The Budget-Building Book for Nonprofits A Step-by-Step Guide for Managers and Boards

by Dropkin, Murray; Halpin, Jim; La Touche, Bill

• ISBN13: 9780787996031
• ISBN10: 0787996033
• Edition: 2nd
• Format: Paperback
• Copyright: 2007-11-02
• Publisher: Jossey-Bass

Summary

This best-selling nuts-and-bolts workbook, now in its second edition, has become the gold standard for nonprofit managers and boards who must work through the budget cycle. The book offers practical tools and guidance for completing each step of the budgeting process. Designed to be comprehensive and easy to use, The Budget-Building Book for Nonprofits provides everything budgeters and nonfinancial managers need to prepare, approve, and implement their own budgets. Includes new chapters on Zero-Based and Capital Budgeting as well as a CD with spreadsheets, worksheets and a new budget-building software that will help make budget building easier!

Author Biography

Murray Dropkin is president of CMS Systems, Inc., a consulting firm that specializes in improving the financial operations of nonprofit and for-profit organizations. He is the coauthor of Bookkeeping for Nonprofits and The Cash Flow Management Book for Nonprofits.

Jim Halpin has written articles for technical publications and has developed accounting software and other applications for clients in a wide variety of industries. He is the coauthor of Bookkeeping for Nonprofits and the coauthor, with Dropkin, of the newsletter Nonprofit Report.

Bill La Touche used his writing, planning, training and organizing skills to help a wide range of individuals, groups, and organizations get what they want from complex business, governmental, and nonprofit entities.

Table of Contents

Preface

Acknowledgments to the First Edition

Acknowledgments to the Second Edition

The Authors

Introduction: How to Use This Book

UNDERSTANDING BUDGETING BASICS

Why Budgets and Budgeting Are Important to Nonprofits

The Importance of Budgets and Budgeting

The Basic Characteristics of Budgeting

Understanding Basic Types of Nonprofit Budgets: Overview

Organization-Wide Operating Budgets

Operating Budgets for Individual Programs, Units, or Activities

Capital Budgets

Cash Flow Budgets (Cash Flow Forecasts)

Opportunity Budgets

Zero-Based Budgets

Key Board and Staff Roles and Responsibilities in Nonprofit Budgeting

The Board's Role

The Executive Director's, President's, or CEO's Role

The Chief Financial Officer's Role

Program, Unit, or Activity Manager's Role

Department Manager's Role

Other Possible Participants

Establishing Budget Guidelines, Priorities, and Goals

Establishing Guidelines

Identifying Priorities

Setting Organization-Wide Goals

Setting Individual Program and Unit Goals

How Different Sources and Types of Income Can Affect Budgeting

Unrestricted Funds

Contract or Grant Agreement Funds

Restricted Contributions

Income from Trade or Business Activities

Asset-Generated Income

Cash and Noncash Contributions, Including Pledges

Funds Requiring a Cash or In-Kind Match

Strategies for Developing Organization-Wide Operating Budgets

Strategy 1: Set Annual Organization Outcome Goals from the Top Down

Strategy 2: Set Annual Income and Expense Targets from the Top Down

Strategy 3: Request Draft Budgets That Show Priorities from Program or Unit Heads

Strategy 4: Use Zero-Based Budgeting

Possible Problems with ZBB

Benefits of ZBB

STEP-BY-STEP BUDGETING GUIDELINES

Start with the Budget-Building Checklist

Designing Your Budgeting Policies and Procedures

Basic Budgeting Policies and Procedures

Basic Income Projection Policies and Procedures

Basic Expense Projection Policies and Procedures

Basic Cash Flow Projection Policies and Procedures

Policies Establishing the Fiscal Year

Other Needed Policies and Procedures

Checklist for Information to Include in Written Policies

Final Review and Integration

Creating Your Budgeting Calendar

Five Steps for Developing the Budgeting Calendar

Instructions for Creating an Annual Budgeting Calendar

Orienting Program and Department Managers and Staff to Budgeting

Budget Team Meeting

Practical Considerations When Planning Budget Team Meetings

Contents of the Annual Budget Preparation Package

Developing Organization-Wide Operating Budgets

Five Steps to Prepare for the Annual Budgeting Process

Five Steps to Create Annual Budgets

Developing Operating Budgets for Individual Programs, Units, or Activities

Planning for Program or Unit Budget Development

Basic Steps in Creating a Program or Unit Budget

Setting Two Kinds of Program or Unit Goals

Preparing a Program or Unit Workplan

Identifying the People and Things Needed to Implement a Workplan

Identifying Personnel Costs

Identifying 'Other Than Personnel' Cost Categories

Identifying Specific Line-Item Costs

Providing Budget Justification or Cost Documentation

Matching and In-Kind Contributions

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