Chapter 13 Leaders in Practice Profiles

Louise Cave

Director, Birralee Multifunctional Aboriginal Children’s Service (MACS), Tamworth (NSW)

What would you say as a leader in a MACS service are the financial responsibilities in managing your vision day-to-day?

I am aware of my amazing and deadly leadership skills (lol), but my finance background is limited; other than attending the odd ‘financial matters’ training workshops, I have no formal account keeping qualifications. Yet, the responsibility for a significant amount of government and community money is mine. So straight away when I came into my current position of leadership I accepted it on the condition of recruiting a bookkeeper, a person who had the financial skills that the service needed, knowing my own limited skills in such an important area.

Birralee MACS is an Aboriginal corporation that reports to Office of the Registrar of Indigenous Corporations (ORIC) and a clear audit is essential for ongoing Aboriginal corporation status that is needed to support our community in so many ways, such as housing etc. Also the Department of Education, Employment and Workplace Relations (DEEWR), our primary funding body, requires a quarterly financial report for continued funding each year. Department of Community Services (now Department of Education and Communities) gives us a little bit too and they require the same. So you can imagine the need to get it right! We have a clerical person that completes all financial matters with my authorisation and we submit this to our accountant each month. Our bank accounts are linked to the accountant’s system so each month it is balanced, same as the wages, petty cash etc. This is a costly part of our bookkeeping but necessary, so Birralee continues to operate a high-quality Aboriginal early childhood service. We have seen in New South Wales alone prominent Aboriginal early childhood services close due to difficulties with financial mismanagement. The financial state of the service determines so much that affects the day-to-day operation, so knowing I have support from the experts is reassuring and I can continue doing what I am better at—that is, leading the centre.

How do you use your financial records to inform your leadership recommendations and decisions?

Birralee MACS responds to the community, after all it is a community service, so when families have financial difficulties that impact on our fee collection, attendance and service delivery, really good policy around these issues is essential. Access is an important issue and the lack of places that support places for Aboriginal families and children is a high need in our area. We are constantly advocating for more places, so when the opportunity came to create more places through a state funding program we quickly looked at what we could do. The first thing was sustainability. How much would it cost? And continue to cost? We recruited again the ‘experts’—our accountants—and the funding body. This was never an exercise around how much money we could make but how many places we could create.

Could you describe how you went about establishing a financially viable community-based multifunctional service?

We didn’t have funds allocated for start-up costs to start ‘researching’; we approached the funding body with our concern and they helped us apply for additional funding that they knew was available, so I think it is really important to be honest and let all parties know what you can and can’t do … and if limited, ask what support can be offered. And can I tell you, I have made the best professional relationships based on this that have continued and you find yourself continually supporting each other not in a deficit way but like a relationship.

What were the challenges that you encountered and how did you overcome these problems?

In working with DEEWR I became aware of specific strategies to support families in paying their fees. This decision to discuss linking fee payments to Centrelink payments and having an automatic transfer was a hard decision at first and not one that everyone appreciated. I eventually saw this as a method to support families in paying their fees regularly and not falling behind and accruing a very large amount which I knew they would never be able to pay back. As our biggest risk is non-payment of fees then this was the only choice that I could have made. So as a leader I had to weigh up what would be perceived as controversial to what would ensure we did not have families who could not catch up in paying their fees.

Published 2012

Daniela Kavoukas

Centre Director, Flemington Childcare Co-operative, Flemington (VIC)

As the director, what are your key responsibilities in terms of the ‘money matters’ of running a community-managed EC centre?

The financial management of Co-op (where I work now) is always floating around in my head somewhere, even in my dreams, I’m sure. Some days it’s like a game of chess—I can’t move one thing until the other piece falls into place, and the money must come in before it goes out.

Coming to the Co-op taught me a new appreciation for the financial aspects of operating a not-for- profit community-managed centre. Of course, there are the everyday monetary tasks required to keep any business afloat—like paying wages, bills, invoicing families, comparison quotes from utility companies … the list goes on. However, entering an organisation that was struggling financially opened my eyes to the importance of having a solid comprehension of the financial aspects of Co-op. I completed a financial management course for not-for-profit organisations to understand how to read profit and loss reports and balance sheets. Budgets became serious, down-to-the dollar detail and every possible expense and income was documented.

Knowledge of the financial aspects meant that I could also support the board of management in their role, whether it be through conversation, examples or organising committee training. Collaboration with the board has been critical in ensuring that the forecast expenses and business plan for Co-op are not just my thoughts. The goal for the Co-op is to remain viable long into the future—this means we must find the balance between financial viability and affordability for families without cutting quality. To do this I start with a budget template that is only my staffing expenses, outlining what isn’t negotiable. Food is our second biggest expense, and another item where I refuse to negotiate quality. Items such as craft materials, consumables, and excess Lego, puzzles and toys are things I try to reduce. We seldom order from teaching catalogues when households have so many items that we can use. Second-hand coffee tables make great child-size tables and look much more homely.

Good relationships with families are paramount in all aspects of the service being sustainable. We explain to families from the beginning that we have low ratios and well-qualified staff, which makes our fees a little higher than some in the area. Conversely, these good relationships support communication with families when times get tough—if families need to come and talk to you about financial strain, or if you need to approach a family regarding late payment of fees, established rapport with families reduces the stress of these difficult conversations.

How does your EC pedagogical knowledge inform your leadership decisions and recommendations about the centre’s financial viability?

Our financial records inform our business plan, and help create our projections and achieve our financial goals. It has been critical that I think of Co-op as a business and use that mindset to be strategic in forecasting. Paramount to our financial success has been the ‘magic’ number of children we are licenced for. By expanding our building a year ago, the addition of six children meant more income each year to invest in quality program delivery. This was used for funding additional educators to provide opportunities for our children to spend time in the community on a weekly basis, offer in- house professional development on curriculum matters for all staff and renovate our outdoor spaces in the near future incorporating a variety of calming, hidden, open-ended spaces where the environment provides endless teachable moments. It was a worthy renovation for the longevity of our service.

What challenges have you encountered and how did you overcome these problems?

The greatest financial challenge for Co-op has been utilisation. In my first years, Co-op was running below the anticipated 95 per cent of our budget. For us at the time there weren’t many three- and four- year-old children in the community. This meant restructuring the children’s groupings, including building a kindergarten room for three-five year olds. I became so resourceful, because I was trying to save every penny I could. All of sudden you realise you don’t need a $2000 budget for art and craft, that storage cupboards full of matching boxes aren’t necessary. Today, sustainability is embedded into Co-op, and it’s occurring naturally.

There have been moments where I felt physically sick reading profit and loss reports. Regular monitoring of records increases predictability of finances, and today it is highly unusual that the financial records for each month would be a surprise to me. Grants were an important part of survival for Co-op and still are. As we recognised the time that it took to create high-quality grant applications, we prioritised our board members’ roles for two people to be grants officers. This enabled us to share out the workload and have more time dedicated towards important applications.

In understanding an EC centre as a business enterprise, what advice would you give to an aspiring leader?

It has been important for me to ensure that although Co-op has had some hard times over the years, that we don’t become run down and unsightly. Gratitude has played a big part for my staff and me. We are grateful to work in a lovely community and pride ourselves on the high-quality education and care that we provide, not on how expensive or how new our equipment is. At times as a leader you can walk into other spaces and be envious of what others have. Take these moments as opportunities to reflect on how you would like your centre to be in the future—they may just be your next financial goals.

Anthony Semann Colin Slattery

Semann and Slattery, Sydney (NSW) and Melbourne (Victoria)

How do you introduce the concept of the need to develop a business plan when running an early childhood organisation?

Early childhood organisations are no different to any other business enterprise that is conducted across Australia in that they are required to plan for the future. Business plans enable organisations to be guided across a range of functions including recruitment, marketing and finances. As consultants we frequently see early childhood programs that, through a lack of planning, find themselves in financial crisis including difficulties in managing the costs associated with delivering the program. In working alongside early childhood organisations we explore with senior management the range of issues that may impact on operations and the plans or strategies in place that will assist them in making strategic business decisions. Such an approach often highlights that an ‘organic’ approach to business operations does not serve these organisations well and as such planning for growth, the unexpected and tougher times is fundamental in running a successful early childhood organisation. It is unfortunate, however, that often it takes a crisis to alert individuals to the fact that business planning should be part of everyday organisational management, rather than a reactionary strategy to an existing or looming crisis.

What would you consider to be the key elements of a business plan for an early childhood setting?

The key elements of a business plan include understanding the social and political context of the sector and community in which you operate. Undertaking an environmental scan is a good place to start in developing a business plan. An environmental scan allows you to find out who is operating in your community, where the sector is heading and what changes may be awaiting the sector.

In developing a business plan it is also important to have knowledge of the demographics of your local community. This is easily done by accessing census data. A business plan should include key outcomes and objectives for the organisation over a 12-month period, identification of any capital works to be initiated within the 12-month time frame and any potential human resources issues. A simple table that includes outcomes, strategies and resources is required (including people or finances) to map out responsibilities, time frames and progress. A review should take place quarterly in order to track progress against these outcomes.

What would you identify as the pitfalls in the financial management of an early childhood setting and what steps could be taken to prevent these?

There is a diverse range of issues that impact directly on the poor financial management of early childhood organisations. First, there seems to be a taboo associated with using business or economic language when it comes to delivering early childhood programs. This has led to some very one-sided debates and as a result maintained a silence around the importance of financial management of programs. The most pressing challenge is the lack of financial literacy and skills evident across the management team. This may be the result of minimal financial training or too often a lack of interest with issues related to finances. Sadly, often it is a combination of the two and is a recipe for a disaster. Program managers need to be proactive in seeking the necessary skills to run a financially healthy and viable organisation. This in no way is to detract from the other important aspects of this individual’s role including leading people, evaluating and supporting contemporary pedagogical approaches or working with families. However, without a financially viable early childhood organisation there would be no organisation to run. The ‘fake it ‘til you make it’ approach is not appropriate. Program managers need to seek support prior to a crisis, increase their knowledge through professional development delivered by financial experts and develop processes that allow for the strict monitoring of the organisation’s finances.

What advice would you give to an aspiring leader about financial management and accounting principles or key rules?

The key pieces of advice that we often offer aspiring leaders and existing leaders in early childhood organisations are as follows:

• Asking for help doesn’t make you a failure—always seek help before it is too late, and often it can be too late if a minor issue is allowed to continue to grow.
• Increase your own skills through specialised professional development—there is a range of professional development programs for those who require basic through to more complex financial skills. Enrol in a course and develop the fundamental finance literacy and skills required to run a small business.
• Develop monitoring systems—finances cannot be left unattended for more than a month. On a regular basis review how the organisation’s finances are travelling and benchmark these across sector standards.
• Become familiar with financial software—don’t be scared of financial software, be scared that you don’t know how to use them. Financial software is developed to make your life easy, so be proactive and learn the tools of the trade.