Budgeting gwn 061213

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Presentation to the June Membership Meeting of Grant Writers Network of Greater Houston

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Budgeting gwn 061213

  1. 1. John F.X. Prior, LCSW, ACSWProgram ImprovementTeam LeaderHarris County Protective Services for Children & AdultsGrantWriters Network of Greater HoustonJune 12, 2013
  2. 2. What is a Budget?A numerical expression of an organization’sdreams that serves as a guide or measureof acceptable financial performance.
  3. 3. Benefits of a Budget Establishes goals to be achieved Identifies work to be done Projects resources that will be needed to get workdone Establishes timetables and deadlines Assigns individuals responsible for work Provides a tool to control spending Serves as a basis for evaluation
  4. 4. Ways to Use a Budget Track Income & Expenses Agency, projects, departments, or programs Plan Capital Additions Track Investment Income Monitor Cash Flow Plan Fundraising events Manage Income Generating Activities Provide Personnel Projections
  5. 5. Advantages Enhances likelihood that organization will be financiallysuccessful Tool that translate abstract goals into determinableinformation; stipulates performance goals Budgeting process leads organization to look at itself, setpriorities, and to narrow its choices Facilitates coordination and cooperation betweenvarious programs and financial department Periodic budget comparison to actual performance canidentify problems and allow time for a response tochanging conditions Measures financial performance in relation toexpectations.
  6. 6. Disadvantages Tendency to emphasize cost control Presence of controls may stifle creativity Budget based on historical data only can fail tokeep up with changing circumstances Budgets completed by only financial personnelcan result in a plan without adequate staff input Not easy to implement and may requireenthusiasm among management staff to beaccepted as useful
  7. 7. Roles of Staff to Create aBudget Program Staff knowledgeable about theProject (Content Experts) Agency Accountant, Treasurer, or ChiefFinancial Officer IF NOT: Someone knowledgeable about the project& organization Person who regularly handles finance
  8. 8. Budget Components INCOME Donations & Memberships Service Delivery Fees Grants and Contracts Investment Income
  9. 9. Budget Components EXPENSES Personnel Fringe Benefits Travel Equipment Supplies Contractual Construction Indirect Charges
  10. 10. Annual Policy Decisions Speculative Income Changes in Service Fees Income that is expected but not yet committed (pending grants,pledges, income from new programs/services, fundraising) Risk Assessment: Are there funding sources that are at risk of reductionor elimination Cost Increases Anticipated increases to salaries, wages, or operating expenses Include increases for contracted services Cost of Generating Future Income: Costs associated in seeking newfunding sources (proposal writing, fundraising campaigns, andfundraising events)
  11. 11. Estimating Projected Income Project Grants or Contract Income Actual income and estimates from funding sources Funding Source Payment Schedules Status of negotiations for new contracts or grants Ongoing or Special Fundraising Campaigns Past year’s experience Current pledge collection rates Net income from fundraising events Economy Fees and Services Past year’s experience Adjustments to fee amounts Projected service levels or caseloads
  12. 12. Personnel Budgeting Typically the largest portion of a budget for ahuman service organization (60% - 85%) Identify all positions to be budgeted, full andpart-time employees For each position, identify Hourly Rate, Total number of Work hours for each position, and Total Wages Account for Salary Increases Budget for Overtime on a separate line item Calculate Overtime at one and one-half of hourly rateof pay (1.5)
  13. 13. Projecting Fringe Benefits Standard types of costs associated with havingemployees Social Security (FICA); 7.65% Medical/Health Insurance Unemployment Insurance Workers Compensation Retirement Calculate at: A percentage of total Wages and Salaries, or Based on Actual Costs
  14. 14. Operating Budgets Identify Projected Cost Evaluate trends for past costs by reviewing previous budgets Consider Rate of Inflation Contact vendors or providers and ask for estimates Identify Changes in Usage or Volume Increases in staff size, and impact on use of facilities, supplies,travel, training, etc. Increases in Program Costs resulting from increased programactivities Decreases due to lower utilization of programs due to reducedstaffing, funding, due to changes in program activities. Timing: Estimate when costs will be incurred. Large one timeexpenses can create cash flow problems. Consider lump sumpayments vs. smaller periodic payments.
  15. 15. Budget Narrative Includes detailed calculations withestimation methods, quantities, unit costs,and other similar qualitative detail. Discusses necessity, reasonableness, andallocation of costs.
  16. 16. Functional Expenses Indirect Costs Costs not readily identified with a particular aspect oforganizational operation (i.e.: administration,fundraising, etc.) Allocation Methods Percentage share of the total budget or total salarybudget Per unit cost of an activity Use of Space
  17. 17. Functional Expenses Functional Expenses Administrative and Operational Costs that support morethan one function Costs are not directly related to specific program activities Using Functional Expenses helps accurately reflecttrue costs of program activities Allocating administrative and operational costs mayincrease reimbursement from funding sources Functional Categories Management & Administration Fundraising Programs
  18. 18. Budgeting Do’s Budget for the life of the grant Allowable costs Indirect Cost Rate Agreement Cost of living increases Address matching requirements Focus on sustainability

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