1. Organizational Budgeting
Budget Development at Grassroots Organizations

2. Financial Decision-making
Financial Management
Planning, directing, monitoring, organizing & controlling of the monetary resources of an organization
Financial Planning
Financial Control
Financial Decision-making

3. 3 Key Elements to the Process of Financial Management
Financial Planning
Ensuring that enough funding is available at the right time to meet the needs of the organization
- Determine needs of organizations
- Allot dollars to needs
- Develop budgets
Financial Control
Using financial statements, primarily a budget, & other financial tools to manage finances
- Accountability: Demonstrate to funders & stakeholders how each dollar is being spent
- Efficiency: Money being used efficiently & according to plan
- Management act in the best interest of funders/donors & in accordance with their rules
Financial
Decision-making
Prioritizin g & Allotting
“How do we use dollars to create the greatest impact to clientele, participants, funders, stakeholders & the organization itself?”
- Using past experience & current context to decide how to acquire & use funds most efficiently

4. Developing a Budget
What to Spend & Where to Spend It

5. Concise yet informative
Budget Basics
Bear in mind
HOW you will share
Expenditures tracks, staff transition, etc.
Concise yet informative
The greater the dollar amount the more detailed the budget
Broad line items with detailed lists underneath
Add detail to those details!

6. Organizational Budgets
Tell a story; demonstrate your organization’s priorities
Should be related to overall planning process of the organization (*Explore Board roles since budget relates to long-term strategic planning)
Team Consultation: Done as a team
Resource Sheet 1. Financial Management Question List

7. Steps to Building an Organizational Budget
Step 1. Make a Wish List
Step 2. Cost out your List
Step 3. Allocate Funds
Step 4. Adjust & Balance
Step 5. Budget Approval
Step 6. Monitor & Amend

8. Step 1. Make a Wish List: Questions to think about
1. What should the organization be doing next year? Or for this upcoming program/project?
2. What core activities are essential?
3. What additional activities might be undertaken if cost were not an object?
4. What staff needs would be associated with these activities? 5. Are there special one-time expenditures that might be considered?
Think systematically about the organization’s activities relation to Mission/Mandate/Vision

9. Based on 3 estimates for the desired camera
Step 2. Cost out your List
1. Incremental budgeting: if your organization will largely be carrying out activities it carried out in the previous year(s)
Add a percentage increment to actual cost from previous year
Example
Item
Cost 2014
Budget 2015
Program Materials
Cost + 5%
2. Zero-Based Budgeting: each line item be calculated based on research, formal estimates, informal estimate, asking sources
Example
Usually a combination of those two processes
Item
Cost 2015
Digital Camera
400.00
Based on 3 estimates for the desired camera

10. Pointers to Remember!
Reap the benefits of honest reporting
Keep your estimates on the high side
New programs, services, activities cost
Tip: Report your expenditures in the right budget line even if you go over the amount you budget. That way, you will know next time to budget for that item
Tip: Avoid any unpleasant surprises!
Tip: Add to your core administrative/operational costs

11. Step 3. Allocate Funds
Project funds (*Underestimate funds to ensure that costs can be met)
*Restricted funds allotted first – These cannot be changed
Use *unrestricted funds to cover most basic administrative costs
Allot remaining unrestricted funds to supplement program & activity funds
Remove programs, services, activities that you can’t cover with your projected funds
Set priorities/Balance your budget
Is this activity really central to what the organization is about?
Does it help the organization achieve its long-term goals – 1 to 5 years?
Is it more important to build a reserve or intro that new program/activity?

12. Definitions & Tips Restricted Funds Unrestricted Funds
Money that you have promised to use for specific purpose
Example: Most grant you receive from government, foundations, and corporations are supposed to be used for specific programs, projects or events
Tip: Allot this money first so you see what has to be covered by unrestricted funds
Unrestricted Funds
Money that hasn’t been promised to a specific purpose
Example: Often this is from fundraising efforts or special gifts, although you can have other types
Tip: Often it’s a good idea to use unrestricted funds for items that are hard to fund through grants, such as rent, utilities, and other administration costs

13. Step 4. Adjust & Balance Step 5. Budget Approval
All major changes need to be approved by governing body
Approved by your Board prior to your fiscal year start
Long, multi-month process
The line item details provide flexibility
One budget for all purposes
Be honest to show overspending, as well as underspending
This process allows you to forecast better in next year & demonstrate real needs
Step 6. Monitor & Amend

14. Tips: Framework Budgets
Use previous year, current budget/actuals and if available approved budget of following year to create three year projection
Analyse trends—project budgets
Create conservative projection
Create optimistic projection
Will help in the development of long-term budgets, strategy, and direct your diversification of funding

15. Tools: Spreadsheet Central
Check out the right hand side bar of this toolkit page to find all of budget templates.
Resource Sheet 2: Budget Request & Reporting Template
Resource Sheet 3: Organizational Budget Template
Resource Sheet 4: Program Project Budget Template

16. Program / Project Budget
Questions to think about:
Take a look at your own organization’s budgets:
What do they tell you about your organization? (i.e. Your grants? Your revenue/income? Your expenses/spending habits?)
Does the current format work for your organization?
What would you change to make the current format more accessible or applicable to your organization?

17. Budgeting Categorization
Office & Administration
Rent Expense, Amenities (Telephone, Internet, Heat, Hydro), Audit/Bookkeeping, Insurance, Postage, Printing/Photocopying, Criminal Checks, Equipment Purchase, Subcontracts/Purchased Services, Miscellaneous
Program Expenses
Honorarium, Board/Volunteer Training, Photocopying/Promotion, Resource Development, Meeting Expenses, Special Events, Resource Materials, Program Transportation, Evaluation
Staffing
Salaries & Benefits (*MERC), Staff Travel, Staff Training, Extended Health Benefits

18. Quick Tips for Effective Financial Management
File each grant in a different binder for easier tracking, recording, reporting, & auditing
Use simple accounting software or templates
Reconcile regularly, based on funds/budget
Communicate frequently with your Board of Directors& Provide monthly financial reports
Resource Sheet 5: Tips from FYI’s former Financial Manager

19. Quiz: What did you learn?
How does your Mission/Mandate/Vision impact your budget?
What is incremental budgeting? Zero-based budgeting?
Why should you report your expenditures honestly?
What’s the difference between restricted and unrestricted funds and how does it impact your budget?
Who approves your organizational budget?

20. Contact
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