CapStoneProject Uiw ADA Haldununal 2009fall

UNIVERSITY OF THE INCARNATE WORD
CapStone 2009 Fall

Instructor : Dr. David G.Vequist IV
American Diabetes Association
by Haldun Unal
Organization:
American Diabetes Association is a non – profit voluntary health agency.
Mission: “To prevent and cure diabetes and to improve the lives of all people affected by
diabetes.”
Vision: “To make an everyday difference in the quality of life for all people with diabetes.(i)”
Diabetes: I believe, it is important to know about diabetes in order to perceive the importance
of the role the ADA has taken on. Below is the description of diabetes extracted from the
ADA website:
“Diabetes is a disease in which the body does not produce or properly use insulin. Insulin is a
hormone that is needed to convert sugar, starches and other food into energy needed for daily
life. The cause of diabetes continues to be a mystery, although both genetics and
environmental factors such as obesity and lack of exercise appear to play roles.”
Approximately 24 million people in the US alone have diabetes which corresponds to about
8% percent of the US population. Awareness raising is particularly important besides research
since about one fifth of the people with diabetes do not know that they have diabetes.
Type 1 Diabetes: “Results from the body's failure to produce insulin, the hormone that
unlocks" the cells of the body, allowing glucose to enter and fuel them. It is estimated that 5-
10% of Americans who are diagnosed with diabetes have type 1 diabetes.”
Type 2 Diabetes: “Results from insulin resistance (a condition in which the body fails to
properly use insulin), combined with relative insulin deficiency. Most Americans who are
diagnosed with diabetes have type 2 diabetes.(iii)”
2
University of the Incarnate Word, CapStone Fall 2010, Instructor Dr.David G.Vequist IV
by Haldun Unal.
Objective of the Study:
In this report I am aiming to make comperehensive internal and external analysis of American
Diabetes Association (ADA) and to make suggestions for its future goals and strategies.
Subject organization ADA is a non – profit charity.
Non – profit status of ADA:
ADA is a non - profit organization as defined under Internal Revenue Code Section 501 ( c )
( 3 ) and is tax exempt.
Organization Overview:
ADA Principal Program Activities:
Research: ADA provides funds to researchers who are seeking knowledge in the prevention
and cure of diabetes, the prevention and cure of the complications of diabetes, new and
improved therapies for individuals affected by diabetes. Its research program is administered
through the American Diabetes Association Research Foundation, Inc. which is a subsidiary
of ADA.
Current Research Outcome Expectations:
• Achieving NIH and CDC fund increases accordingly with the economic impact of
diabetes.
• Enhance the pool of researchers.
• Make ADA the primary voice for all diabetes research.
• Improve the prevention, diagnosis and treatment of diabetes and its complications.
3
by Haldun Unal.
Information: ADA provides diabetes information to individuals with diabetes, their families,
and their health care providers.
Current Information Outcome Expectations:
• Enhance position as the authority of information.
• Provide the primary care community with the necessary information.
• Recognition as the first contact for information following diagnosis of the
disease.
Advocacy and public awareness: ADA has assumed advocacy role for people with diabetes.It
delivers messages about diabetes to the general public and to government agencies(i).
Current Advocacy and Public Awareness Outcome Expectations:
• Greater understanding of the seriousess of diabetes.
• People with diabetes have access to all diabtes related information.
• Perception of ADA as a constituent – centric organization.
• People with diabetes will know how to live well with it.
ADA Funding for Its Activities:
ADA’s reveune sources are donations, special events, bequests, subscriptions, sales of
materials.
Where does the money go? There are 3 expense areas:
1) Program activities: Information, research, advocacy & public awareness, fundraising
and management expenses form the program expenses.
2) Management and general expenses.
3) Fundraising expenses.
Current Revenue Expectations:

4
by Haldun Unal.
• Increase revenue to $300 million by 2011.
• Diversify revenue sources.
• Encourage high performance.
• Create a flagship event(iii).
What does ADA do raise funds and deliver its mission?
Community Programs and Local Events:
Fundraiser Events:
StepOut: This is an event which raises over
$20 million. In 2008 over 100,000 walkers
participated in 180 cities.
Tour de Cure: This is a ride where cyclists in more
than 40 states join. There were more than 40
thousand riders in Tour de Cure rides in 2008 (iv).
B.A.D Ride ( Bikers Against Diabetes): Motorcycle
riders get together in 7 states to raise funds for fight
with diabetes.
Diabetes Expo: This is a trade show where diabetes
related products, services and information are offered
to visitors(vi). This community - based product attracted more than
83,000 consumers at 17 locations. It features free health
screenings, cooking and fitness demonstrations.

5
by Haldun Unal.
School Walk: A fund raising event for students, at the
same time, educates them about diabetes.
Community Campaign For Diabetes: The campaign
brings more than $10 million every year. Volunteers
ask their neighbors and friends for donations as they
distribute a risk test(iv).
diabetes.org: Consumer web site of ADA provides resources and information to people about
diabetes. It is also a gateway to its various products and events. In 2008, diabetes.org,
experienced a visitor traffic of more than 22.8 million which reflects an a 44% increase
compared to previous year. According to ADA’s 2006 Annual report diabetes.org was
receiving receiving 1 million visitors every year. In the 2008 ADA Annual Report, the
improvements listed resulted in increased traffic: 3.4 million more visitors, 5.8 million visits
and 32.7 million additional visits. Other than improvements to microsites such as Tour de
Cure, interactive tools like MyFoodAdvisor were added.
Family Link:
Family Link is ADA’s subportal for kids and parents
about diabetes and its activites targeting kids.
Diabetes Pro:
6
by Haldun Unal.
Diabetes Pro is ADA’s subportal for healthcare professionals.
Online Store: ADA also has an online store where it sells books and gifts.
National Call Center: ADA’s call center (1-800-DIABETES) received more than 300,000
calls and emails in 2008. This was an increase in of 14% compared to 2007(v). Call center
operates 24/7 and between 8:30 a.m. 8:00 pm enhanced personalized services are available
both in English and Spanish.
Location:
1701 North Beauregard Street
Alexandria, VA 22311
ADA has 100 community offices and 99 leadership councils.
Personnel:
Board Size: 41
Chief Executive: Larry Hausner, Chief Executive Officer
7
by Haldun Unal.
Compensation: $152,438
Highest Paid Executive: Michael Farley, Interim CEO/Chief Community & Corporate and
Corporate Relations Officer.
Compensation: $523,784
Paid Staff Size: 897(vi)
Number of employees paid over $50.000: 399 (x)
Leadership Boards:
ADA has a National Leadership Board and a Local Leadership Boards. These boards do not
have right to elect or or pass policies like other non-profits as I am informed by Erica Bayless.
Leadership Councils changed name in 2008 and their name became Community Leadership
Boards(CLB). CLB is a formal volunteer body that provides a consistent local ADA
organization. It helps achieve local goals. Its purposes are to help with key fund raising,
program, public awareness, advocacy, and recruitment activities(vii).
Market:
8
by Haldun Unal.
ADA is willing to serve 23,6 million people with diabetes, their families, health care
professionals and the general public. It has targeted minority ethnic groups as they have
higher risk of being diagnosed with diabetes and highly affected by diabetes. There are four
groups listed on its website with programs tailored to reach out to these groups:
1. African Americans
2. Latinos
3. Native Americans
4. Asian Americans and pacific Islanders
Direct Response Marketing: In 2008 ADA raised more than $44 million through its direct
marketing program. The program aims to inform people about living well with diabetes. It is a
critical public support to the ADA.
Direct Mail Program of 2006: In 2006 ADA received 1.1 million gifts which totaled to an
amount of $32.5 million. With this program ADA was able to reach 5 million individuals
informing them about diabetes(viii).
Commercial Fundraising Activities: One activity which is seen as am additional remedy to
raise funds, increase membership and awareness and reinstall lapsed memberhsips by the non
– profit charities is commercial fundraising in the form of telemarketing. In this type of
fundraiser, a charitable organization has a contractual relationship with a for profit
organization, in many cases with a telemarketing company. Company makes the
telemarketing calls on behalf of the charitable organization and seeks donations or
membership fees from the donors. In return, for the service it provides it keeps a percentage of
9
by Haldun Unal.
the revenues. This revenue changes depending on the contract terms. Many states have
mandated the registration of these commercial fundrasing firms. ADA has also used this tool
in the past. It has had telemarketing companies perform fundraising on its behalf. One of the
companies is the Corpus Cristi based Futuremarket Telecenter Inc. and the other is Infocision
Management Inc. I contacted Erica Bayless of ADA regarding this activity. Unfortunately, she
was not aware of such telemarketing activities. The report of the Attorney General of the State
of California for the year 2007 shows 3 commercial fundraisers: FutureMarket Telecenter Inc.
(FT), Infocision Managment Corpration (IMC) and Car Program Inc. (CRI). Future
Telemarketing provided services to ADA’s subsidiary American Diabetes Association
Research Foundation. FT recorded revenue entries: One entry for $7.02 million and the
second entry for $6.26 million. Amount “To Charity” entries are -$1.86 million and -$2.1
million after each revenue respectively and the “% to Charity” columns are showing -%26.51
and -%33.59. In the report it is stated that “Negative amounts in the “To Charity” column
indicate the campaign rased less the commercial fundraiser fee guareanteed in the contract
between the charity and the fundraiser.” Therefore, ADA owed FT a total of $3.96 million on
top of the $13.28 million worth of donations (and / or membership fees depending on the
nature of the activity) FT collected on behalf of the ADA. In 2005, FT’s report to the State of
California is showing that it paid to ADA $4.51 million of the $11.6 million campaign
proceeds which corresponds to 39% of the total cash contributions. There was not any
available information on if there were similar activites yet, however, in my opinion, in 2007
ADA incurred an opportunity cost of receiving $11.6 million in cash contributions. On its
2007 IRS form there appears to be a payment of about $6 million to Future Telemarketing.
The total cost may be at about $17 million(ix).
Competitors:
10
by Haldun Unal.
On the National Diabetes Information Clearinghouse(NDIC) and Charity Navigator websites I
was able find many more diabetes related associations other than the ADA with comparable
programs to each other. Some of them are American Association of Diabetes
educators(AADE), Diabetes Action Research and Education Foundation and Juvenile
Diabetes Research Foundation International(JDRF) and Joslin Diabetes Center(JDC).
However, among those three, only JDRF has the similar financial and operational size which
gives warrant for a comparison with the ADA.The second organization which I chose for
financial perforance comparison is the Natinoal Multiple Sclerosis Society, although it
focuses on a different casue. On the other, this does not provide any legimacy for ignoring the
existence of several diabetes related charities accross the country. In fact, competition is not
only from the same type of medical condition related charitable organizations. On a same
type of fundraising event basis from different type of medical condition related charities, there
is competition for the funds waiting to be donated. Such as the bicycle rides and the walks
which are organized by Lance Armstrong Foundation and National Multiple Siclerosis
Society. In general, it would not be wrong to say that there is competition amongst all
charitable organizations for the funds that may be made available to these organizations what
ever their motive is. Therefore, competition analysis and comparisons will be made not
between the same type of charities but also on event type basis when I find it necessary.
Financial Condition:
Public Support and Other Revenue - US$ - In Thousands

FY2008 FY2007 FY2006
Donations 101,671 103,224 104,208
Special Events (Net) 46,665 47,245 46,225
Bequests 28,568 27,465 28,254
Fees from Exchange Transactions 45,088 55,841 51,639
Total Revenue 221,992 233,775 230,326
Expenses - US$ - In Thousands
FY2008 FY2007 FY2006
Program Expenses 170,161 170,184 168,703
11
by Haldun Unal.
Management 9,867 9,000 7,992
Fund Raising 49,89 49,018 46,869
Total Expenses 229,918 228,202 223,564
Source: 2008, 2007 and 2006 Annual Reports of ADA.
Strategic Goals of ADA:
ADA has committed to fund research to find cure, prevent and manage diabetes; raise
awareness of diabetes in general public; and, advocate at governmental levels on diabetes
related maters. It has publicized its strategic goals for the year 2011 in three areas:
1.Easily accessible educational programs which will reach to those individuals who are
with or at risk for diabetes.
2./Improved alliances with other non – profits, businesses and government entities to
make changes for easy access to diabetes care facilities.
3.Increased ADA led strategic alliances to increase the funding for the research of all
aspects of diabetes(x).
Priorities of ADA:
1. Increase ADA’s impact on people with diabetes by devoting resources to target
programs.
2. Increase its revenue with new strategies.
3. Transform its culture and develop its human resources to achieve goals and changes(x).
Revenue Generation Expected Outcomes of ADA through 2011:
1. Total revenue of $300 million with a 7.2% compound annual increase.
2. Diversify revenue sources.
12
by Haldun Unal.
3. Higher performance.
4. Create a profitable flagship event(x).
Internal Analysis:
Operations:
ADA funds research, delivers information to consumers and health care professionals,
advocates on behalf of people with diabetes and helps educate the public about diabetes.
ADA’s research program supports basic and clinical diabetes research which aims to prevent,
treat and cure diabetes. In 2008, ADA invested $42,5 million in research funds. It received
924 grant applications and funded 137 in new grants. It funded 348 exisiting; 142 new and 2
other new grants at 172 leading US research institutions. This program is designed to
complement the National Institutes of Health (NIH). Since it has started ADA allocated over
$450 million to research and provided 4000 research projects. Funding of the research
program has increased from $18 millions in 1999 to $42.5 millions in 2008.
13
by Haldun Unal.
Association hosts the world’s largest annual diabetes conference: 68th Scientific Sessions was
held in San Francisco with 15,000 attendees.
ADA connects with the health care professionals via electronic or print educational activities;
30,330 health care professionals were served in 2008.
14
by Haldun Unal.
Leading diabetes journals are published by the ADA: Diabetes, Diabetes Care, Clinical
Diabetes and Diabetes Spectrum was delivered to 84,000 people.
ADA had 2,052 Certified
Recognized Education Programs at 3,252 sites.
Advocacy role of ADA helped pass The American Disabilities Act Amendments Act which
makes it difficult to discriminate people with diabetes. $1 billion “the Fresh Fruit and
Vegetable School Snack Program was supported by ADA.
Subsidiaries of ADA:
ADA has two subsidiaries:
1. American Diabetes Association Research Foundation Inc .: It was established in 1994
by ADA to fund diabetes – related research. ADA provides the ADA Research
Foundation grants for its research purpose. ADA receives a management fee of about
20% of contributions.
2. American Diabetes Association Title Property Holding Corporation: There appears to
be an entry in 2007 IRS 990 form related to this subsidiary and it is stated in the
annual reports that it has tax exempt status.
A third subsidiary which is called “Shaping America’s Health – Association for Weight
Management & Obesity Prevention” was shut down after the new CEO analyzed their events
and programs according to the Erica Bayless, Director of ADA San Antonio Office.
15
by Haldun Unal.
Organizational Structure:
Hurwitt & Associates have provided a depiction of a traditional nonprofit organizational
structure as shown in the chart below(xi).
When we compare this structure with the ADA’s structure, I am observing a much more
complex structure due to the variety of the services and products it is offering and also, as a
possibility, due to its size. It also shows a more vertical structure rather than a horizontal one
which brings, I believe, difficulty in focus on functions. As per email communication with
Erica Bayless below is the current structure of the ADA. In addition it does not adhere to a
16
by Haldun Unal.
particular departmantation type. For example, there are some marketing activities under
different administrators.
17
by Haldun Unal.
18
by Haldun Unal.
The figure below depicts how ADA is represented externally.
Source: (xii)
19
by Haldun Unal.
Divisions of ADA:
ADA has 6 divisions according to its 2007 ADA in Your Community Report.
These are Midwest, Northern, Eastern, Southeast, South Central. These divisions are overseen
by Vice Presidents.
However, in 2009 ADA has shown a desire to “create a field design and a management and
support structure that will accelerate revenue generation and improve mission delivery.”
20
by Haldun Unal.
In the field organization plan presented in its Field Design and Management Structure there
appears to be a migration from 5 geographical divisions to 3 divisions in conjunction with a
“Key Market Strategy” (xiv).
In its operations ADA is in search of “One Income Goal”, “One Constitutent Base”, “One
Coordinated Set of ADA Services”, “One “Face” of the ADA Services.” ADA has been
working on coordinating its activities.
21
by Haldun Unal.
Differences with the industry competitors:
I visited Erica Bayless who is the Director of the Local ADA Office in San Antonio.
According to her ADA is operating with “less personnel and more volunteers.” This statement
was in regards with the recruiting riders to the Tour deCure event. However, it is a fact that
ADA has fewer field staff as cited in their Field Design Report_Management Structure
Report. As another difference cited in this report is that the field - based revenue generation is
significantly lower compared to other NVHA’s. She also mentioned that National Multiple
Sclerosis Society has team recruiters for its ride events and they are able to fill their available
spots in about a month while for ADA it is taking about a year to hit the event goals. Also, for
comparison, JDRF has generated $147.7 millions(xiv) while ADA has generated $46.7 millions
from its special events in 2008.
Corporate and field operations are pretty much similar accross the nation as ADA has highly
diversified but standardized products.
22
by Haldun Unal.
Some information regarding warehouses, retail stores and buyers has been provided by
Darlene J. Moore, Administrative Services, ADA in Seguin, TX via email:
Warehouse: ADA does not have any warehouse facilities. It only has storage units.
Retail stores: ADA does not have any retail stores. There is an online bookstore, however,
where you can order diabetes related books.
Buyers: There are development managers who negotiatewith various vendors for equipment
and office supplies.
Marketing:
A market is defined as “a geographic area of demand.” It has classified its markets by tiers.
There are four tiers: Tier A, Tier B, Tier C and Tier D.
Source: ADA in Your Community – 2007
23
by Haldun Unal.
Office service areas are defined by market sor counties served.
In another report dated April 2009 shows that tiers are classified by the available EBI.
(xvi)
Human Resources:
“You’ll be part of a solid backbone of support that focuses on our 3Rs:
Reaching people with diabetes
Raising funds for diabetes research
Recruiting critical volunteers to participate and
organize our community programs and events.” ADA Human Resources encourages
individuals to apply to jobs at ADA.
At ADA job seekers can apply for opportunities in 17 areas of this charitable organization.
These are accounting, administrative support, communications, community initiatives,
customer service, finance, fund – raising and events, fund raising and programs, government
relations and advocacy, human
resources, information systems and
24
by Haldun Unal.
technology, internships, legal advocate, legal counsel, marketing, publications, scientific and
medical research.
Also, through a college recruiting program ADA offers internships to students and it has a
dedicated section on its career web page for this program:
http://careers.diabetes.org/college.asp?user_id=
As at October 18, 2009 ADA had 25 openings in 15 states ranging from internships to
executive director positions.
ADA is an equal opportunity employer.
Personal Development:
ADA University: ADA has created an interactive, multimedia, online training campus which
provides its students continuing development. Curriculum which is designed to improve
personal effectiveness includes programs such as ADA Products, Management,
Communication, Sales, Human Resources, Desktop (MS Office).
Benefits:
ADA employees enjoy benefits which are presented on their web site as “Benefits Fit For
Heroes”. It has a “Total Rewards Program” based on cafeteria – style benefits which lets the
employees choose their benefits according to their changing needs. Benefits are listed below:
• Pay for performance — competitive salaries, incentive awards, special recognition
awards
• Medical Care
• Dental Care
• Vision Care
• Flexible Spending Accounts
• Employee and Dependent Life Insurance
• Short-Term and Long-Term Disability

25
by Haldun Unal.
• Retirement
• Paid Time Off/Holidays
• Vacation Days
• Personal Leave and Sick Leave
• Group Legal Plan
• Employee Assistance Program
• Bank of America at Work™
• Part-Time Employment
• Fitness Program
Core Values of ADA Employees:
ADA employees adhere to a set of Core Values which can be found on its web site’s career
section: http://careers.diabetes.org:
Integrity
Ownership
Trust
Employee Standards of Conduct: ADA has established a policy to be used as a framework
for employee day-to-day conduct. With this policy, ADA ensures that its employees are
working in a safe and professional environment. Besides the infractions, it has also
categorized the Corrective Actions.
Conflict of Interest: ADA has posted its Conflict of Interest policy on its website and it
identifies the potential conflict of interest situations.

26
by Haldun Unal.
Whistle Blower Policy: ADA has an explicit whistle blower policy which can be located on
its web site. This policy includes a preamble, reporting, whistle blower protection,
investigation, and oversight sections. Whistleblower is defined as “anyone who informs
his/her supervisor, member of the Whistleblower Program Team, or other member of senior
management about an activity, which that person believes to be illegal, unethical, or otherwise
fraudulent.”
Finance:
ADA’s revenues can are divided in to two groups on the consolidated statement activities.
These are contributions and grants, and, fees from exchange transactions. Under contributions
and grants there are donations, special events, bequests and federated and nonfederated
organization revenues. Exchange transactions consists of subscriptions, sales of materials,
program service fees and other revenues (xvi).
In 2008 41.5% of the revenues was from donations which equals to approximately $92.2
millions. Donation revenue in 2008 was $1.157 millions less than 2007 donations.
Special events revenue was $54.889 millions which corresponds to aprroximately 25% of
total revenues. It decreased by $0.538 million. Revenues from bequests totaled in the amount
of $9.478 millions in 2008. There a $1.030 million decrease in total contributions and grants
from 2008 to 2007.
ADA recorded a decrease $10.753 million in fees from exchange transactions. This included a
$1.863 million dollar decrease in sales of materials and $0.918 million decrease in
subscriptions and other income from periodicals in 2008 compared to the previous year.
27
by Haldun Unal.
When we compare revenues we can see a decrease about 5% from 2008 to 2007 which may
be attributed to the downturn in the economy.
ADA program activity expenses remained about the same. These expenses include research,
information, advocacy and public awareness expenses. It decreased to $170.161 millions in
2008 from $170.184 millions in 2007 which does not reflect a significant change. Its
management and general expenses increased by 8.8% from $9 millions in 2007 to $9.867
millions in 2008. Its fundraising expenses increased from $49.018 millions in 2007 to $49.890
in 2008.
28
by Haldun Unal.
29
by Haldun Unal.
30
by Haldun Unal.
31
by Haldun Unal.
32
by Haldun Unal.
At this point, explaining the percentage expense distribution to the total expenses is vital to
understand why the expenses are classified as mentioned above and to understand how they
are used by charity monitoring agencies to rate the non – profit organizations. In addition,
there are other ratios which can be used in evaluating a non – profit organization. These ratios
are as follows:
Program Expenses Ratio: This ratio shows the percentage of total expenses spent on program
activities. It helps us understand how much of the funds collected from the donors are
allocated to the programs and services which the charitable organization promised to spent on.
The higher this percentage is the better a non – profit organization is rated. The Better
Business Bureau(BBB) has indicated in its “Standards for Charity Accounting(SCA)” that this
percentage shoould be at least 65%(xvii). The formula is:
Total program expenses

Total expenses
For the year 2008 ADA’s program expenses were 74% of its total expenses.
Administrative Expenses Ratio: This ratio is calculated by dividing management and general
expenses by total expenses:
Total management and general expenses

Total expenses
The lower this ratio the better. BBB asks the charities to spend no more than 35% of their
related contributions on fundraising for compliance with its SCA.
For the year 2008 ADA’s Administrative Expense Ratio was 4.29%.
33
by Haldun Unal.
Fundraising Expenses Ratio:
Total fundraising expenses

Total expenses
For the year 2007 ADA’s Fundraising Expenses ratio was 21%.
Fundraising Efficiency: Charity Navigator a charity evaluator organization has defined this
ratio as “The amount spent to raise $1 in charitable contributions. To calculate a charity's
fundraising efficiency, we divide its fundraising expenses by the total contributions it
receives.” So the formula will be:
Total Fundraising Expenses

Total Contributions
For the year 2007 ADA’s fundraising efficiency was 27% according to Charity Navigator.
Working Capital Ratio: Another ratio which is monitored for the charity financials is the
working capital ratio which is measure of how long can a charity can sustain its level of
spending by using its net available assets. For the year 2007 ADA’s Working Capital Ratio
was 0.26 years.
34
by Haldun Unal.
The comparison charts below are created with data from 3 non – profit organizations’ IRS 990
forms, from their financial statements and their annual reports. Best effort is made to use the
most accurate numbers. Most of the expense related numbers are from Functional Expense
Statement sections of IRS 990 Forms. Paid staff size used for calculations are from Better
Business Bureau Web Site.
*For ADA this data represents Donations: revenue other than special events, bequests, fees
from exchange transactions.
For JDRF this data represents Contributions: revenue other than International Affiliate
Transfers, Revenue, Special Events (Including Walk).
For MS this data represents Contributions form members and others: revenue other than
Interest, Gaming & Miscellaneous Income, Government Grants, Special Events.
Purpose of comparing this data is to understand the degree of reliance on donations.
JDF recorded the highest revenue among the three organizations in 2008.
35
by Haldun Unal.
I believe it is important to see the revenue per employee accross organiztions with similar
functions and size. JDRF employees contributed to revenue generation more than ADA and
MS employees in 2008.
Paid Staff
Size
ADA 897
JDRF 670
MS 1,453
The ratio of special events to total revenue can help us understand the degree of reliance on
this revenue source. Special events require effort in the field, good organizational,
communication and interpersonal skills. They also are great opportunities for spreading
information for a cause. For the special events to be successful, participant recruiting and
other marketing activities are especially important. The pricing of participation of these events
vary and ADA has the lowest minimum donation requirement for its bicycle ride for example.
36
by Haldun Unal.
Marketing efforts, concentration on certain geographical locations may increase the special
events revenue
The higher the the program expense ratio the better rating chances for an organzation. JDRF
has the highest ratio amongst all.
ADA has the lowest adminstrative expenses compared the JDRF and MS.
BBB Charity accountability standards ask that fundrasing expense ratio should not be more
than 35%. All three organizations are under that level with ADA having the highest.
37
by Haldun Unal.
Some of the costs may mean opportunities for cost savings. ADA has the highest telephone
cost according to the IRS 990 forms by 3,148,000. ADA may look for savings in this item of
expenses.
This ratio indicates what percentage of the revenue of an organization goes to research grants
for its specific cause. It may help an individual to decide which organization he / she wants to
make a contribution to. In this case JDRF is allocating most of its revenue to grants. ADA and
MS are providing more funds for the activities like advocacy and public awareness.
JDRF has the lowest professional fees percentage in their total expenses. MS has the highest
percentage.
The difference in the percentage spent on supplies may vary because of the different activities
organization has assumed. More informational activities through mail may mean more use of
supplies. It may also mean room for cost savings.
38
by Haldun Unal.
Competitive Analysis:
Five Forces of Competition:
39
by Haldun Unal.
There is no real pricing for a charitable organization, in my opinion, even though they sell
merchandise to raise funds, and, on the other hand, donation amount can start from a penny to
millions of dollars. It is not easy to have a set price for contribution to a cause whether the
charity creates circles for members who donate more than ten thousand dollars or sell books
for twenty dollars. I believe, the value and the position of an organization is evaluated by its
actions, and, increasingly and necessarily by its transparency with regards to its actions. Still,
I will attempt to examine the competitive environment in general:
Competition:
If we want to review the competition for a non profit from a financial perspective we can say
the competition which ADA faces is for the donations from the donors, particularly for the
donatons that may find its way to diabetes related casues. The search with keywords “diabetes
association” for non – profit on Guidestar.org produced 660 results. However, competition is
not only from the diabetes related non – profits. Other non – profit healthcare agancies or
organizations and more are in the competition. It may be in a similar product from a different
type of organization. For example, the bicycle rides which are organized by Livestrong and
National Multiple Sclerosis Society organize or nutrition programs of American Dietetic
Association can be examples of competiton. Despite the fact there may be competiton from
many directions ADA’s position as a leader non – profit in the race to find a cure is not likely
to change.
Barriers to Entry:
40
by Haldun Unal.
There are 956,760 public charities registered with the IRS according to National Center for
Charitable Statistics. This high number of public charities shows me that there is not a
significant barrier to entry.
Substitutes:
There are substitutes in the non – profit world for the people who want to make donations. In
particular case of ADA, although the number of substitudes may be limited, other causes may
be substitus for some donation dollars. Individuals who do not have diabetes but who may
want to contribute to the society may choose for any reason another cause for their donation
budgets.
Power of Suppliers:
Large geograghy where the populations are served may be limiting the power of suppliers,
however, other suppliers do exist small or big. They do have an impact on the amount of
donations collected and even a new charity in a small. Therefore, it would be deceptive to
underestimate that there are other suppliers.
All said, it is important to point out that the competition do not have to be brutally harsh for
these non-profits. Instead, cooperation and collaboration must be sought.
Economic Environment:
The most recent financial crisis is effecting the non-profit organizations. A survey by the
Corporation for National and Community Service and the John Hopkins Nonprofit Listening
Post Project shows the level of fiscal stress on organizations. The non-profits and AmeriCorps
sponsor organizations were surveyed for the period of September 2008 and march 2009. 80%
41
by Haldun Unal.
of the organizations reported that they experienced financial stress to some level. 40% of
them felt the stress severely or very severely. 23% of them reported decreasing staff hours and
a third reported eliminating staff positions. Despite the negative environment and decrease in
staffing, nearly 75% of these organizations reported that they maintained or increased the
number of the people they served. 60% of the severely and very severely affected
organizations also reported that they maintained or increased the number of the people they
served. They were able to maintain levels of people served with the help of volunteers. During
the downturn their reliance on volunteers increased.
In 2008, the charitable giving decreased to $307.7 billion by about 2% compared to 2007.
Individual giving was $229 billion down by 2.7% and corporate giving decreased by 4.5%.
This situation may not improve signficantly, but may remain at about the same levels if the
economy starts to recover slowly as the Congressional Budget Office(CBO) 2009 – 2019
Economic Outlook indicates: acccording to CBO hs expected a slow recovery in the second
half of 2009 and grow by only 1.5% in 2010.
Non-profits are reliant on volunteer work at different levels. Monetary value of the volunteer
time differs from state to state. Percentages of residents of different states who volunteer are
diferent, too. The figure below shows a distribution of volunteer work total monetary value by
state.
42
by Haldun Unal.
The figure below shows the percentage of volunteerism by state.
43
by Haldun Unal.
California had the highest dollar value of volunteer service by $162 billion in 2008 with less
than 26% volunteer rate.
44
by Haldun Unal.
An important statistics provided is the distribution of volunteers by education levels:
42.2% of volunteers had bachelor degrees or higher, 30% of them had some college
education, 19.1 % of them had high school degrees and 9.4% were not high school graduates.
SWOT Analysis:
Strengths:
ADA’s most important strength is their constituent base. They have great support from them
which, of course, comes together with responsibility of stewardship of the donations dollars
appropriately. Other strength of ADA is its brand name which is associated with many
diabetes related research, information and advocacy activities; in other words its reputation.
Branching out with local offices is a strength which makes it easy for them to reach out to
their target market. Also, the product variety is a strength which opens up the possibility of
continous revenue stream.
Weaknesses:
High number of products its offering is making it difficult to focus on the delivery of its
mission.
Low average participation in special events such as in Tour de Cure is another weakness.
Heavy reliance on contributions other than special events.
Opportunities:
Growing social networking websites may bring additional revenue.
Following the online shopping trends can create additional revenue streams. Recreational
activities are great opportunities for potential revenues.
Wireless technologies and applications are creating revenue opportunities.

45
by Haldun Unal.
Electronic publishing can be an opportunity for cost reduction.
Higher education institutions are great opportunities for to increase volunteer and constituent
base, for additional revenues and to deliver information.
Threats:
If the economy does not recover, individuals and corporates may make lower levels of
contributions with their already contracted budgets.
ADA is supporting stem cell research. This situation may upset people who are against stem
cell research and they may not be willing to donate to ADA. I see this as a mild threat, but one
that should be addressed properly.
Inefficient use of donations as it has happened in FTI fundraising contract. Donors are
scrutinizing the organizations increasingly; I believe this is a high level threat.
Strengths Weaknesses
• Constituent base • Lack of focus due to diversity of services and
• Brand name products
• Past achievements • Low average participation in special events
• Local offices
• Diversified product line

Opportunities Threats
• Growing social network sites • Delay of economic recovery
• Online shopping • Controversial research support may upset
• Wireless technology some donors
• Electronic publishing • Inefficient use of donations may damage its
• Higher education institutes reputation
Goals and Strategies:
Goals:
46
by Haldun Unal.
In my opinion ADA should consider the following goals:
Cost reduction should be a one of the top priorities.
Increasing revenues from the special events by actively recruiting participants.
Increase donations by using low cost wireless technologies.
Increase employee productivity by reviewing and updating job descriptions. Retraining may
be necessary to better communicate with the local community.
Enlarge the volunteer base and make sure volunteer base has continuity.
Strategies:
Create in-house call center operations. This could be done at divisional levels or at local
chapter levels. All year round continuous contact with the existing constituent base and with
the prospects can be sought.
Online store can be expanded to match the nature of the special events and this can bring
additional revenue.
In order to enlarge the volunteer base ADA can approach universities and colleges and
branch out by helping create ADA Student Chapters at every college across the United States.
ADA can approach wireless carriers and ask them for annual campaigns to ask for donations
via text messages. And also, it can be advertised on the ADA web site indefinitely for easy
giving.
Creating in-house call center and eliminate commercial fundraisers:
47
by Haldun Unal.
Pros: Cons: Risk: Cost
-Own telemarketing -Training staff may -Delayed -Cost of personnel

operations take long time. implementation may training.
-Do not have to split increase lapsed
donation dollars with memberships and
a commercial fund cause revenue loss.
raiser.
-Already have an
established national
call center.
In order to enlarge the volunteer base ADA can approach universities and colleges and branch
out by helping create ADA Student Chapters at every college accross the United States.
-Great diabetes -May not bring great -ADA may have to -Supplying the
related material monetary share risks associated students
distribution points contribution in the with the student with materials
-Ready student short run. organizations.
population looking
for community
service
-Continuity of
volunteers
ADA can approach wireless carriers and ask them for annual campaigns to ask for donations
via text messages. Also, it can be advertised on the ADA web site indefinitely for easy giving.
-Low cost. -May irritate - -Cost of personnel

-Easy operation. constituents who training.
receive the text - Scams by
messages. commercial
fundraisers may
affect reputation of
ADA adversely.
Implementation of the in – house call center:
48
by Haldun Unal.
I chose in – house call center for ADA’s telemarketing activities in the future. Since, believe
in – house telemarketing makes financial sense. When I look at the proceeds by FTI in
telemarketing activities for the highest percentage of the total proceeds ADA received is 39%
in 2005. There is a second filing by FTI for ADA with State of California for a net gain
realized by ADA at 33% in 2005. In 2004 ADA received 35.57% of the proceeds while the
rest remained with FTI. In 2007 there were two separate entries for commercial fundraisers by
FTI for ADA in the State of California Commercial Fundraiser Report of 2007. Both of them
resulted in negative returns to ADA. In 2007 IRS 990 of ADA, there is a compensation entry
of $6,630, 235 to FTI for fundraising support and another compensation entry of $1,330,117
IMC for telemarketing. Although I was not able to find state filing for 2006 Telemarketing
activities of FTI on its 2006 IRS 990 form it is one of the five highest paid independent
contractors for other services and the compensation amount is $3,993, 836 for fundraising
support and telemarketing. There is another compensation entry for same type of service for
$1,519,881 to IMC.
Commercial fundraiser proceeds split between the charity and the telemarketer:
$ 2004 2005 2005 2007 2007

ADA 2,082,848 4,512,666 3,524,020 -1,861,485 -2,103,189
FTI 3,613,877 7,092,617 7,284,464 7,021,365 6,260,504
TOTAL 5,696,725 11,605,283 10,808,484 7,021,365 6,260,504
% TO ADA 35.57% 39% 33% -26.51% -33.59%
The percentage of employee cost to the total expenses was 30% in 2007. I will add another
10% per year for additional costs of the in-house call center.The total cost of operating will be
about 40% for opereating the call center given that ADA already has a National Call Center
49
by Haldun Unal.
which receives about 300,000 calls and emails every year transition may be smoother with
already trained employees( I am assuming that the National Call Center is in – house).
The call center may be established at divisional level or it may be at local office levels. Today,
there are call center employees working in their homes for airline companies. This gives me
the idea that if such operation is working for an airline company it can well work for a non –
profit, although in this case outbound calls are in question. I also believe that if a constituent is
called from a local office or at least from an ADA divisional office, that constituent would be
happier than receiving a call from a telemarketing company which is related to the ADA only
with a contract. The nature of giving urges people to question where the money donated is
going and increasingly individuals are makingmore informed decisions with the available the
internet based tools provided by non-profit rating agencies.
I will transition my outsourced telemarketing operations to in-house gradually considering the
time to train employees and gain experience. This will happen in 20% increments of the total
target operation size.
For best case scenario I will add the proceeds of 2007 and the compensation to FTI which
totals to calculate what could be the revenue if the fundraiser was done in-house. This amount
is about $20 million. I will call this amount as savings since I am reducing the cost of
compensating FTI and I am saving the opportunity cost of the donations which I was not able
to collect before.
For a modest expected scenario I will keep the proceedings at 50% of the best case scenario.
50
by Haldun Unal.
For the worst case scenario I will assume in-house call center operations failed after the
second year due to lack of enough number of trained employees and difficulty in
implementation in different locations.
51
by Haldun Unal.

CapStoneProject Uiw ADA Haldununal 2009fall

Uploaded by

Copyright:

Available Formats

You might also like

CapStoneProject Uiw ADA Haldununal 2009fall

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

CapStoneProject Uiw ADA Haldununal 2009fall

Uploaded by

Copyright:

Available Formats

UNIVERSITY OF THE INCARNATE WORD

CapStone 2009 Fall

American Diabetes Association is a non – profit voluntary health agency.

8% percent of the US population. Awareness raising is particularly important besides research

diagnosed with diabetes have type 2 diabetes.(iii)”

Subject organization ADA is a non – profit charity.

Non – profit status of ADA:

( 3 ) and is tax exempt.

ADA Principal Program Activities:

Current Research Outcome Expectations:

• Enhance the pool of researchers.

• Make ADA the primary voice for all diabetes research.

and their health care providers.

Current Information Outcome Expectations:

• Enhance position as the authority of information.

• Provide the primary care community with the necessary information.

• Recognition as the first contact for information following diagnosis of the

Current Advocacy and Public Awareness Outcome Expectations:

• Greater understanding of the seriousess of diabetes.

• People with diabetes have access to all diabtes related information.

• Perception of ADA as a constituent – centric organization.

ADA Funding for Its Activities:

Where does the money go? There are 3 expense areas:

1) Program activities: Information, research, advocacy & public awareness, fundraising

and management expenses form the program expenses.

2) Management and general expenses.

Current Revenue Expectations:

• Diversify revenue sources.

• Encourage high performance.

• Create a flagship event(iii).

What does ADA do raise funds and deliver its mission?

Community Programs and Local Events:

StepOut: This is an event which raises over

$20 million. In 2008 over 100,000 walkers

participated in 180 cities.

Tour de Cure: This is a ride where cyclists in more

than 40 states join. There were more than 40

thousand riders in Tour de Cure rides in 2008 (iv).

B.A.D Ride ( Bikers Against Diabetes): Motorcycle

riders get together in 7 states to raise funds for fight

Diabetes Expo: This is a trade show where diabetes

related products, services and information are offered

to visitors(vi). This community - based product attracted more than

83,000 consumers at 17 locations. It features free health

screenings, cooking and fitness demonstrations.

same time, educates them about diabetes.

Community Campaign For Diabetes: The campaign

brings more than $10 million every year. Volunteers

ask their neighbors and friends for donations as they

distribute a risk test(iv).

Cure, interactive tools like MyFoodAdvisor were added.

Family Link is ADA’s subportal for kids and parents

about diabetes and its activites targeting kids.

both in English and Spanish.

1701 North Beauregard Street

ADA has 100 community offices and 99 leadership councils.

Chief Executive: Larry Hausner, Chief Executive Officer

Corporate Relations Officer.