughly 7 ½ months if it were to receive no more funding. This would be seen as a positive trait if an investor were to analyze the organization.

The “Savings Indicator” is a ratio that shows how well the organization is adding to its savings (or worth). The ratio looks like this: (Revenue – Total Expense) ÷ Total Expense.

Regarding the Montana Foundation, this would appear as follows: ($585,536 - $594,619) ÷ (594,619) = roughly -.015.

This suggests that the Montana Foundation is used about 1.5% of its savings, suggesting that the Montana Foundation’s savings are not growing but are declining. This would be seen as a negative trait if an investor were to analyze the organization.

The “Liquid Funds Indictor” is a ratio that shows how long an organization can function if it were to use only its liquid funds to operate. The ratio looks like this (Total Net Assets – Restricted Net Assets – Fixed Assets) ÷ Monthly Expenses.

Regarding the Montana Foundation, this would appear as follows: ($292,949 - $230,319 - $0) ÷ (49,551) = roughly 1.26.

This suggests that the Montana Foundation could operate for roughly 1 ¼ months by only using their current liquid funds. This would be seen as an okay-poor trait if an investor were to analyze the organization. The Montana Foundation has enough cash to operate, but only for about a month. Ideally, they should have enough cash to operate for 6+ months.

The “Debt Ratio” is a ratio that shows the amount of debt of an organization compared to the value of the organization. This ratio would show the value of the organization if they were to pay off all of their debt. The ratio looks like this: (Average Total Debt) ÷ (Average Total Assets).

Regarding the Montana Foundation, this would appear as follows: ($82,595) ÷ ($363,263) = roughly .23 (or 23%).

This suggests that the Montana Foundation could pay off their debt by using only 23% of their assets (be them liquid or assets), resulting in the organization keeping about 77% of their value. This would be seen as a positive trait, in my opinion, because it shows the Montana Foundation as being stable. They would be able to pay off all of their debt and still retain the majority of the organizational value, something that could be seen as a positive if an investor were to analyze the organization.

The “Revenue Ratio” is a ratio that shows how much revenue comes from any given source. As a result, there are many different revenue ratios. The ratio, at its basic level, looks like this: (Revenue Source) ÷ (Total Revenue).

· Regarding the membership dues (between both members and affiliate members), this would appear as follows: ($115,481) ÷ ($516,530) = roughly 22%.

· Regarding the sponsorships, this would appear as follows: ($51,225) ÷ ($516,530) = roughly 10%.

· Regarding the discount product fees, this would appear as follows: ($76,930) ÷ ($516,530) = roughly 15%.

· Regarding the conference and training fees, this would appear as follows: ($86,448) ÷ ($516,530) = roughly 17%.

· Regarding the project fees, this would appear as follows: ($25,313) ÷ ($516,530) = roughly 5%.

This data suggests that the Montana Foundation receives their income from numerous different sources, which would be seen as a positive trait if an investor were to analyze the organization. Having income from diversified sources is considered to be “safe” because the organization is not depending entirely on any one source of income.

Summary:

These are some of the ratios that I would run if I were to perform a fiscal analysis of the Montana Foundation, or any other organization. There are a few more that could be performed, but I see these as the most integral of those listed. I believe that this data shows that the Montana Foundation is a suitable organization with which to invest or donate. The only major weak point is that of the “Savings Indicator,” which is so nominal that I believe it could be simply fixed.