1. Financial Bootcamp – Module 4 Affiliate Budgeting

2. Objectives Introduce and explain the annual budgeting process
Identify the key aspects of an annual budget
Recommend good budgeting procedures

3. Budget Timeline
Since the affiliate fiscal year is typically July 1 to June 30…
Board members, bookkeepers, managers, etc. should coordinate to develop the budget as early as possible
Start working on a budget by April of each year
The Board of Directors should have a budget approved by the end of May

4. Budget Components
There are two primary components of any affiliate budget: income and expenses
Income – Expenses = Net Profit
If income is greater than expenses, the affiliate has a surplus. If income is less than expenses, the affiliate has a deficit.

5. Income All monies received by the affiliate during the fiscal year
All donated properties and materials by the affiliate during the fiscal year
Anything received that is of monetary value is considered an asset, and is a part of the affiliate’s income

6. Expenses All monies spent by the affiliate during the fiscal year
Includes salaries and compensation, house costs, fundraising event costs, etc.
Includes all overhead costs such as rent, utilities, office supplies, etc.

7. Contingencies
A contingency is an unforeseen circumstance wherein an affiliate experience an unexpected expense
Affiliates are wise to maintain a financial reserve and/or budget for contingencies every year
It is most likely that, at least once during the year, an unexpected expense will occur

8. Budget Basics
Projected incomes should never be less than projected expenses
Ideally, projected income should be at least 20% higher than projected expenses to account for unexpected expenses and/or unexpected shortfalls in income
Income should determine expenses

9. Building a Budget
Begin by reviewing the previous year’s budget with actual income and actual expenses.
Evaluate discrepancies and ask:
What income / expenses were higher or lower than projected?
What caused these to be higher or lower than projected?
Were these causes isolated, or did we make an error?

10. Building a Budget
Use the previous year’s budget as a basis for establishing the next year’s budget
Include any income or expenses you may not have expected / overlooked in the previous year’s budget
Remove any income or expenses you had projected, but not received and do not reasonably expect to receive in the coming year

11. Building a Budget Do not simply copy the previous year’s budget
Always project for an increase in income and an increase in expenses
Economic factors outside your control almost guarantee next year’s expenses will be higher than last year’s expenses

12. Building a Budget
Challenge yourself to raise more money than the previous year
Expect to have to spend more money than the previous year
Be realistic, but also be optimistic

13. Realistic Budgeting
A budget should be founded in reality, using real numbers and realistic expectations
If you only raised $30,000 in Year 1, do not expect to suddenly raise $60,000 in Year 2—that is an unrealistic goal
If your expenses were $100,000 in Year 1, do not expect them to be $50,000 in Year 2—that is an unrealistic expectation

14. Budget Review
After approving a budget, Board member should review financials each month to see if the affiliate is on-target to meet budget expectations
A regular analysis of the budget and actual incomes and expenses will help the organization curtail any shortfalls and make strategic adjustments as necessary

15. Conclusion
Board and staff should work together to craft a detailed, accurate budget for each fiscal year
The budget should be realistic and based on previously-verified information
The annual budget should be reviewed on a regular basis to ensure the affiliate is meeting its goals and not experiencing unnecessary expenses