The document provides guidance on developing a budget narrative for a nonprofit organization. The key points are:
1) The budget narrative tells the organization's "big picture" financial story and evaluates its financial performance and strategic direction. It presents key financial data and explains variances from budgets and prior years.
2) The narrative identifies opportunities and concerns for the current fiscal year and discusses the organization's longer-term financial outlook. It connects programmatic goals to financial projections.
3) Developing an effective budget narrative is a collaborative process that involves analyzing historical financials, developing departmental budgets, identifying assumptions, and reviewing/negotiating to finalize the narrative and budget. The narrative guides strategic financial decision-making.
Alternate View of Library Budgets, A Living DocumentJeh718
This is a presentation on: How to create a budget and business plan for your library? How to use your budget throughout the year as a focal point to support library services? and How to use strategic budgeting?
Budgeting season. It's a four letter word at most nonprofit organizations because it requires countless spreadsheets, getting non-finance staff to think about finance, and infinite revisions. There's got to be a better way, right?
This presentation discusses best practices for nonprofit budgeting. It provides tips, tricks, and practical advice that will turn your budget into a positive four letter word..."Done."
This webinar will provide a basic introduction to budgeting in a nonprofit setting. Attendees will learn how to prepare and strategically use budgets for their organization.
Alternate View of Library Budgets, A Living DocumentJeh718
This is a presentation on: How to create a budget and business plan for your library? How to use your budget throughout the year as a focal point to support library services? and How to use strategic budgeting?
Budgeting season. It's a four letter word at most nonprofit organizations because it requires countless spreadsheets, getting non-finance staff to think about finance, and infinite revisions. There's got to be a better way, right?
This presentation discusses best practices for nonprofit budgeting. It provides tips, tricks, and practical advice that will turn your budget into a positive four letter word..."Done."
This webinar will provide a basic introduction to budgeting in a nonprofit setting. Attendees will learn how to prepare and strategically use budgets for their organization.
Presentation on Budget, budgeting and budgetary control..
Contents-
1) Budgeting [characteristics]
2) Budgetary control
3) Difference in budget, budgeting, budgetary control
4) Essentials in budgetary control
5) Requisites for budgetary control system
6) Merits & limitations
7) Zero-based budgeting
8) Difference in Traditional & Zero based budgeting.
The slides were commissioned in 2016 for an in-house development program at a large Australian public company.
They have been slightly edited. In 2019, they still seem quite relevant.
Budgeting and forecasting: The differences.
Why has budgeting and forecasting failed? What are the traditional responses?
Contemporary responses.
What can we learn from the agility of the great tech disruptors?
What is the influence of agile development and machine learning? What does the the future finance team look like?
Presentation on Budget, budgeting and budgetary control..
Contents-
1) Budgeting [characteristics]
2) Budgetary control
3) Difference in budget, budgeting, budgetary control
4) Essentials in budgetary control
5) Requisites for budgetary control system
6) Merits & limitations
7) Zero-based budgeting
8) Difference in Traditional & Zero based budgeting.
The slides were commissioned in 2016 for an in-house development program at a large Australian public company.
They have been slightly edited. In 2019, they still seem quite relevant.
Budgeting and forecasting: The differences.
Why has budgeting and forecasting failed? What are the traditional responses?
Contemporary responses.
What can we learn from the agility of the great tech disruptors?
What is the influence of agile development and machine learning? What does the the future finance team look like?
1.Union Budget: Revenue Budget, Capital Budget
2. Revenue Receipts, Revenue Expenditure, Revenue Deficit
3. Capital Budget, Capital receipts, Capital Payments
4. Taxes: Direct Taxes, Indirect Taxes
5. Two components of expenditure, Plan and Non-Plan
6. Fiscal Policy, Fiscal DeficIt, Finance Bill
7. The Budget process stages
STAGE 1: Estimates. Part A – Expenditure
8. STAGE 1: Estimates. Part B - Revenue
9. STAGE 2: First estimates of deficit
10. STAGE 3: Narrowing of the deficit
11. How India balances its books
12. Consolidated Fund, Contingency Fund
13. Public Account, Appropriation bills
14. Budget deficit, Fiscal deficit, Primary deficit
FFA- Statement of Schedule of Changes in Working Capitaluma reur
Statement Of Schedule Of Changes In Working Capital
This statement is prepared with the help of current assets and current liabilities relating to two different periods.
An increase or decrease in respect of each of such items should be recorded to ascertain the net increase or decrease in the working capital.
An increase in the value of current assets between two different periods indicates an increase in the working capital. It is an application of funds.
An increase in the value of current liabilities between two different periods indicates decrease in the working capital. It is sources of funds.
Case Study Title
DateCourseInstructor
Introduction
An introduction is used to let the reader know:
· The main entity or entities involved
· The major question or issue being analyzed
Introductions for case studies in this course should be one paragraph in length.
Background
This is a brief overview of the main problems or questions involved. Historical information can be used as long as it has a direct bearing on the items being analyzed. Provide enough description that a reader that is unfamiliar with the case will understand the context of your analysis. For this course, background information should be two to three paragraphs in length, maximum.Discussion
The discussion includes an analysis of each problem or question. The analysis can include:
· The problem or question and its impact on the main entities involved.
· How the problem or question is linked to the topics we have discussed or read to this point.
· How the problem or question is linked to best practices in industry.
· A solution or multiple solutions and an evaluation of those solutions.
In this course the case studies will have at least one major problem or question. There may be secondary problems or questions but there will be, at most, one or two secondary issues. Use as much space as necessary to provide a rational analysis but if there are more than four or five paragraphs for a given question the analysis needs to be reviewed and made more concise.
Conclusion
Summarize your solutions and describe how those solutions improve the current situation or resolve the problems in the case. The conclusion should be one to two paragraphs.
References
All references must be properly cited and referenced using APA format. Refer to the syllabus for tutorials and resources on using APA format.
PAGE 2
Week 5: Lesson
Budgeting
Introduction
Budgeting is a very important part of the managerial role of any department manager. A budget helps the department establish the amount of money it will need in order to operate for a fiscal year. By creating a budget, this guarantees that your department will get a piece of the pie for general operating costs, and in some cases, proposed projects. If your budget is approved, you can breathe easy, knowing that you have the money that you need to operate your department for the next year.
Traditional organizational budgets & accounting systems are activity-oriented, with expenses gathered and reported by organizational units. IT Budgets represents a large organizational strategic investment for many corporations; hence, it is critical for IT managers, CIO, and CFO to understand what needs to be considered in creating an IT departmental budget.
Budgeting is not always an easy process simply because it requires good working knowledge and understanding of the financial aspects of the organization. Depending on the type of organization for which you work, the budget might serve as a profit plan. In other organizations like nonpro ...
Chapter 2 Strategic Planning and Budgeting—Process, Preparation, .docxchristinemaritza
Chapter 2: Strategic Planning and Budgeting—Process, Preparation, and Control
OVERVIEW
Although it differs among companies, planning charts the direction of the company over a period of time to accomplish a desired result, such as improving profitability. Budgeting is simply one portion of the plan, and the annual budget should be consistent with the long-term goals of the business. Planning should link short-term, intermediate-term, and long-term goals. Plans are interrelated, and the annual plan may be based on the long-term plan. The objective is to make the best use of the company's available resources over the long term.
In planning, management selects long-term and short-term goals and draws up plans to accomplish those goals. Planning is more important in long-run management. The objectives of a plan must be continually appraised in terms of degree of accomplishment and how long implementation will take. There should be feedback as to the plan's progress. It is best to concentrate on accomplishing fewer targets so proper attention will be given to them. Objectives must be specific and measurable. For example, a target to increase sales by 20 percent is definite and specific. The manager can quantitatively measure progress toward meeting this target.
The plan is the set of details implementing a strategy. The plan of execution typically is explained in sequential steps, including costs and timing for each step. Deadlines are set.
The planning function includes all managerial activities that ultimately enable an organization to achieve its goals. Because every organization needs to set and achieve goals, planning often is called the first function of management. At the highest levels of business, planning involves establishing company strategies—that is, determining how the resources of the business will be used to reach its objective. Planning also involves the establishment of policies—the day-to-day guidelines used by managers to accomplish their objectives. The elements of a plan include objectives, performance standards, appraisal of performance, action plan, and financial figures.
All management levels should be involved in preparing budgets. There should be a budget for each responsibility center. Responsibility in particular areas should be assigned for planning to specific personnel. At MillerCoors Company, planning is ongoing, encouraging managers to assume active roles in the organization.
A plan is a predetermined action course. Planning has to consider the organizational structure, taking into account authority and responsibility. Planning is determining what should be done, how it should be done, and when it should be done. The plan should specify the nature of the problems, reasons for them, constraints, contents, characteristics, category, alternative ways of accomplishing objectives, and information required. Planning objectives include quantity and quality of products and services, as well as growth opportunities.
A pla ...
Recent graduates who are aspiring to become Financial Analyst or Finance Manager must have comprehensive understanding of Financial Statements. This 6 part article aims to provide an understanding of Financial Statements through real life examples.
A Study on Budgetary Control System conducted at Hassan Cooperative Milk Prod...Projects Kart
A Study on Budgetary Control System conducted at Hassan Cooperative Milk Producers Societies. One the primary functions of the management is planning. Most of the planning relates to individual situations and individual proposals. However, this has to be supplemented and reinforced by overall periodic planning followed by continuous comparison of the actual performance with the planned performance. Budgetary control has, therefore, become as essential tool of management for controlling costs and maximizing
“Budget” and “Budgeting” are concepts traceable to the bible days, precisely the days of Joseph in Egypt. It was reported that “nothing was given out of the treasure without a written order”. History has it that Joseph budgeted and stored grains which lasted the Egyptians throughout the seven years of famine.
Budgets were first introduced in the 1920s as a tool to manage costs and cash flows in large industrial organizations. Johnson states that it was during the 1960s that companies began to use budgets to dictate what people needed to do. In the 1970s performance improvement was based on meeting financial targets rather than effectiveness. Companies then faced problems in the 1980s and 1990s when they were not willing to spend money on innovations in order to stay with the rigid budgets; they were no longer concerned about how customers were being treated; only meeting sales targets became essential.
Response 1:
Part 1
Memo:
Understanding Similarities and Differences between Financial and Managerial Accounting
Attention
: Susan Thompson
Susan-
In an effort to get you up to speed on our expectations, I wanted to provide some details on the differences you can expect to see between managerial and financial accounting and provide you some examples from both areas.
Financial accounting is the backbone of the day-to-day functions of accounting. From payables, to receivables to collections, this area ensures all of the outstanding bills and debts are paid so the organization can operate. The details received from the day to day management of financial accounting are provided to stakeholders’, creditors, vendors and management to ensure the organization is being forthcoming and so management can use the data to further the position of the company(MUSE: Financial and Managerial Accounting). Reports provided within financial accounting include the following:
Income Statement
Statement of Owners Equity
Balance Sheet
Cash Flow Statement
Each of these documents is used by managerial accounting team members to help make decisions about the future of the organization.
Managerial accounting is optional. This is a team of managers who are trying to plan for future business and need to understand the ebbs and flows of the business itself and how any of the business segments or areas can function more productivity. One thing to note is that Financial Accounting is handled by external persons who try to ensure the strength of financial decisions whereas Managerial Accounting is managed by internal managers responsible for the success of the organizations. Financial Accounting Reporting for the IRS is mandatory and GAAP accounting rules must be adhered too. Managerial Accounting has no set rules nor are they bound to any oversight group and are not required to provide any sort of mandatory reporting.
Additional reports used to analyze the health of an organization are horizontal and vertical analyzes.
Horizontal analysis is where we take a series of reports year over year and try to determine what trends were in assets, equity, cash flow, etc. Using these reports allows the management team to better understand the business and what could be coming in the future. Vertical analysis is where we analyze financial statements based on entries for assets, accounts, liabilities and equities. We review each of these as a proportion of the total account and try to understand what led to any inconsistencies.
If you need any further clarification regarding these concepts, reporting or analysis, please reach out to me directly.
Thank You
Part 2
Attn: Board of Directors
MEMO
In an effort to help our team better understand how we can use our current and previous accounting information to help plan and control for future business, I have broken down details on four key financial reports we receive regularly. These reports include the income sta ...
What is the point of small housing associations.pptxPaul Smith
Given the small scale of housing associations and their relative high cost per home what is the point of them and how do we justify their continued existance
Jennifer Schaus and Associates hosts a complimentary webinar series on The FAR in 2024. Join the webinars on Wednesdays and Fridays at noon, eastern.
Recordings are on YouTube and the company website.
https://www.youtube.com/@jenniferschaus/videos
Understanding the Challenges of Street ChildrenSERUDS INDIA
By raising awareness, providing support, advocating for change, and offering assistance to children in need, individuals can play a crucial role in improving the lives of street children and helping them realize their full potential
Donate Us
https://serudsindia.org/how-individuals-can-support-street-children-in-india/
#donatefororphan, #donateforhomelesschildren, #childeducation, #ngochildeducation, #donateforeducation, #donationforchildeducation, #sponsorforpoorchild, #sponsororphanage #sponsororphanchild, #donation, #education, #charity, #educationforchild, #seruds, #kurnool, #joyhome
Many ways to support street children.pptxSERUDS INDIA
By raising awareness, providing support, advocating for change, and offering assistance to children in need, individuals can play a crucial role in improving the lives of street children and helping them realize their full potential
Donate Us
https://serudsindia.org/how-individuals-can-support-street-children-in-india/
#donatefororphan, #donateforhomelesschildren, #childeducation, #ngochildeducation, #donateforeducation, #donationforchildeducation, #sponsorforpoorchild, #sponsororphanage #sponsororphanchild, #donation, #education, #charity, #educationforchild, #seruds, #kurnool, #joyhome
Russian anarchist and anti-war movement in the third year of full-scale warAntti Rautiainen
Anarchist group ANA Regensburg hosted my online-presentation on 16th of May 2024, in which I discussed tactics of anti-war activism in Russia, and reasons why the anti-war movement has not been able to make an impact to change the course of events yet. Cases of anarchists repressed for anti-war activities are presented, as well as strategies of support for political prisoners, and modest successes in supporting their struggles.
Thumbnail picture is by MediaZona, you may read their report on anti-war arson attacks in Russia here: https://en.zona.media/article/2022/10/13/burn-map
Links:
Autonomous Action
http://Avtonom.org
Anarchist Black Cross Moscow
http://Avtonom.org/abc
Solidarity Zone
https://t.me/solidarity_zone
Memorial
https://memopzk.org/, https://t.me/pzk_memorial
OVD-Info
https://en.ovdinfo.org/antiwar-ovd-info-guide
RosUznik
https://rosuznik.org/
Uznik Online
http://uznikonline.tilda.ws/
Russian Reader
https://therussianreader.com/
ABC Irkutsk
https://abc38.noblogs.org/
Send mail to prisoners from abroad:
http://Prisonmail.online
YouTube: https://youtu.be/c5nSOdU48O8
Spotify: https://podcasters.spotify.com/pod/show/libertarianlifecoach/episodes/Russian-anarchist-and-anti-war-movement-in-the-third-year-of-full-scale-war-e2k8ai4
A process server is a authorized person for delivering legal documents, such as summons, complaints, subpoenas, and other court papers, to peoples involved in legal proceedings.
1. Presented by Russell Pomeranz, MBA &
Terence Cook, MPA
November2009
The Latino Nonprofit Financial Management Initiative is a project by the
Hispanic Federation and presented in partnership with
Fiscal Management Associates.
Latino Nonprofit Financial
Management Initiative
Session 3:
Budget Development
2. Standards of Excellence
Organizations plan based on reliable
statistics from historical performance, while
maintaining a strategic look to the future
Key Indicators:
▪ Key organizational decision-makers are involved
▪ Budgets reflect relevant historical financial data and
organization’s goals
▪ Budgets are developed at relevant levels
▪ Cash flow monitoring instruments are developed and used
Financial
Planning
2
3. Budget Calendar
July Aug Sept Oct Nov Dec Jan Mar Apr May June
Begin budget development
process
Assemble draft budget by
compiling departmental budgets
Present draft organization
budget to Finance Committee
Finance Committee presents
budget to Board
Board approves FY10/11
budget
Develop program goals
Identify revenue streams
Identify expenses
Capture assumptions in budget template
Review and
negotiate
Review and
negotiate
Feb
Review and
negotiate
ED’s review &
negotiation
Board sets FY 09/10
organization's goals
Board receives FY 08/09
audited financial
statements
Board approves FY09/10
budget modification
Present Q4 results to
management
Review operating results to
create “Budget Narrative”
Evaluate program goals
Monitor revenue streams
Manage expenses
Develop departmental
budget teams
Budget Development and Monitoring Calendar
(June 30th
Year‐End)
2009 2010
ED’s review &
negotiation
Chief Financial Officer
3
Board
Senior Management
Team
Finance Committee
Legend
Executive Director
4. Themes Throughout the Budget Process
4
▪ What’s the story?
▪ What are the options?
▪ What are the trade-offs?
▪ What impact does that have on the bottom line?
5. Developing the Budget Narrative
5
▪ Elements of the Budget Narrative -
▪ Section 1: Telling the “Big Picture” story
▪ Section 2:
▪ a) Presenting financial statements & key data
▪ b) Explaining financial reports & data
▪ c) Present opportunities and concerns for the
current fiscal year
▪ Section 3: Provide insight into the longer term
6. Developing the Budget Narrative cont’d
PURPOSE: The primary purpose of the Budget Narrative Tool is to encourage a forum for discussion and decision making related to the
organization’s strategic financial direction and goals. The formulation of the Big Picture is based on the analysis of the organization’s financial
statements and relevant financial data.
STRUCTURE OF THE BUDGET NARRATIVE
Section 1: Telling the “Big Picture” Story
The opening section of the Budget Narrative tells a story. The story line revolves around whether the organization is viable, sustainable, and
has a strategic business model which enables it to fulfill its programmatic mission. The positive story explains how success is expected to
continue. However, since not all story lines are bereft of drama, the realistic story explains the uncertainty of what could happen as well as
what financial decisions could, should, and will be made. Different than traditional novellas, the riveting ending focuses on whether an
organization can expect to meet its specific organizational financial goals.
The opening of the Budget Narrative is an important opportunity for the CEO and CFO to evaluate the organization’s overall financial
performance and present it in ways which best articulate and highlight their understanding and interpretation of the “Big Picture”.
The writer can approach the “Big Picture” from a number of different angles, including, but not limited to, a combination of the following.
a) Frame the organization’s budget narrative from in the perspective of time, telling the story in the context of the past with an eye to the
future. A five year historical chart tracking net income, total revenue, administrative costs, and/or net asset growth including
temporarily restricted net assets, paints a very informative picture.
b) Focus on a particular program or department whose success or failure is indicative of the fortunes of the entire organization as well
as the current year’s programmatic strategy.
c) Focus on the strategic plan, if one exists, or several strategic decisions the organization has recently made impacting the current and
future fiscal years. Explore the impact of the decisions which have been made and implemented as well as the expected impact of
those being considered.
d) Discuss the competitive environment in which the organization operates. Evaluate competitors and indicate how the organization has
responded to changing market forces.
e) Focus on critical organization decisions that are on the horizon. Discuss how these decisions relate to the “Big Picture”, present and
future.
6
7. Developing the Budget Narrative cont’d
Section 2a: Presenting Financial Statements and Key Data
The section focuses on the financial data that supports the “Big Picture”. It presents what management considers the most important
numbers. These key numbers are usually found in the analysis of the following reports:
a) Unrestricted, Temporarily Restricted, and Permanently Restricted Fund Balances
o Estimate the impact of current year projections on end of year fund balances. These numbers should be compared to prior year
fund balances and trends should be noted.
o Unrestricted Net Assets may also include a Board restricted endowment.
o Temporarily Restricted Net Assets may be more of an estimate if based on projections.
b) Current Year Organizational Net Income (the bottom line)
o Provide financial statements, indicating whether the organization is running a surplus or deficit.
o Compare projections for the fiscal year to the budget.
o Variance analysis to previous fiscal years may be useful.
c) Financial reports identifying profit and loss for specific projects and departments
o Reports include administrative departments and fundraising, and the sum of department results roll into organization totals.
o Identify areas of significant growth or decline.
d) Financial reports outlining financial models in current fiscal year and beyond
o Some indication of future financial position or whether the business model will hold is often necessary. Early in the fiscal year, a
listing of revenues may be a good indicator of the success of the future year. Later in the fiscal year, a financial report resembling
a net income budget or forecast might be more appropriate. This may also require putting together a financial model, describing
what would need to happen in order to get to the desired financial result.
e) Reconciliation to the Audited Financial Reports
o Issues of timing or one time entries (i.e. balance sheet clean-up) are not always included in the financial reports to the Finance
Committee. If this is the case, then additional reporting tracking potential one-time entries and their impact on the fiscal year can
explain differences between fiscal year projections and audited financial reports.
7
8. Developing the Budget Narrative cont’d
Section 2b: Explaining the Financial Reports and Data
Build a bridge between the numbers reported on the financial statements and the organization’s programmatic and operating results. Guide
the reader through some or all of the following questions:
a) What do the numbers mean?
b) What are the variances between the budget, forecast, and previous fiscal year operating results?
c) What is the organization doing differently, what changes have been made, and have these changes “worked”?
d) Are their unanticipated factors or changes which are to the organization’s benefit or detriment?
e) What analysis did the Finance department undertake to better explain why things happen? For example, did management take a
closer look at the bottom line results of performance based contracts, administrative expense vs. indirect cost rates, diversity of
funding sources, aged accounts receivable balances, temporarily restricted net asset balances, etc.?
f) How will the strategic plan, or specific projects or departments be instrumental to the organization’s success going forward?
Section 2c: Present Opportunities and Concerns for the Current Fiscal Year
Connect last fiscal year’s results with plans for the current fiscal year. Discuss the opportunities and concerns for the upcoming fiscal year that
will impact the organization’s financial reality. Contingency plans to be determined or are at various stages of implementation should be
discussed.
a) Outline the opportunities and their significance not included in the budget or forecast.. What is the probability of such occurrences?
b) What are the organizational financial concerns not included in the budget or forecast? What could go wrong?
c) What changes or decisions (strategic, staffing, focus, investment, etc.) could be made to provide new programmatic opportunities
and relevant revenue streams
d) What expense reductions might alter the net income equation? What are their pecuniary and non-pecuniary impacts? This could be a
list of contingencies to enact if the financial situations worsens or does not improve. Would significant cuts compromise organizational
efficiency?
8
9. Developing the Budget Narrative cont’d
Section 3: Provide Insight into the Longer Term
In concluding the budget narrative, indicate whether the current business model will sustain a financially viable organization. Reiterate
management’s evaluation of the strength or weakness of the organization financial position. Potential questions to explore at the end of the
story may include:
a) What are the projections for next fiscal year’s revenues, expense, and bottom line?
b) Are there decisions that can be made now (pricing, cost reductions, investment, etc.) that will impact the future? What is the financial
impact of non-recurring investment in planning, programs, staff and administration into future years?
c) What needs to happen for the business model to hold up in the long term?
d) Are there obstacles to business model success, internal and external? These might include: competition, macro economic
uncertainties, trends among funders, rising costs, the anticipated loss of programs, etc.
9
10. Developing the Budget Narrative:
Year 5
Year 4
Year 3
Year 2
Year 1
How ending balances become next year’s starting position
July
Start of
January
OctoberApril
New Fiscal Year August
10
September
DecemberFebruary
March
November
May
June
11. Developing the Budget Narrative:
How ending balances over time become organizational trends
Year 3
Year 2
Year 1
11
Year 4
Year 5
12. 12
What are the Options? - Revenues
Program/
Department
Funding Source
Total Revenue
Originally
Anticipated
Likelihood of
Receipt (%)
Total Revenue
After
Discounting Gap Notes on Impact of Funding Decrease
Program A
Government contract A 70,000 50% 35,000 May mean a decrease in number of meals served
to seniors, a core program service
-
-
-
-
-
-
Subtotal $ 70,000 $ 35,000 $ 35,000
Program B
Grant from foundation A 50,000 75% 37,500 Could mean a significant reduction in number of
children served in after-school program
Grant from foundation B 10,000 25% 2,500
-
-
-
-
-
Subtotal $ 60,000 $ 40,000 $ 20,000
Development
Special event ticket sales 113,000 50% 56,500 Less unrestricted funding to support under-funded
gov't contracts may mean cutting program services
-
-
-
-
-
-
Subtotal $ 113,000 $ 56,500 $ 56,500
Management&
General
Board donations 100,000 75% 75,000 Less unrestricted funding for M&G activities may
necessitate reducing capacity in ITor finance units
Investment income 40,000 0% -
-
-
-
-
-
Subtotal $ 140,000 $ 75,000 $ 65,000
Total Revenue $ 383,000 $206,500 $176,500
13. 13
What are the Options? - Expenses
Program/
Size of
Revenue Gap
Description of Proposed Cost
Impact to Delivery of Core Mission
Total Cost Remaining
Gap
Notes on Impact of
Proposed ReductionsDepartment (fromrevenue
worksheet)
Cutting Measure
Minimal Moderate Significant
Savings
Program A
Decrease # of meals served in Senior Center 6,500 Decrease in provision of coreservice
Delayhiring of Program Assistant for 6 months 20,000 No impact to mission -- will increase
workload for current staff in the interimFringesavings 4,000
Renegotiate contract w/ program supplies vendor 2,000 No negative impact
Subtotal $ 35,000 $ 26,000 $ 6,500 $ - $ 32,500 $ 2,500
Program B
Eliminate counseling program for children Critical reduction in provision ofcore
mission service for after-school
program participants
Salary of part-timeProgram Counselor 28,000
Supplies for counseling program 3,500
Subtotal $ 20,000 $ - $ - $ 31,500 $ 31,500 $ (11,500)
Development
Eliminate Development Associate position 50,000 May reduce ability to raise future
revenue
Fringesavings 6,500
Subtotal $ 56,500 $ - $ 56,500 $ - $ 56,500 $ -
Management
& General
Postpone the hiring of ITassistant 40,000 No mission impact --will increase
workload for IT staff in the interim
Fringesavings 8,000
Increase employee contribution to med. insurance 8,000 may impact staffmorale
Subtotal $ 65,000 $ 56,000 $ - $ - $ 56,000 $ 9,000
Total $ 176,500 $82,000 $63,000 $31,500 $176,500 $ -
14. What are the Trade-offs? – Making the
Hard Choices
14
ProgramA ProgramB Development
Management
&
Administratio
n
Total
Total Anticipated Revenue Gap (35,000) (20,000) (56,500) (65,000) (176,500)
ProposedExpense Reductions:Minimal Impact (26,000) - - (56,000) (82,000)
Subtotal: Remaining Gap (9,000) (20,000) (56,500) (9,000) (94,500)
ProposedExpense Reductions:Moderate Impact (6,500) - (56,500) - (63,000)
Subtotal: Remaining Gap (2,500) (20,000) - (9,000) (31,500)
ProposedExpense Reductions:Significant Impact - (31,500) - - (31,500)
Subtotal: Remaining Gap (2,500) 11,500 - (9,000) -
Total Proposed Expense Reductions (32,500) (31,500) (56,500) (56,000) (176,500)
TOTALREVISEDSURPLUS(GAP) (2,500) 11,500 - (9,000) -
15. The Budget Development Steps
▪Step 1: Assemble materials & determine goals
▪ Step 2: Determine programs & activities
▪ Step 3: Identify significant support functions
▪ Step 4: Budget expenses
▪ Step 5: Budget revenues
▪Step 6: Identifying the Unknowns
Get it done!
15
16. Step 1: Assemble Materials
16
▪ Last full year’s budget
▪ Last full year’s actual revenue and spending
history
▪ Current year’s budget
▪ Current year-to-date’s actual revenue and
spending
▪ Forecast of current year’s ending balances
▪ Develop the organization’s Budget Narrative
17. Step 1: Assemble Materials cont’d
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▪ Collect and review data:
▪ How did the organization perform?
▪ Budget surplus / deficit
▪ Increasing / decreasing reserves:
▪ Unrestricted net assets
▪ Temporarily restricted net assets
▪ Permanently restricted net assets
▪ Last year
▪ Last 3 years
▪ What trends are developing?
18. Step 1: Assemble Materials & Determine
Goals
▪ Will the organization’s business model meet the goals for:
▪ Finance
▪ Program
▪ Administration
▪ Stakeholders
▪ Mission
▪ Fixed Assets
▪ Strategic Planning
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19. Step 1: Assemble Materials & Determine
Goals cont’d
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▪ What are the organization’s:
▪ Reserves?
▪ Goals for developing reserves?
▪ How do we translate those goals into budget
priorities?
20. Step 2: Determine Programs & Activities
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▪ Assemble the budget development team
▪ A role for any lead officer is to test all
assumptions and gather data from as many
sources as possible
▪ Gather information from sources closest to the
point of delivery
23. Step 3: Identify Significant Functions
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▪ Changes to necessary support functions
▪ Do you now need a dedicated HR resource?
▪ Do you now need a dedicated IT resource?
▪ Do you need to start or expand a grant management
function and/or a Development function?
▪ Do you need to lease more space, add maintenance
staff, or outsource maintenance support?
▪ How do changes to program capacity affect the
allocated amounts?
24. Step 4: Budgeting for Expenses
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▪ Develop a program-based budget template
▪ Require each budget development team to
submit a completed budget submission
▪ Develop a consolidated budget of all the plans
▪ Decide if the consolidated budget achieves the
Budget Narrative priorities
▪ Renegotiate budget submissions
25. Step 4: Budgeting for Expenses cont’d
Expenses generally fall into one of two categories
▪ Personnel Services (PS)
▪ Other Than Personnel Services (OTPS)
PS
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OTPS
26. Step 4: Budgeting for Expenses cont’d
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▪ Salaries
▪ Fringe Benefits
▪ Payroll Taxes
▪ FICA / Medicare
▪ State Unemployment Insurance (SUI)
▪ Mandatory Insurance
▪ Workmen’s Compensation
▪ Disability
▪ Voluntary Insurance
▪ Health Insurance
▪ Long-Term Disability
▪ Pension - 403(b) or 401(k) (voluntary)
27. Step 4: Budgeting for Expenses cont’d
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▪ Full Time Employees
▪ Mandatory taxes and insurances, medical plan for
employee only
18% to 23%
▪ Mandatory taxes and insurances, medical plan for
employee only, pension funding of 5%
23% to 28%
▪ Part Time Employees
▪ Mandatory taxes and insurances, does not qualify for
medical plan or any other voluntary benefit plan
10% to 13%
28. Step 4: Budgeting for Expenses cont’d
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▪ Space
▪ Supplies
▪ Printing/copying
▪ Transportation
▪ Insurance
▪ Depreciation
30. Step 5: Budgeting for Revenues
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▪ Myths
▪ We can’t afford to create a reserve
▪ My board wants a “balanced budget”
▪ Funders don’t want to see a “surplus”
▪ Reality
▪ Aim to add to reserves each year
▪ An unrestricted reserve is crucial
▪ Most funders want the organizations they support to be
financially secure
31. Step 5: Budgeting for Revenues cont’d
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▪ Grants
▪ TRNA balance from pervious year(s)
▪ Grants and contracts
▪ Individual donations/Membership/Annual fund
▪ Special events
▪ Program service fees
▪ Other revenues
▪ Endowment allocation/Investment
▪ Earned Income
▪ Unrelated Business Income
32. Step 5: Budgeting for Revenues cont’d
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▪ Justification for deficit spending:
▪ The deficit is for a specific purpose and there is a reliable
plan to earn the funds in a future period
▪ The organization can fund the deficit from their reserves
▪ Each organization needs to determine the method and amount
of its contribution to reserves
▪ % of excess of revenue over expenses
▪ % of operating budget
▪ % of revenues
▪ % of earned income
▪ Accounting for revenue uncertainty/discounting
33. Step 6: Plan for Identifying the Unknowns
▪ What if….
▪ Revenue changes?
▪ Expenses change?
▪ What can we do to respond to the unknowns?
▪ Contingencies plan
▪ Opportunities tracking
▪ Develop strategy
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34. Financial Monitoring & Analysis: Session 4
What are the
operating results
telling us about the
organization’s
business model?
Key Indicator:
Trend in
Unrestricted Net
Assets
How current performance affects the future
June 30th
Year-end
Year 6
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