Strategic Budgeting
Posted on Wednesday, May 26, 2021
ShareIs your organization’s budget driven by your strategic plan?
Your budget should be about setting priorities and not about setting restrictions on what your organization can and cannot do. Unlike your monthly financials or even year-end audit, that looks backwards, the budget is forward looking. It should be seen as a roadmap for the year. A tool to help you carry out your strategic plan. Once it is prepared, it should be used throughout the year to ensure your organization is on the right path.
The budgeting process should also be seen as an opportunity. Especially with the current times, it should be viewed as an opportunity for your organization to reinvent itself and the way it operates. The pandemic has taught us that there are new ways to work, to fundraise, and to operate. In order to be successful, your organization needs to adapt.
As you prepare to start the budgeting process, here a few things to consider:
- Are the right people involved in the process? Are you getting input from various people within the organization? There may be ideas for new ways of doing things that have not been thought of before.
- Does your organization take a top-down or bottom-up approach to budgeting? Is it more important to get the budget done quickly or to have buy-in from more people?
- Does your budget follow your accounting? If you follow the accrual basis of accounting, is your budget on the accrual basis? If not, the monthly budget to actual reports will be like comparing apples to oranges.
- Do you include noncash expenses (in-kind and depreciation)? If you do not receive in-kind goods and services as donations, your organization would need to purchase them. Including them in the budget provides a truer picture of the actual cost of your operations.
- Does your budget include enough infrastructure? Without the proper equipment, you will not be able to offer your programs efficiently and effectively.
- Does your budget reflect your values? If your team is important to you but the budget does not include anything for team bonding, then your budget does not align with your values.
Once you have prepared your budget, ask yourself whether it accurately reflects the goals of the strategic plan. Do the revenues and costs directly relate to the activities in the strategic plan that you want to accomplish?
Contributed by: Carrie Minnich, CPA, MAcct | Director | DWD CPAs & Advisors
Posted in Mission Minded Nonprofits
Disclaimer: The information contained in Dulin, Ward & DeWald’s blog is provided for general educational purposes only and should not be construed as financial or legal advice on any subject matter. Before taking any action based on this information, we strongly encourage you to consult competent legal, accounting or other professional advice about your specific situation. Questions on blog posts may be submitted to your DWD representative.