Thursday, March 1, 2012

No-Kill Delaware Needs Accounting 101

I'm sure there are followers of No-Kill Delaware that believe their rants, especially those regarding the stockpile of money that Kent County SPCA. I don't want everyone across the US to stream into our state looking for the Fort Knox of the Eastern shore or gold that the leprauchan has stashed at the end of the rainbow, so I think it's necessary to separate fact from fiction.

Today the following post appeared on No-Kill Delaware's Facebook page.

"This is the kind of creativity that we'd love to see at Kent County SPCA in order to increase adoptions of Pit Bulls. This kind of thing doesn't cost much, and of course KCSPCA has millions of tax dollars."
Below is also a screenshot of that post.

So let's examine the facts put out there by the brilliant financial experts at NKD.  Where do they get the notion that KCSPCA is sitting on millions of dollars?

Below is the balance sheet for KCSPCA ending 9/30/10.

KCSPCA Balance Stmt 9-30-10
 Looking at the balance sheet, yes Kent County SPCA has over $3.1 million in assets.  While NKD is probably sitting on the Facebook page proud of another quip, let's look at the detail of the balance sheet to see what's behind those numbers.  Of that $3.1 million, more than $2.4 million of those assets are in value of land, building and equipment, and only $585,212 in cash and investments.  Since land and equipment isn't the typical currency that will buy PSA time, I would say their claim that KCSPCA is sitting on millions that can be spent on a moments notice is clearly false. 

OK, so maybe I'll give them the benefit of the doubt since they also mentioned tax dollars and may be speaking from a revenue standpoint, so I will also include the revenue portion of the Income Statement below.  Yes, KCSPCA gets $2.76 million from all 3 counties in Delaware who contract with them for dog control services.  I think it's a good business assumption that the counties are paying to for KCSPCA to use those funds to have officers on patrol in their respective counties and a certain amount for care of the dogs picked up.  So while KCSPCA does get $2.76 million of funds from the counties, those funds are expected to pay for what the contracts intended - dog control.  Also, NKD needs to keep in mind that it's not like the counties write up a contract and pay them a large bundle of money at the time they sign the contract.  Funds paid under most contracts like this are paid on a monthly or quarterly basis, so that means that while KCSPCA may get $2.76 million for the year, since the money comes in to them under installments, they obviously never have millions on hand as NKD likes to so often imply.

KCSPCA Income Stmt (Revenue) 9-30-12
 So is NKD really so dense that they don't understand basice finance, or do they just spit numbers out and hope that people buy their spun tales?  I can't answer whether it is ignorance of basic financial principals, or whether it is distorting the truth to try and pirate donations away from KCSPCA to their rescue, but the numbers and basic business principals tell us alot. 

It also makes me wonder if NKD's lack of financial and business skills is the very reason that their new shelter, which was expected to open last year, is still not open.  Maybe the leadership of that shelter needs to figure out that you don't build a multi million dollar shelter that requires $750,000 to operate (based on their own proposal), when most years they only took in 100-200 thousand in donations.  One time grants and bequests are great, but operating effectively means having a fairly reliable revenue stream.  So the analogy is that they built their dream home on the hopes of getting the executive job, but when job didn't appear and the pay increase didn't come in, it's difficult to service the debt on the mansion.  It's not comforting that people haven't learned better from the housing crisis of the last several years.   Fancy houses or shelters are nice, but if you don't have the money to operate them once they are built, then maybe it's time for NKD and their associated shelter, to take a look at what they are lacking in financial and business knowledge and make changes that will help animals in Delaware instead of continually griping about others.  Just think NKD, if you gave up one ridiculous post a week, you would have time to take Accounting 101.