Harlan Foundation was created in 1953 under the terms of the will of Martin Harlan, a wealthy Minneapolis benefactor. His bequest was approximately $3 million and its purpose was broadly stated: income from the funds was to be used for the benefit of the people of Minneapolis and nearby communities.
In the next 50 years, the trustees developed a wide variety of services. These included three infant clinics, a center for the education of special needs children, three family counseling centers, a drug abuse program, a visiting nurses program, and a large rehabilitation facility. These services were provided from nine facilities, located in Minneapolis and surrounding cities. Harlan Foundation was affiliated with several national associations whose members provided similar services.
The foundation operated essentially on a break-even basis. A relatively small fraction of this revenue came from income earned on the principal of the Harlan bequest. Major sources of revenue were fees from clients, contributions, and grants from city, state, and federal governments.
Exhibit 1 is the most recent operating statement. Program expenses included all the expenses associated with individual programs. Administration included the costs of the central office, except for fund-raising expenses. Seventy percent of administration costs were for personnel costs.
In 2005, the foundation decided to undertake two additional activities. One was a summer camp, whose clients would be children with physical disabilities. The other was a seminar intended for managers in social service organizations. For both of these ventures, it was necessary to establish the fee that should be charged.
The camp, which was renamed Camp Harlan, was donated to the foundation in 2004 by the person who had owned it for many years and who decided to retire. The property consisted of 30 acres, with considerable frontage on a lake, and buildings that would house and feed some 60 campers at a time. The plan was to operate the camp for eight weeks in the summer and to enroll campers for either one or two weeks. The policy was to charge each camper a fee sufficient to cover the cost of operating the camp. Many campers would be unable to pay this fee, and financial aid would be provided for them. The financial aid would cover a part, or in some cases all, of the fee and would come from the general funds of the foundation or, it was hoped, from a government grant.
As a basis for arriving at the fee, Henry Coolidge, financial vice president of the foundation, obtained information on costs from the American Camping Association and from two camps . . .
- What weekly fee should be charged for campers?
- Assuming a fee of $100, what is the break-even point of the seminar?
- What fee should be charged for the seminar?