Creating A Useful Budget

Creating A Useful Budget

One of the biggest challenges that most organizations confront relates to finances. Especially in recent years, organizations have faced the realities of dwindling membership, reduced sponsorship and donor revenue, combined with rising expenses. In addition, this situation has often been exacerbated by the fact that the great majority of organizations, while well meaning, often have individuals in fiscal leadership locaiongs who without the abilities and/ or necessities of fiscal knowledge and discipline. In working with organizations and its leaders for over thirty years, I have come to realize that in many situations the root cause of the financial woes stems from inadequate attention to proper budgeting, in addition as taking advantage of what a well developed budget can do for an organization.

1. The first rule that fiscal leaders must follow is that there must be no holy cows when it comes to the fiscal review course of action. Each line item must be prioritized, in addition as analyzed, in terms of its relevance, need, and cost effectiveness and efficiency. I have observed that many organizational leaders shy away from doing anything when it comes to certain projects, etc., while they should review everything, and if a project is that basic, the review should then focus on effectiveness, efficiency, options and alternatives. Could these pet projects be achieved either better or for less cost by using some different approach?

2. Perhaps the biggest error made is that these leaders seem to overlook small savings, considering them insignificant in light of the size of the big picture. However, the reality of the financial budgeting course of action is that it is generally both easier to do, in addition as more efficient, to find a large number of small items, than to locate one big cut. Countless times I have heard a leader say, “What’s $500 (or $1000, $2000, or $5000) average when the deficit is so large?” However, if across the board, there are these small savings made, in addition as small efficiencies, they add up to a rather meaningful and meaningful sum of money.

3. It never ceases to amaze me that already in these difficult financial times, there are so few organizations that are using zero- based budgeting procedures. While it may take more time and effort to prepare a budget using this procedure, only by doing so, is an organization able to fully look into their expenses, review their programs and expenditures, create priorities, and estimate alternatives and compare efficiencies and effectiveness. When an organization begins with a zero base, it method that the budget is developed on needs and prioritizes, instead of just passing along the “same old, same old,” year after year.

Like so many other obstacles faced by organizations, the financial and budget areas require training of present and future leadership. Fiscal officers need specialized training, and those organizations that press specialized trainer nearly always fare far better than those that do not.

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