Monday, April 18, 2011

Guidelines for Developing a Budget for a Non-Profit Organization

Budgeting needs to be placed second in a two-part approach with planning. When budgeting is teamed with planning, the figures cease to be just hazy projections snatched out of the sky, but logical predictable numbers that flow easily out of the overall plan. Budgeting without planning gives you little more than a record of income and expenses. Planning puts you in control of that record, and provides both the means and the impetus to use those numbers to insure the organization's success.

Planning starts with ideas. It is knowing where you would like your organization to be in the next year, the next two years, or the next five years and in mapping out the most direct route to get there. Perhaps you would like to double your membership. Or, perhaps you want an office and office equipment. At this point it is not as important what the substance of the objectives are, but rather that you know what they are. Once you know where you are and where you want to go, budgeting becomes the dollars and cents needed to be acquired and expended during a particular time in order for the end to be reached.

Once there is agreement as to what the objectives will be, the next step is to determine what particular programs are necessary in order for these objectives to be met. In other words, for each objective there will be several tasks which must be completed by specific areas of the organization. In addition, there will be income sources which must be identified and funds that must be allotted.

Objectives then make up the activity schedule from which the monetary side of the plan can be developed. The budget then begins to evolve.

It is extremely important to generate objectives from each area of the organization, and it should be the responsibility of each area to determine what part it plays in the overall mission. Moreover, it should not be overlooked in planning objectives that the governing board itself will have objectives regarding new projects and administrative changes.

Once the objectives are agreed upon, they should be turned over to the particular area of the organization to which they apply These areas, in turn, will determine what specific tasks must be accomplished to make the objectives realities. Some of the tasks will carry monetary costs, while the price of others cannot be measured except in volunteer hours. In other words, some tasks will represent expenditures, others income and others are fulfilled by volunteer time only.

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