Like all charities, Mencap has a culture of minimising overheads to minimise waste. Under the full-cost accounting principles, it needs to recover any additional cost in the price of future business. The challenge is often, therefore, to decide where best to invest money to gain the greatest direct benefit.
The operational management and finance management teams are the key stakeholders in addressing these challenges. To do so, they need to constantly assess the financial viability of services in an uncertain environment and make strategic decisions. While legislative change can be difficult to predict, all other challenges can be managed under full-cost accounting through the availability of accurate data and good information.
Mencap has continued to invest in developing the CRM (Customer Relationship Management) database it introduced a number of years ago to
hold all data on existing contracts and past and future tenders.
The charity recently won a place on Morgan Stanley’s pro bono strategy challenge. As part of this, it has been working with the bank to develop a growth strategy. This has included creating tools to monitor external data and engineering an approach to grow the organisation. The development of the CRM has accelerated full-cost recovery as it helps answer the key question: “What is our guaranteed level of income over the next five years?” According to Matt, “With this information, we have been able to assess the point where we can be confident that our fixed overheads are covered for a set number of years. This allows us to consider marginal pricing for certain contracts, as we can be more certain that fixed overheads are covered by existing contracts.
“Taking advantage of this information and utilising marginal pricing effectively allows us to target areas of growth and act more strategically. Working with Morgan Stanley has helped us create a positive and focused Personal Support Services strategy and culture.”
Together, these initiatives have delivered annual contract efficiencies of £0.3 million in the Personal Support Services South division. They have also grown the annual contract portfolio by £1.5 million.
As Matt says, “Accurate data is vital. As a charity, we operate on very slender margins and it’s therefore essential to have confidence in the cost data when making decisions and ensuring full-cost recovery. “We have learnt that if we’re going to enable as many people as possible to benefit from the support we can offer them to live the independent lives of their choice, we need to fully utilise the data that is available to us to drive decision-making.” It is clear from progress made to date that reliable full-cost project data will help Mencap sustain its excellent quality of service — but with significantly more beneficiaries.
Download →