I think basic accounting ratios and financial analysis are quite helpful for getting a basic view on return on donations and high level valuations of charities.
However, I do think this post underrates the value of assets.
Increased cost effectiveness over time usually comes from investment in quality assets (I’d include staff costs as assets - for management accounting purposes not for external financial reporting purposes).
Does AIM publish any estimates on the valuation of its IP and other intangible assets?
I think there was a conservative counterfactual estimate of the value of a founder somewhere too.
I’d say there’s a decent number of highly effective charities with very valuable IP that are too leveraged on the output of very few staff members.
This makes them riskier and more exposed to shocks.
Quite frankly I’d rather they fundraised more than they needed and hired extra staff /​ had more in reserves for contractors than continue to run lean.
Useful post.
I think basic accounting ratios and financial analysis are quite helpful for getting a basic view on return on donations and high level valuations of charities.
This is a decent high level overview: https://​​www.investopedia.com/​​terms/​​f/​​fundamentalanalysis.asp
However, I do think this post underrates the value of assets.
Increased cost effectiveness over time usually comes from investment in quality assets (I’d include staff costs as assets - for management accounting purposes not for external financial reporting purposes).
Does AIM publish any estimates on the valuation of its IP and other intangible assets?
I think there was a conservative counterfactual estimate of the value of a founder somewhere too.
I’d say there’s a decent number of highly effective charities with very valuable IP that are too leveraged on the output of very few staff members.
This makes them riskier and more exposed to shocks.
Quite frankly I’d rather they fundraised more than they needed and hired extra staff /​ had more in reserves for contractors than continue to run lean.