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Financial Planning for the Non-Finance Stakeholder

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In this highlights video from our 2020 Virtual Solutions Summit, Wofford College’s CFO Chris Gardner and Provost Mike Sosulski go over how they utilized Synario to craft a budget workshop designed for non-finance colleagues to develop a greater appreciation for the trade-offs needed to maintain a strong and sustainable financial future.

Inspired by a workshop Mike attended during his time at Kalamazoo College, Chris and Mike presented a highly interactive, half-day session for faculty and staff with limited financial experience to explore the challenges of maintaining a sustainable financial model at a private liberal arts college.

Participants broke into groups where they built their own custom college or university. The groups considered their college’s key stakeholders such as the students, their parents, faculty, and even lesser known stakeholders like government agencies and the local community. They then considered their institutional mission and core values, making sure they thought about all institutional stakeholders, identified their key institutional priorities and noted how they would achieve these priorities. Once all of these factors were considered, participants then drafted a written mission statement to share with the other groups in the workshop.

Participants then finished building their college by naming it, determining the size, type of student experience, what the physical campus might looked like, and what type of individuals made up the students and faculty. Next, to better construct their financial model, the groups were tasked to make qualitative judgments about how they would run the institution by asking and answering important questions such as:

  • How much will you pay faculty/staff?
  • How diverse will your student population be?
  • What types of institutional resources will you make available to your campus?
  • What will be the age and physical condition of your campus?

With all their choices made, the workshop participants were now ready to dive into their financial models; and while crafting the colleges and universities was a fun thought-exercise, developing the financial model for the workshop was a whole other task itself for Chris and Mike.

Before the workshop even began, Chris and Mike had to take the possible choices the participants might make and translate those decisions into quantitative outcomes and assemble them into a profit & loss statement for the hypothetical institution. They decided that participants could make up to 20 qualitative decisions about the nature of their new institution.

Questions such as “What will be the level of faculty compensation?” were asked and the participants were presented with four options: below average, average, above average, and elite. To create value behind the answers, each response was tied to a financial metric based on benchmarking statistics pooled from a collection of examples from a cluster of private liberal arts colleges and universities.

In the first iteration of this workshop, Chris and Mike tried to use Microsoft Excel as the model for participants to play in. However the limitations of Excel lead to complications as it was very difficult from them to build a multi-year model, and it required participants to navigate between multiple tabs. Participants accidentally edited the model in ways they were not supposed to due to the inability to lock certain sections or aspects of the spreadsheet-based model. Additionally, as participants in this workshop were non-finance stakeholders, some were intimidated by the vast array of data, charts, and reports contained within their spreadsheet-based financial models.

Wanting to do better for their second iteration, Chris and Mike contacted the Synario Team to utilize our intuitive user experience, and advanced scenario and sensitivity analysis capabilities to create a higher education focused financial model. Synario allowed Chris and Mike to easily build a multi-year model that could rapidly recalculate values as inputs change, and utilizing our intuitive presentation mode, they were able to create data visualizations that appealed to the “non-financial” participants and allowed them to make changes to their model, without impacting the formulas or predetermined values that Chris and Mike had programmed in.

When the Synario financial model portion began during Chris and Mike’s revised workshop session , participants entered their answers to those 20 questions into the Synario model. As expected, the participants picked the top choices for most of the questions and because of this, the “first pass” produced a 10-Year financial model for most participants that was unsustainable with a negative net income. In the first half of the workshop the goal was to then make a sustainable 10-Year forecast, tasking the groups to now make tough decisions that altered the choices they made in the very beginning, such as making sacrifices in class size or student activities budgets

The groups then faced a set of curveballs requiring them to address real life scenarios that could impact a college’s sustainability like endowment decreases due to market volatility, increases in annual giving, and missing annual enrollment goals; causing them to readjust their financial model to ensure they’d maintain a sustainable forecast no matter what might come their way.

By the end of the session, in order to achieve financial sustainability, every working group had to compromise their values to some degree. This emphasized to participants that it’s not always easy to maintain a healthy forecast while maintaining the values originally set. The participants also saw that some financial decisions had greater impact than others and that their colleagues from different parts of campus may have different priorities than themselves.

In feedback from the participants themselves, they noted that not only did they have fun going through the exercise but that it helped their perspectives on the challenges that Wofford College deals with regarding financial stability and sustainability.