Recommendations for Dealing With Crear Vale la Pena (CVLP) Major Funder's Donation Cut
General instructions: It should be no longer than two pages (standard margins; 12 point font; spacing is up to you).
After graduating from a public policy school in May of 2001 you spend 6 months travelling before starting your new job with the Argentine NGO, Crear Vale la Pena (CVLP). The job is a one-year fellowship paid for by a US NGO that is trying to develop management expertise in NGOs in low- and middle-income countries. CVLP is counting on you to bring your public management and implementation expertise to their aid. You have only been there a few months, but so far, they are quite impressed.
On April 6th, your immediate boss Rodrigo Kon calls you to his office. He tells you that two days ago CVLP found out that their major funder (who accounts for 80% of total donations) would be cutting their donation for the following period (May, June and July) by 50%. The executive committee met that day for hours—but could not come to a decision on next steps to take. The committee decided that they needed a fresh perspective to help them decide on a strategy and they are counting on you to help them determine the direction that CVLP needs to go. The executive committee plans to take a break for the weekend, but they would like you to meet with them first thing Monday morning. They have asked you to draft a memo with recommendations for the organization. You should focus on the immediate future, but advice on long-term goals is important as well.
In planning your memo, Kon suggests that you focus on a few questions that came up at the end of the meeting:
- Should CVLP drastically reduce its May-July quarter expenses?
- What specific expense categories could be curtailed without substantially affecting activities?
- Will dealing with this emergency have an effect on the organization in the long run? If so, how do we make sure the organization remains viable in the long run?
HINT:
If it helps in drafting your memo (and it should), you MAY, but do not need to, include a 1-page budget or projected statement of revenues and expenses as a reference tool in addition to the 2-page memo.
However, your memo should not need to rely on the exhibit to prove your case—it should be for reference purposes only.
To: Rodrigo Kon, Executive Director, Crear Vale la Pena
From: (Students Name)
Subject: Recommendations for Dealing with CVLP's Major Funder's Donation Cut
Date: 22nd/April/ 2023
Executive Summary
Essentially, company executives should re-strategize how to handle the financial change since CVLP has already received notice of a reduction of donor funds in the coming months. Financial disruptions in organizations more often lead to financial distress if proper planning is not undertaken. Therefore, it is prudent that the executive committee sought extra assistance in drafting the possible recommendations on how to deal with the donation cut in the short and long term. In this regard, I recommend the executive committee should ensure the financial managers of CVLP focus on cutting expenses in non-important areas and some of the recurrent expenditures that can be done away with. Additionally, the executive committee should ensure they diversify their funding options. Increasing their funding options will be crucial in ensuring the company does not get entangled in a situation of insufficient funds in the future, no matter the radical changes it experiences from a donor.
Policy Dilemma
Deciding which expenses to cut is the major dilemma they are experiencing. The organization's executives are deciding to devise alternative policy options to handle the current situation. The company executives anticipate a situation where they will be financially distressed once the donation cut happens. Hence, the company executives have to readjust their policies and have a major cut on some of their expenses. Deciding which expenses to cut is the major dilemma they are experiencing. This cut will ultimately affect some people and departments in the organization. The executives must also communicate the expenses cut to the department heads affected. This will certainly be an unpleasing piece of information since it will affect the operations of such departments. Additionally, the executives are in a dilemma deciding which additional funding sources to explore to ensure the upcoming financial crisis is well managed.
Recommendation
I recommend that the company executives should cut down on expenses related to travel, research and personal development. The current budget for the organization for travel, research, and personal development is very high. The year often ends with the budget allocation for the stated three expenses not fully spent. Hence, discretionary expenses should be reduced as a mitigating measure to the upcoming...
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