Financial Performance Summary
The Coastal Conservation League is a 501(c) 3 nonprofit organization whose mission is to protect the threatened resources of the South Carolina coastal plain – its natural landscapes, abundant wildlife, clean water, and quality of life – by working with citizens and government on proactive, comprehensive solutions to environmental challenges. The Coastal Conservation League is heavily dependent upon philanthropic support for funding programs and operations.
The chart below provides a picture of the sources of funding:
This pie chart illustrates the breakdown of revenues for 2015. The Coastal Conservation League, including GrowFood Carolina, received approximately 97% of its funding from contributions and grants. This includes Coastal Conservation League memberships, major donor gifts, new pledge commitments and grants. Investments, primarily the $7.4 million endowment account, produced 2% of revenues for 2014 and was placed with a new investment manager in the last quarter of the year. Other Income included fees generated from sales of produce, rental income, book sales, events, and similar miscellaneous sources.
Revenue is used primarily to support program expenses. The programs at the Coastal Conservation League include the Energy & Climate Program; Air, Water, and Public Health Program; Land & Communities Program; and Food & Agriculture Program. A detailed description of the work that goes on in these programs is presented elsewhere on the website.
The chart below illustrates the expense breakdown for the Coastal Conservation League:
Roughly 68% of expenses supported the Coastal Conservation League’s programs, with 19% and 13% supporting administrative and fundraising costs, respectively. The Coastal Conservation League relies heavily on staff expertise to provide education and advocacy to achieve mission driven goals and relies on a broad base of support from constituents. As a result, 56% percent of total expenses for 2016 are personnel expenses. The personnel expense ratio is consistent with organizations that rely on their staff for advocacy, education, and human services. The fundraising ratio is consistent with organizations that rely on private donors for support rather than payment for those services or support from tax revenue.
The administrative expense was higher in 2015 primarily because it included a $130,000 increase in the allowance for pledge write-offs due to the $4.7 million in new pledges booked during 2016. The Conservation League uses a target of approximately 5% to calculate the write-off allowance for outstanding pledges.
The new pledges made in 2015 support three initiatives of the Coastal Conservation League. One initiative is a new communications effort that began in the fall of 2015. The goal is to encourage active engagement from our members and supporters and also to grow our donor base. The second initiative is to expand existing programs to further efforts towards the mission of the organization. We are in a period of high growth in the Charleston area and are committing resources to address the conservation challenges that occur in periods of rapid expansion. Our final initiative is to grow the endowment to $12 million by 2021. We feel this will be an increasingly important source of funding for annual Conservation League operations and new programmatic efforts in the future. The bottom line is that we are looking towards our goals in 2021 and determining new actions we can take now to help us achieve those goals.
The chart below illustrates the composition of expenses over the last five years. The percentage of expenses that are programmatic in nature have varied from a low of 65% in 2012 to a high of 71% in 2011. The percentages for 2014 and 2015 were 70% and 68%, respectively. Without the large addition to the allowance for future pledge write-offs discussed above, the percentage for 2015 would have been 71%.
During the last four years, assets for the organization have also grown. The majority of this growth occurred in 2015 and is a result of the new pledges received by the organization. The expectation is that we will continue to grow in asset size, albeit at a smaller rate.
As mentioned previously, one of the goals over the next five years is to continue to grow the endowment account. We would like to see the endowment grow to $12 million by the end of 2012. While current market conditions are adding to this challenge, we are committed to this goal.
The endowment account grew from $759,157 in 2005 to approximately $7.4 million at the end of 2015. Fundraising campaigns have been an effective and highly efficient method for raising significant funds for the Conservation League and have been the primary reason the endowment has been able to grow at this pace.
It is important to note that according to Generally Accepted Accounting Principles (GAAP), nonprofit organizations are required to record revenue when campaign pledges are received rather than when campaign funds are received. The result might be a skewing of reported revenues to the earliest years of a campaign although the actual funds may be received during each year of the campaign. This is important to understand because it explains large revenue peaks and valleys at nonprofit organizations who rely on fundraising campaigns as a source of revenues. The $6.9 million revenue amount in the chart below includes approximately $3.6 million in pledges that were counted as 2015 revenue but were not received in 2015.
Additionally, when creating the annual budget, the Coastal Conservation League includes a budgeted annual draw on the endowment account. This draw is currently at 4.5% of the rolling three-year average of the year-end balance, and is expected to remain at that level for the foreseeable future. The result is that while the 990 might reflect an annual deficit for certain years, this does not include the budgeted use of the endowment draw used to support the organizational mission nor does it include the annual pledge payments made by donors. Thus, the annual budget is created within the limits of the anticipated receipt of funds during the fiscal year.
The chart below illustrates the funding swings discussed above that occur during a fundraising campaign. There is a strong correlation between revenues and net surplus or deficit since expenses are growing at a much slower and more predictable pace.
As we look to the future, we celebrate our first 26 years of accomplishments and are focused on positioning ourselves for the future. We expect to accomplish this by expanding current programs, increasing communication with local and statewide communities to make those around us aware of issues that could potentially impact their quality of life, updating current infrastructure to increase efficiency and cost effectiveness, and continuing to grow the endowment account to support programmatic areas for generations to come. We rely heavily on public support, and we look to you, our donors and potential donors, to help make this a reality!
We welcome your questions or requests for additional information. Please contact Christina Allen, CFO, at 843-723-7468 for more information.