Have you been reading Mission Minded? It’s the nonprofit blog from local CPA and Advisor firm Dulin, Ward & DeWald.
Today’s topic, the budgeting process, is of interest to all of our readers and written by Carrie Minnich.
Here’s a snippet – click through to the Mission Minded blog to read more.
The Budgeting Process
Posted on Wednesday, February 27, 2013
All nonprofit organizations should have a budget that identifies the expected revenue and expenses for the upcoming year. A budget is a plan that allows the organization to determine where its resources are coming from and what those resources are used for.
Budgets are usually divided between income that is earned, called revenue, and income that is contributed, called support. Expenses are normally divided between those relating to personnel, overhead expenses, fund raising expenses and program specific expenses. Budget line items should be matched with the organization’s chart of accounts to allow easier matching of actual income and expenses against budgeted amounts. Noncash items such as depreciation and in-kind contributions should also be included in the budget; however, not all nonprofits include these. Budgeting for depreciation allows the organization to provide cash needed to replace depleted assets. Including in-kind contributions and offsetting expenses gives a more realistic picture of the total resources needed to operate the organization.
Often times the budget is created by looking at what has happened in the previous year and adjusting those balances for what is expected to happen in the future. Are there any programs that will be cut in the coming year? Are there new programs that the organization is going to take on? Click here to read more on the Mission Minded blog.