The June Baseline magazine features an article by Stephen Johnson, chief financial officer of Arc of Yates, explaining how the nonprofit uses @RISK and Monte Carlo simulation to account for potential shortfalls in annual budget planning.
Founded in 1975, Arc of Yates is a nonprofit organization for people with developmental disabilities. Arc of Yates provides a wide range of community-based services, including service coordination, residential living, clinical services, employment opportunities, and industrial and educational development throughout Yates County in upstate New York.
Johnson outlines how Arc of Yates used @RISK to develop effective strategic financial contingency plans and communicate challenges to board members and other stakeholders. Johnson writes, "We also were able to quantify the magnitude and probability of risks in our funding streams that could affect our financial planning. And we could update risks monthly or even weekly to keep up with our fast-paced environment. As a result, we were able to gain crucial insights that enabled us to develop our three-year strategic financial plan."
He continues: "Using @RISK has empowered our organization to foresee potential obstacles and shortfalls in our budgetary forecast. By understanding risks, we are able to both quantify and focus on other activities that may generate replacement revenue and produce contingency plans for cost reduction."