Building a Better Budget
Presented by Tonia Papke, MDI Consulting
September 16, 2015
Presented in collaboration with The Foundation Center New York
The purpose of this session was to provide a general overview of budgeting and to present participants with tools for the creation of organizational budgets. Specifically, we discussed the importance of budgets, walked through the budgeting process, and presented the steps in the creation of an institutional budget. We also created a personnel budget (salaries and fringe benefits) and introduced the creation of cash flow projections.
Top 3 Takeaways:
1. A budget, the monetary expression of your objectives, outlines the financial resources required to implement your workplan. Along with the work plan, the budget acts as a road map for your organization–guiding you in the implementation of your planned activities. A budget also provides a framework for telling stories about your organization.
2. Budgets are critical to nonprofit organizations.
a. They insure that resources are spent only on activities that directly support organization objectives.
b. They insure that these resources are available when required.
c. They allow you to examine objectives and activities with regard to their actual cost.
d. A realistic and updated budget and a continual monitoring of actual expenses against that budget provide information on cash flow problems before they happen so that necessary action can be taken.
e. Periodic evaluation of program progress towards objectives can be compared against expenses to date to determine whether you will be able to meet your objectives, given the budget balance.
3. Budgets are more effective when they are detailed. Ideally, budgets have three dimensions:
a. They list specific line items of revenue and expenses.
b. They break out revenue and expenses by Programs or Departments, including Administration and Development.
c. They also list where the funds are coming from to support these programs and whether they are unrestricted or restricted grants.
