Is your community organisation clear on its financial viability for the next 12 months?
Budgeting and forecasting to control the costs of your not-for-profit organisation is simply creating strategic plans for its financial future.
This is where the strategic plans are translated into financial numbers to ensure that the plans are financially viable. We assist your Board Members and key staff to understand the fundamental principles for sound financial decision making.
Strategic planning for your not-for-profit organisation is usually done for a specific period, for example 12 months. It outlines all of the activities you plan to undertake in the next 12 months, based on the costs/income involved for each activity. In other words, it is a statement of anticipated sales turnover, expenditure, profits and cash flows.
A budget is a key management tool particularly for not-for-profits that operate without capital or large reserves. Operating losses can have a devastating impact and effect the viability of the not-for-profit organisation. Your budgeting will tell you whether the organisation’s income is likely to exceed its expenditure, and if so by how much. We can assist your team to position your community organisation for financial sustainability and good governance.
In light of the funding your community organisation is receiving, are you producing the correct financial reporting?
State, Territory and Commonwealth Governments regulate the not-for-profit Community Services Sector. If your community organisation relies upon Government financial support from and/or private benefactors then you must be aware of the unique attributes, laws and regulatory frameworks that apply to community finance.
Good budgeting and forecasting require the following:
Preparation against strategic goals set and approved by the Board or Management Committe
Budgeted timelines aligned to the preparation of financial statements
Regular comparison of budgets against actual financial results as disclosed in the financial statements
Scope for amending activities and targets where actual results indicate that budgeted outcomes will not be met
A Treasurer does not usually write the budget alone. It is prepared in consultation with the Board and key management staff. Handing over the budget for your community organisation to your Accountant to complete may appear more efficient, but unless your Accountant plays an integral role in the management of your organisation, they may not know your goals and objectives to do an accurate job.
To control your costs and planning for them, imagine the worst and the best that could happen financially within your organisation, then look at how you would cope with it. It may seem odd to worry about the best-case scenarios, but a sudden upsurge in demand for your services could place your organisation under financial stress as costs also increase.
Some budgets will be drawn up for the financial year of June to June and others will operate on a calendar year or based on a ‘special projects’ term.
See here for budgeting software help.
Look out for upcoming workshops we will be providing via our partnerships to provide expert tips and guidance in managing your not-for-profit organisation’s budget and cost control.
