Regardless of whether you opt to become a leader, or prefer to remain an involved, concerned, and committed member of an organization, your ability and effectiveness will be positively enhanced, and your actual degree of personal responsibility is often directly related to your willingness, ability, and understanding of the essentials of organizational budgeting. While nearly every group mandates creating and approving an annual budget, very few do so in a way that actually makes the group more effective. Wouldn’t it make sense, therefore, if groups dedicated time and effort, to training their constituents, and especially their leadership (and most involved and concerned members), to all the essentials and necessitates of the various aspects of budgeting, and how to use it effectively? With that in mind, this article will briefly discuss five things you should know and understand, before you prepare, consider, and review a budget.
1. What are the needs, priorities, and goals for the organization? Budgets should never be created in a vacuum, but rather must be tools for evaluating needs and priorities, and allocating the best proportion of time, money, and other resources, in the most efficacious manner. Since effective groups constantly evolve, this is a significant reason why the method most used for creating budgets (which, unfortunately, is generally merely taking the previous year’s document, and adding a certain percentage). Great budgets address how a group should operate and create plans and programs, etc.
2. Carefully evaluate both revenues and expenditures: Are you optimally and efficiently raising revenues, as well as spending as you should, rather than falling into the trap of, too much, too little, or just right? Is your fundraising performing as it should, and running on the proverbial, all cylinders? Avoid being myopic, and just cutting across the board, but rather, use zero-based budgeting, so you can evaluate every non-contractual area of either income or expense.
3. Review the actual revenues and expenses from the past two years: Don’t merely guess in some areas, or resort to either wishful thinking or speculation. Look at what has been raised in the past, and pay particular heed to what’s been spent, and see if you can get more bang-for-the-buck.