Budgeting For Your Organization
One of the tasks you face as a financial officer, especially if your organization makes frequent business transactions, is that of preparing a budget. A budget is a tool used for planning and controlling your financial resources. It is a guideline for your future plan of action, expressed in financial terms within a set period of time. A budget does not have to be complex as the information below will explain.
What A Budget Accomplishes
- It helps refine goals.
- It compels members of the organization to use funds efficiently.
- It provides accurate information to analyze, adjust and evaluate programs and activities.
- It aids in decision making.
- It provides a historical reference to be used for future planning.
Knowing your organization's priorities, objectives and goals helps as you begin to prepare your budget. As you begin, ask yourself the following questions.
- What is the time period with which you are working (e.g., one term, entire school year)?
- What does your group most want to accomplish?
- How will you accomplish this?
- How much will it cost?
- Where is the money coming from?
Once these questions have been answered, you are ready to begin preparing your budget.
Preparing Your Budget
- Prepare an outline of the organization's planned future activities.
- Determine and record available funds (e.g., carryover balance from previous year).
- Estimate and record expected income and when it will be available (dues, t-shirt sales, video games, etc.).
- Define and record needed expenses (advertising, rentals, printing, supplies, etc.).
- Review, revise and then assemble into a final budget.
- Have members vote for budget approval.
THE BUDGET MUST BE FLEXIBLE TO ANTICIPATE CONDITIONS WHICH MIGHT HAVE BEEN OVERLOOKED DURING THE PLANNING PROCESS.
Managing the Budget
- Once prepared and approved, it should be closely managed.
- Set and maintain a minimum cash balance.
- Formulate general policies and procedures needed to achieve objectives while providing internal control (e.g., allow only approved expenditures).
- Keep an accurate written log of financial transactions (income and expenses).
- Periodically compare the budget to your actual logged expenditures.
A SAMPLE BUDGET
Bake Sale = $200
Car Wash = $200
Phonathon = $500
Dues = $250
TOTAL INCOME = $1150
TOTAL EXPENSES $250
PROJECTED GAIN $900
Determine the outcome of each expense and revenue as the budget period is ending. Review and judge actual costs in order to establish priorities for the next budgeted period. Begin preparing for the next budget a month or more prior to the current budgeted period and then begin the process anew.
Adapted from the Office of Student Activities of University of Michigan