Financial Management and Budgeting

SHOW ME THE MONEY!

What is a budget?

A budget can be a helpful method of keeping track of group funds. It is a tool for planning and controlling organizational funds. It is a formal written guideline describing your organizations future goals expressed in financial terms within a set period of time. A detailed statement of estimated income and expenses. A historical record of the organizations activities during a given period.

What can a budget accomplish?

It can help refine goals based on realistic resources. It can compel members of the organizations to use funds efficiently. It can provide accurate information to adjust, analyze, and evaluate programs and activities. It can provide a historical reference to be used for future planning. It can be an aid in decision making.

Steps to Develop a budget

Step 1: Begin preparations a month or more prior to the close of the current year (end of spring semester).

This will allow for the new administration to easily transition without worrying about approving their budget for the next year.

Steps to Develop a budget, contd

Step 2: Prepare an outline of the organizations planned activities for the upcoming year.

This allows your organization to determine what plans you wish to do for the upcoming year (take a trip, have a dinner, publish a newsletter, show movies, etc.) Many times committee chairs, executive officers, and sometimes group members will make proposals for the activities might be considered during the organizations fiscal year.

This step is very important since programs require money, and to a great extent they drive the budget.

These proposals are presented to the budget committee, which might be a separate group chaired by the treasurer or other organization member in the case of a larger group, or the executive committee in the case of a smaller group.

Steps to Develop a budget, contd

Step 3: Determine available funds (carry over balance from previous years, cash on hand and funds in the bank, interest, etc.) Step 4: Do careful studies of funding sources, costs, estimated and probable fundraisers. Step 5: Estimate expected income and when it is expected to be available (dues, t-shirts, sales, etc.) Step 6: Define needed expenses (advertising/printing, supplies, etc.) Step 7: Get price quotations on certain expenditures, delegate certain responsibilities to members.

Steps to Develop a budget, contd

Step 8: Rank the order of expenditures by their importance.

Step 9: Negotiate, as necessary, eliminate less essential expenditures or limit expenditures. Step 10: Revise, review, coordinate, cross-reference, and then assemble into a final budget; the budget must be flexible to anticipate conditions which might have been overlooked during the planning process.

When doing this step the organization needs to consider which activities are the wisest expenditure of funds.

This allows the organization to project their revenues and expenditures for the next fiscal year.
Many times once the revenues and expenditures are projected they are presented to the executive group for initial review. Changes to the budget can be made based on recommendations of the officers. Assuming that the revised budget is approved, it is then presented to the organizations members for adoption.

Keys to managing a budget

Once approved, adopted and prepared, it should be closely managed.

Set and maintain a minimum cash balance. Formulate general policies and procedures needed to achieve objectives.

The budget is the organizations financial road map for the year. It can be changed if circumstances dictate, but it would require a vote according to the process prescribed in the organizations constitution or bylaws.

Keys to managing a budget, contd

Keep an accurate log of financial transactions (income and expenses): maintain your organization record book (check and balance records periodically).

Contemplate on having the treasurer preparing periodic reports related to the budget and presents them to the executive officers and members.

Keys to managing a budget, contd

The treasurer should produce monthly operating statements.

In the report all transactions that have occurred since the previous statement should be included.

At the end of each statement a balance should be reported by the treasurer.

The monthly statement should be reconciled with the yearto-date activity of the organization so that a clear picture of the organizations financial position can be established.

A review of the statement will provide the income of the organization, its expenses, and the organizations cash balance.

Keys to managing a budget, contd

Control cost allow only approved expenditures. Assess budget at any given point of time during the budgeted period. After the budget period has elapsed, determine the outcome of each expense and revenue. Judge and review actual cost in order to establish priorities for the next budget period.

Were In the Money

Managing the budget and being successful in balancing the spending will allow your organization to transition easily. Having a correct budget and knowing how much monies your organization is able to work with will allow for your organization to have less stress and more fun.

Example Budget
Previous Year Current Year ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________

Revenue
Dues and activity fees Student government allocation Services rendered Commissions from machines Sales Fundraisers Program receipts Other receipts Prior year carried forward TOTAL REVENUE ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________

Expenses
Personnel services Salaries Hourly wages Fringe benefits Workers compensation Social Security Insurance Operating expenses Telephone line charge Long distance Other communications Office supplies Printing Postage Equipment rental Equipment repair Program expenses (Develop budget for each program) Newsletter Speakers Travel Outstanding debt Miscellaneous expenses

Capital
List by item

Contingency
TOTAL EXPENSES BALANCE

Sample Balance Sheet

Date: ___________________ Amount

Assets
Cash on hand Accounts receivable Savings accounts (by number) ________ ________ Equipment (fair market value) _______________________________ _______________________________ Other property _______________________________ _______________________________ TOTAL ASSETS ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________

Liabilities
Accounts Payable Long-term debts _________________________________ _________________________________ TOTAL LIABILITIES NET Value of Organization ____________ ____________ ____________ ____________ ____________ ____________