Budgeting:A Plan For All Seasons - River Network

Volume 14 | Number 4 - 2005A River Network Publication

cont. on page 4

Budgeting: A Plan For All SeasonsBy Susan Schwartz, Director of Finance, River Network

Annual income twenty pounds, annual expenditurenineteen…result happiness. Annual income twenty pounds,

annual expenditure twenty pounds ought and six…result misery.

— Charles Dickens

udgets, simply speaking, are operating plans expressed in financial terms. Budgeting is a systematicway of allocating the financial and human resources necessary to achieve your strategic goals. Theincome statement describes the past. The balance sheet describes the present. The budget, however,is all about your future: it projects the costs of your programs and predicts the income necessary to

finance those costs. In a volatile world, a sound budget is a pathway through uncertainty and may mean thedifference between barely surviving and thriving.

Budgets have four important organizational purposes:

(1) To quantify the necessary resources to reach your goals and objectives.

(2) To help predict cash flow for better financial management.

(3) To serve as an internal control to alert you to unexpected variances.

(4) To help identify operational strengths and weaknesses.

Using budgets, the staff and the board can see problems in the making and develop thoughtfulsolutions. Budgets, as well as the budgeting process itself, is a critical tool for betterprogrammatic and financial management and can help your organization achieve its missionwith fewer unpleasant surprises and financial crises.

Types of BudgetsOrganizations may use many different formats and models for budgeting. The budget for an organization withannual revenues of $50,000 will be different from that of one with $5 million. But while they may lookdifferent, all budgets have the same purpose: to help your organization avoid unpleasant financial surprises andensure resources to fulfill your mission.

There are at least four (4) types of budgets relevant to nonprofits:

$ The cash flow budget identifies periods of cash surplus and shortfall. If the organization receives itsmoney at a different time of the year than when it pays out its expenses, it must know and planaccordingly for that timing difference (pg. 12).

$ The operating budget outlines your major sources (revenues) and uses (expenses) of funding (pg. 13).

$ The grant budget is a sub-budget or section of the overall operating budget, usually designed to meetthe information and evaluation needs of a particular funder or program (pg. 15).

$ The capital budget details the cash needed to purchase large equipment and those major assets thatwill be depreciated over time rather than expensed in just one fiscal year (pg. 17).

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2 River Network • RIVER VOICES • Volume 14, Number 4

NATIONAL OFFICE520 SW Sixth Avenue, Suite 1130 • Portland, OR 97204-1511503/241-3506 • fax: 503/[email protected] • www.rivernetwork.org

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RIVER NETWORK BOARD OF TRUSTEES

Clarence AlexanderCatherine ArmingtonAdrienne T. AtwellSally BetheaDavid BordenWilliam G. F. Botzow, IIRob R. BuirgyKimberly N. CharlesJim Compton, Trustee Emeritus

Dianne DillonridgleyDon ElderGeorge S. HawkinsPaul ParyskiElizabeth RaisbeckMarc TaylorLaurene von KlanJames T. Waring, ChairJames R. Wheaton

RIVER NETWORK STAFFMatthew BurkeMichael CurnesGeoff DatesSteve Dickens Don Elder Jean A. HamillaGayle KillamKarli Kondo

Andrea KorsenKatherine Luscher Margaret McCoyPat MunozSusan SchwartzJames P. SullivanWendy WilsonAlanna Woodward

River Voices is a forum for information exchange among river and watershedgroups across the country. River Network welcomes your comments and sugges-tions. River Network grants permission and encourages sharing and reprinting ofinformation from River Voices, unless the material is marked as copyrighted. Pleasecredit River Network when you reprint articles and send the editor a copy.Additional copies and back issues are available from our national office.

Editors: Katherine Luscher, Susan Schwartz

Editorial Assistance: Jean A. Hamilla

Design & Layout: Greer Graphics

River Network is a national, nonprofit

organization whose mission is to help

people understand, protect and restore

rivers and their watersheds.

CONTENTS1 Budgeting: A Plan For All Seasons

by Susan SchwartzDirector of Finance, River Network

3 From the President

5 The Role of the Board

by William Botzow, TreasurerRiver Network Board of Directors

7 Budget Process Models

by Cynthia Cumfer & Kay SohlTechnical Assistance for Community Services (TACS)

8 Projecting Revenues

by Don Elder, PresidentRiver Network

10 Estimating Expenses

by Rob Buirgy, Executive DirectorBig Thompson Watershed Forum

12 Budget Examples: Cash Flow Budget

13 Operating Budget

15 Grant Budget

17 Capital Expenditures

18 CASE STUDY: Cahaba River Society, Alabama

by Beth Stewart

21 Resources & References

23 River Network Partnership

Volume 14, Number 4 • River Network • RIVER VOICES 3

From the President

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ost of us think about organizational budgets like wethink about trips to the dentist. We know we shouldmake them at least once a year, and we know it’s a goodidea to have a mid-year checkup. Even though we knowwe need them, we expect them to be painful at least

some of the time, so we don’t ever really look forward to them.

That’s understandable, but there’s a much better way to thinkabout budgets. We should think of them as some of our mostimportant tools for building healthy, effective, long-lastingorganizations.

Building an annual budget forces us to think hard aboutresources—about how many we have, and about whether and howwe can acquire more. That’s reason enough in and of itself todevelop good budget habits.

However, a good budget process does much more. It helps usconnect our long-term goals to short-term actions and the moneythey require. It prompts us to talk about options, establishpriorities and make choices. Sometimes the decisions it forces areimportant and difficult. Those tend to be the very ones we put offtoo long otherwise.

A good budget is more than just numbers on a page. It includesdocumentation of projections, decisions and the rationale behindthem. Once built, a good budget gives us resources, goals,boundaries and guidance we need to perform well and manageresponsibly on a day to day basis. Monitoring it regularly helps usmeasure our progress, giving us assurance that we are on track. Italso helps us identify small problems and take corrective actionbefore they become big problems.

Watershed protection is long-term work. It requires goodplanning, fiscal discipline and sound management, year after yearand day after day. Organizations that succeed over the long termbuild good budgets and use them. We hope this issue of RiverVoices will help you build better, more useful budgets for yourorganization—and enjoy doing it!

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Budgeting A Plan For All Seasons, cont.

cont. from page 1

cont. on page 6

Roles and Responsibilities in BudgetingBudgeting is unique to each organization inresponse to the specific staffing andvolunteer patterns, organization history andcultural precedents. One formative factor inhow the process looks is whether yourorganization is board-driven, staff-driven ora combination of both. In younger andsmaller groups especially, the board treasureroften prepares the entire budget. In some,the treasurer works with volunteercommittee chairs. In others, an executivedirector may work with the treasurer and/orcommittee chairs. When there is executive,program and development staff, they oftenwill work collaboratively to prepare thebudget to be presented to the finance/budgetcommittee or to the board.

In order to produce an accurate financialplan, an organization should use aparticipatory approach to budgeting withthe active involvement of many differentpeople in the organization. This ensures theinclusion of more information and broaderinsights. At a minimum, board or staffshould participate in any part of thebudgeting process that impacts activities andmaterials for which they will beoperationally responsible.

Both program and financial volunteers orstaff should be involved from the beginning.Program planning is often viewed as thedomain of the executive director or programstaff. Fiscal management, meanwhile, isassigned to the finance director or the boardtreasurer. Consequently, each may not beaware of the importance of the other’sapproach to budget issues. Programplanning may be seen as failing to reflect theeconomic realities, while fiscal decisions maybe viewed as insensitive to the mission workof the organization.

To avoid last-minute ad hoc decisions, allkey board members or staff should worktogether in the process to discuss plans andanticipated problems and co-developbudgets. Only with the necessaryprogrammatic and financial expertise willthe budget truly reflect joint priorities andbe a useable guide for employing theresources of the organization.

Recommended Timeframe for Preparing a BudgetSince every organization will have differentpreparers and process, it is best to start byknowing the date of the board meeting atwhich the budget must be approved andcount backwards, allowing enough time forthorough discussion and the necessaryresearch for any new initiatives you areplanning. One group, for example, plannedto move to a new office and to hire a newprogram manager. That required both asurvey of the commercial space market toidentify average office rents and at the sametime a small compensation survey todetermine a competitive market rate ofsalary for the new staff position.

Month-by-Month Operating BudgetsIf your accounting software permits, andyou have sufficient information, it is veryhelpful to prepare monthly budgets thatreflect the real timing of revenue andexpense rather than simply dividing theannual budget into twelve equal parts. YourDecember special fundraiser should beincluded in that month, while expenses forthat large May conference should be in May.If your insurance is due twice a year, thetwo premium payments should be reflectedin those months, rather than in each oftwelve months in your budget. By preparingmonthly budget breakdowns andcomparing them with actual dollars spentand received, you can far more accuratelysee problems and revise your planning

THE ROLE OF THE BOARDWilliam Botzow, TreasurerRiver Network

s board members, we are naturally most excited by what our organizations do to makethe world better and by contributing to plans to restore our waterways and keep themthat way for the benefit of all.

We also have another role. We safeguard the reputation and integrity of our organization. Thosethat fund our work put their trust in us, and we are legally responsible for the financial probityof our organization. This responsibility lies at the heart of what it means to be a trustee and aboard member. The central instrument for carrying out that responsibility is the budget. Weapprove the budget, then monitor finances throughout the year and finally account forexpenditures at year’s end.

Most nonprofits have, or should have, a financecommittee. Finance committees make sure that thebudget supports the organization’s mission and its tax-exempt purposes, and that donated and earned dollarsdirectly connect to organizational goals and objectives.

Asking good questions during budget approval ensuresrealistic (not hopeful) revenue and expense projectionsand that dollars will be available throughout the budgetcycle to support activities. We need to ask if initiativeshave the resources necessary for success and will besustainable. We need to ask if risks can be managed and not undermine essential operations.

Looking at budget changes from year to year in the specific areas we track such as salaries,travel, communications, etc. on the expense side or individual, corporate and foundationdonations on the revenue side guide the realism of a budget. Carefully monitoring revenue andexpense variances from budget as the year progresses stabilizes our organizations and preparesus for inevitable corrections.

Ideally, we strive for balanced budgets with surpluses. The ability to manage and protect thosesurpluses carries organizations through times when we need to approve deficit budgets in orderto transform our organizations. If you approve a deficit budget, ask if you have the reserves inthe bank to back them up. Ask if you have a plan to turn a temporary deficit into a sustainablesurplus.

The assumptions we make when we write, approve and monitor budgets will ultimately beaccounted for in our IRS reports and audits. Board members must be sure sensible policies arein place for handling and recording dollars in and out, for using reserves and ultimately forprofessional oversight at year end.

Prudent realistic financial management gives stability and certainty so we can continually evolveour work and build credibility for our organization.


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Budgeting A Plan For All Seasons, cont.cont. from page 4 $ What story does your budget tell

the external world about you?

$ Does your budget look almost thesame as last year’s? Different?Why? Why not?

$ Should your budget be revisedand updated?

Final ConsiderationsDoes it all add up correctly? This isprobably stating the obvious but it shouldbe rechecked. Take the time to be sure that2+2 equals 4 and not 3 on your budget. Ifusing software like Excel, it is easy to omit acell in a spreadsheet, which will impact oneor more totals. Or, if you use your goodold-fashioned calculator, add the numbersagain to be sure that you get the same sub-totals and totals the second time around.

Do your numbers pass the “sanity test”?Take a moment to ask yourself if yournumbers make sense overall. Are newactivities or staff included? Are operationalchanges reflected? Do your total incomeand expense costs in total seem reasonablein light of what you know about theorganization?

Explain your budget. Always include athoughtful narrative that gives a summaryoverview of your budget. At the very least,your budget narrative should discuss anysignificant increases or decreases comparedwith last year’s budget and any othermaterial numbers. For example, if your$500,000 organization has a $20,000increase in office rental, explain thatchange. A rule of thumb is to explain anydifference in excess of 10%. The moreinformation and footnotes provided, theeasier it will be to review and evaluate anyvariances that occur during the year.

accordingly. Such monthly budgets are alsothe major step toward creating your cashflow budget, which is essential to prepare forany cash shortfalls.

Budget AdjustmentsTo be useful, a budgetmust be a livingdocument and not an

historical relic. If you arelooking at your budget verses

actual numbers each monthand analyzing the variance,

you should reforecast the budgetwhen you see that circumstances

have changed. Changes in theinternal or the external environmentshould be reflected. Variances—

positive or negative—may also signalthat some organizational intervention

is necessary. If you must change courses tocorrect for the variances, you want thebudget to reflect new programmatic oradministrative plans. If these factors are notconsidered and the numbers adjustedaccordingly, the document will no longerreflect your organizational reality and willnot provide a meaningful tool for evaluatingyour operational efficiency. Worse still, youmay miss the opportunity to correct errorsand deficiencies. Revision on a semi-annualbasis is, therefore, highly recommended. Becertain that the revision process is ascarefully controlled and structured as theoriginal in order to maintain accuracy andaccountability.

Other ConsiderationsAs with all organizational initiatives,communicate, communicate, communicate.Present your plan—the budget—in a clearand thoughtful written document for board,staff and volunteers. Be certain they reallyunderstand what it says.


rganizations with more than oneprogram utilize a variety ofmodels for developing budgets.Four common models are

described below. Your board and staff maywant to consider trying a new method, orusing a combination of methods.

Bottom Up: Program Manager DrivenProgram Managers develop budget proposalsfor all program costs. Fiscal Managersupplies information on proposedadministrative cost share and all share costs(occupancy, phone, etc.).

Fiscal Manager reviews Program Manager’sproposals for consistency with agencypolicies and prior years’ experience. FiscalManager combines program proposals withadministration budget proposals and worksclosely with Development Director orExecutive Director to project revenue.

Fiscal Manager and Executive Directorpreparerecommendationsregarding revenue andexpense options fordiscussion by BoardFinance Committee whichthen makesrecommendations to thefull board.

Top Down: FiscalManager DrivenFiscal Manager preparesfirst draft of annual budgetbased on analysis of costincreases and program plansfor budget year. Fiscal

Manager circulates draft budget amongProgram Managers for feedback and input.Fiscal Manager proposes revenueprojections based on committed funds,prior years’ experience and input fromDevelopment Director and ExecutiveDirector. Fiscal Manager presents proposedbudget to Executive Director who presentsdraft to Finance Committee for review andrecommendation to the board.

Board DrivenBoard planning process identifies servicepriorities and revenue generation strategyfor coming year. Fiscal Manager developscost proposals reflecting board prioritiesafter seeking input from ProgramManagers and Executive Directors onimplementation plans for board identifiedpriorities. Fiscal Manager and ExecutiveDirector develop options or key choices forBoard Finance Committee.

Development DrivenDevelopment Director and ExecutiveDirector identify funding strategy andprobable amounts to be raised from each

source. Funding availability becomesprimary factor in design ofprograms. Program budgets already

submitted to funders areconsolidated to create agency

budget. Board FinanceCommittee reviewbudget prepared bystaff andrecommends boardapproval.

Top-down verses Bottom-up

Budget Process Models

This information is from theOregon Nonprofit Corporation

Handbook by Cynthia Cumfer andKay Sohl, used by permission of

Technical Assistance for Community Services,503/239-4001. www.tacs.org.

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Realistic Income Analysis

Projecting Revenuesonfidence in ability to produce isa virtue shared by most goodfundraisers. But fundraisingconfidence is a virtue only up to a

point. In excess—especially when nottempered by budgeting procedures thatrequire reality checks—it can lead anorganization to disaster.

Clearly, overly ambitious revenue forecastscan lead an organization to ruin. On theother hand, so can overly cautious forecaststhat force unnecessary cutbacks in peopleand programs. How then can those buildingbudgets find a responsible middle of theroad? While there is no simple, cut-and-dried answer, there are some principles uponwhich better budgets can be built.

Establish a financial reserve. Becauseno revenue forecasting system willever be perfect, the first rule has asmuch to do with financialmanagement as fundraising. Some

margin for error needs to exist. I recommendabout six months’ operating expenses—moreif the organization is very dependent onhighly restrictive, irregular sources offunding such as government contracts andfoundation grants. If the reserve must betapped, the first priority for the followingyear should be to restore it.

Begin revenue projection work earlyin the budget process. It’s hard tothink clearly and objectively aboutrevenues for the coming year once anexpense figure is already developed. By

then, it’s almost impossible not to startgenerating revenue numbers based onwishful thinking. Given a specific number—say, $300K—to hit, many boards andfundraisers will immediately begin thinkingbackwards: “Let’s see, that means we justneed $200K from foundations and $60Kfrom individuals and $40K from our annualbake sale and we’ll be all set. Let’s get towork!” If only it were that simple and easy.

Long before you generate an overallorganizational expense figure, develop therationale, procedures, documentation andworkplans to support the initial revenueprojections for the coming year. They canbe further developed as the budget processcontinues, and they must be furtherdeveloped if the revenue projections areincreased. But the foundation should belaid very early in the budget process, asindependently of expense considerations aspossible. I recommend beginning therevenue projection process at least onemonth earlier than the rest of the budgetwork.

Consider the uniquecharacteristics of differenttypes of funding sources.Some revenue streams are farmore reliable than others. For

example, if you already have 2,000individual members averaging $30 each peryear, you may project at least $50,000 fromthem with a high degree of confidence. Butif you are hoping for renewal from twofoundations and one major donor thattogether gave $60,000 this year, be muchmore cautious about putting $50K fromthose three sources in next year’s budget.

Look at revenue potential fromseveral different angles. Allfundraising projection methodsare simply models. Like allmodels, they have their

limitations. Consider running yournumbers for the coming year using two oreven three quite different methods. Forexample, you might look at projections forfoundations or major donors in terms oflikelihood of a gift of a certain size for eachprospect (i.e., 60% chance of a renewal of$10K = $6K projection for a particulardonor); a pyramid of most likely to leastlikely gifts (i.e., $100K from two donorswho have made firm $50K pledges, at least$50K from 12 highly likely donors who

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by Don Elder

PresidentRiver Network


have averaged $5K apiece in recent years, andat least $15K from 75 brand-new prospectsfor $1K gifts); and historical performance(i.e., no increase from foundations ascompared to last fiscal year, and no morethan a 10% increases from all other sources.)Each of these methods is legitimate (if basedon reasonable assumptions and good data),but they can generate very different results.Don’t bet the farm on one method whoseresults are much higher than the others. Also,keep in mind that the more donors you have,the more the odds tend to even out. If youhave just a few donors in a given category,and if even one of those is a big wild card inyour projections, be especially cautious.

Be clear about the assumptionsupon which each projection rests.Whatever method or methods youchoose, write down theassumptions behind them. Share

them with board and staff. Refer to themoften as the year progresses. Each time amajor assumption is proven true, celebrate!If a major one proves to be false, step backimmediately and reassess. Don’t wait untilthe end of the year to do so. Quick correctiveaction—some supplemental fundraisingstrategy, some expense-cutting measures orboth—may be in order.

Don’t rely on windfalls—andwhen they come, use themdifferently. A well-rounded,well-run fundraising programtends to generate some nice

surprises most years. Don’t count on them.For example, if an individual donor has beenspeaking with you about the possibility of amajor one-time gift, don’t include it in yourannual budget projections. Even if it arrivesin the amount and at the time expected, youwill be better off if you weren’t counting onit to meet this year’s budget, because it willnot come again next year. As long as doing sois consistent with donor intent, it’s far betterto use windfalls for special purposes, such as

building reserves or endowment, that willenhance your organization’s efforts formany years to come.

Plan to exceed projections.While relatively cautiousprojections usually make sense,they should be accompanied bythe most aggressive fundraising

plans possible. Fundraising goals should begreater than, not equal to, your budgetrevenue figures. Aim to exceed budgetfigures nine years out of ten. When revenuesare almost always greater than budgetprojections, it is much easier for fundraisersand everyone else to do their jobs well. Whythen do so many organizations set budgetfigures that they believe they have only a50% chance of exceeding?

Decide in advance what majorevents will trigger what expensemanagement decisions. Thisreassessment will be faster andeasier if you have decided in

advance what events (or non-events) willtrigger what actions. For example, a 20%shortfall in individual giving during theholiday season might be reason to scale backsome program activities. Non-renewal of amajor corporate donor might be reason tomodify or eliminate the program it funded.On the other hand, receipt of a pendinggrant that wasn’t assumed in the budgetmight allow specific, predeterminedexpansion to take place. In addition toproviding clarity for program staff andboard, advance decisions of these kinds helpfundraisers prioritize their efforts.

Adopting these principles will not removeall uncertainty from revenue projections.Nothing will. But it can help move anorganization from guesswork, boom-and-bust cycles and crisis management toward amuch steadier, more productive and moresustainable long-term path.

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Understanding Your Costs

Estimating Expenseshe art of estimating expensesexists in close relationship to thechallenge of predicting revenues.These are the yin and yang of a

balanced budget, and maintaining aharmony between the two is a key ingredientto building the productive planning tool weall desire.

As with any relationship, our budgets willfunction best when directed toward acommon purpose. By having ourorganization’s mission clearly in mind and arealistic work plan established, we’ll have aframework that can support the inevitable‘squabbles’ that surface between revenuesand expenses.

Once the key ingredients of the work planare in place, it usually works best to lay thefoundations of your revenue projectionsearly in the process. Without a realisticassessment of top-line revenueestimates, it’s way too easy to buildthe pie-in-the-sky expensebudgets that get program staffand boards all worked upabout unrealistic goals,and end up withequally unrealisticexpectations forfundraising. We all know the best chance fora successful marriage is to start with realisticexpectations; I think of this as the pre-nuptial agreement between the two halves ofour budget, and it helps us go into theprocess with confidence.

Ahhh—now for the fun part. In aconscientious organization, we have quite abit of control over our own activities, andestimating expenses comes a little morenaturally. This part of the process oftenengenders more confidence than what we getfrom reading the tea leaves of our fundingsources. Also, as our expense budgetsdevelop some established traits, they canhold their own in the relationship and give

us a clear indication of where we need to gowith our revenue projections.

As a starting point, it’s worthwhile toconsider the basic categories to whichexpenses are allocated. Reportingexpectations for nonprofits will require atleast 3 general expense categories, whichgives rise to the typical classes seen in mostbudgets: Administration, Fundraising, andone or more Programs. This is where ourwork plan objectives dovetail with thebudget, and often where program staff getsthe opportunity to build their part of thebudget. A little creativity, with an eyetoward descriptive labels, makes for a more

natural, and consequently

moreaccurate,allocationprocess. For

example, an‘outreach’ expense category

with subclasses like ‘education,’‘workshops’ and ‘other’ gives me a confusingvariety of options when I’m trying to figureout where to allocate the cost of this year’sState of the Watershed report. In a case likethis, eliminating subclasses can pay off bigdividends—especially early in the budgetingprocess. A single ‘education’ class will makethe allocation decision obvious and keepsthe process moving forward. Subclasses willnaturally evolve in a working programbudget, but I recommend rolling them upinto major categories during the early stagesof budget planning.

Expense categories will share the same listof ‘line items’ such as salaries, rent,insurance, materials, mileage, etc. We allhave regular expense items that can’t beignored—paying our own salary and

Tby Rob Buirgy

Executive DirectorBig Thompson

Watershed Forum& River Network

Board Member


renting office space don’t usually slippeoples’ minds. However, there is one regularexpense item that belongs front and center,but is so commonly overlooked that itdemands special attention. In true top-downfashion, the Board of Directors must set agoal for an annual financial reserve andensure that the overall budget has ‘cashremaining’ in the final analysis. Just as abusiness would never overlook their bottomline profits, a sustainable nonprofit musthave a realistic operating reserve that isendorsed by everyone in the organization.Enough said. This is also the time to take acareful look at line item categories todetermine if adding, eliminating orrenaming lines is in order. A stale, out-datedbudget is a real burden, and this is a goodopportunity to breathe new life into theorganization on an annual basis.

When it comes to actually estimatingexpenses, there are at least three commonmethods:

$ The “Mark-Up Method” estimatesfuture expenses based on myorganization’s historic spendingpatterns. We usually use the mostcurrent expense records available andfactor in an increase or decrease basedon our recent experiences. Thismethod is widely used, so it makessense that the inherent problems withthis method are some of the mostcommonly encountered. For example,when using this approach, we oftenassume that our current year’s costs arereasonable, when they may be quite theopposite. This would cause a problem,for example, if we need to rehire for adeparting administrative assistantwhose loyalty kept them working foryears at minimum wage, but that payrate won’t attract the quality ofapplicants we need. Conversely,perpetuating inflated expenses is just as

common—how long has it been sinceyou solicited bids for your organizations’internet services or technologyhardware? Computer and IT serviceshave shown dramatic price decreases inthe past few years and may be goodcandidates for decreased expenseallocations in next year’s budget.

$ The “Percentage Method” compares thecurrent year’s percentage of eachexpense relative to revenue and appliesthese percentages to projected revenuesfor next year. This method often workswell when allocating fixed costs acrossseveral expense categories, as long as weare on the lookout for the same pitfallswe encounter with the mark-up method.

$ Last, but not least, the “Zero-BasedMethod” is all we have to work withwhen we are starting a new organizationor a new program—or in lean times, thisstrategy takes us right back to the baseassumptions we have in running ourorganization, and may be the only wayto create a budget that allows us to keepthe doors open. With this approach,current or previous years’ figures areignored or don’t exist, and each expensemust be justified on its own merit. Iimagine this is a favorite tool of evilcorporate types who want to torturetheir managers, but it is truly the onlyoption in many young or developingorganizations. Be sure to allow for theextra time and effort this methodrequires, and inform the process with asmuch organizational knowledge you canmuster through a team approach thatincludes experienced program staff.

At the end of the day, our success as anorganization must be measured by our results,not by our efforts—and a balanced budgetthat allows for a dynamic relationshipbetween expenses and revenues is one of themost efficient planning tools we can have.


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$Touring Friendly Watershed Council’s Budgets...

Budgets, Budgets, Budgets

Cash Flow Budgets:by Suzi Wilkins Berl

orewarned is forearmed! A cashflow budget set up in an Excelspreadsheet allows anorganization to determine how

various expenses and income will balancethroughout a fiscal year. With thisinformation, an organization can foreseeshortfalls and can take steps ahead of timeto ward off a cash shortfall.

Basically, a cash flow budget takes theprojected numbers from your overalloperating and capital budgets and addstiming to the mix. By estimating when theactual cash from the various income itemsis expected and when the expendituresmust be made, a cash flow budget has beencreated. Cash and the demands for cashwill ebb and flow throughout the year.

Projecting the likely timing on expenseitems, of course, is the easier task. Thepayroll must be at regular intervals by law,and the accounts payable tends to be steadyexcept for start-up and one-time onlyoutlays. There is also some control thatmay be exercised over the timing ofoutgoing funds.

The timing for revenues, however, requirescommunication and coordination withwhoever will execute the fundraising planand development calendar and depends toa greater extent on factors external to theorganization. Do be realistic and consistentabout the probable receipt of payments.Even if the budgeted revenue is realized, thecash may not be paid in accordance withthe terms originally specified. This isparticularly true of corporate contributionsand fee-for-service income.

Facing short-term financingproblems is not uncommon in nonprofit. Ifthe organization needs a bank line-of-creditor another type of loan, the cash flowbudget will be an essential part of thedocumentation for making that lendingpossible. One of the first questions that alender will ask is: “When will theorganization be able to repay any loan?”

Here in the example, we show the newincome for each month plus the cash carryover from the previous month minus themonthly expenses, with that total thencarrying over to the next month. Usingregular spreadsheet formulas throughout,the organization can determine what mighthappen if, for example, the $75,000foundation income anticipated in Aprilcomes in at a lower level, doesn’t come in atall or is delayed 6 months. This “what-if”planning is crucial for the cash forecastingthat will help stabilize the financialmanagement of an organization.

FSalaries

6,250 6,250 6,25075,000

Fringe Benefits @ 16% 1,000 1,000 1,00012,000

Rent3,000 3,000 3,000

37,200

Equipment300 - -

1,500

Newsletter- - 2,000

8,000

Printing & Postage500 500 500 5 6,000

Phone/fax/internet500 500 500 50 6,000

Supplies300 150 50 300 2,000

Travel1,000 500 500 1,000 8,000

Annual Conference- 500 2,000 4,000 7,500

Miscellaneous200 200 200 200 2,400Total Core Expenses 13,050 12,600 16,000 17,9 165,600Project A Contract Employee 2,500 2,500 2,500 2,500 30,000

Project A Operational 2,000 3,000 3,000 3,000 44,000

Project B Contract Employee - - - 2,500 20,000

Project B Operational- - - 1,200 9,600Total Expenses

17,550 18,100 21,500 23,500 269,200Additional IncomeFoundations

8,00 - 12,000 127,000Government

45,000- 100,000

Individual Members 200 600 750 3,000 12,750Group Members

100 400 350 1,800 3,600Special Events

- - - - 7,000Corporations

- -- 15,000

Other Nonprofits 2,500 -- 4,500

Conference- 250 1,0 - 7,500

Interest344 580

576 8,884TOTAL NEW INCOME 48,144 1,830 10, 17,376 275,934 Total Income

ADD MOLY. CARRY OVER 34,450 65,04455,008 34,450 carryover last yr.

MINUS EXPENSES(17,550) (18,100) (22,600) (23,500) (259,700) Total Expenses

END BALANCE65,044 48,774 55,008 48,884 50,684 carryover to next

Jan. Feb. Mar. Apr.Total Total Account

Friendly Watershed Council Cash Flow


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ET$Operating Budgets:

A wise man will have money in his head but not in his heart.

— Jonathan Swiftby Susan Schwartz, River Network

he initial step in the operatingbudget process is a careful reviewof the organization’s achievementsand fiscal performance of the

prior year. This includes, but is not limitedto, reviewing programmatic goals andobjectives accomplished and comparing pastyears’ budgeted revenues and expenses to theactual financial experience of theorganization. If it is possible, it may behelpful to look at the number of peopletrained or groups served or activitiesevaluated—whatever the appropriateoutcome statistic is for your programs. Basedon this review, goals and objectives might bereevaluated and redesigned. The budget canbe the connector between your goals andobjectives, and your strategic, long-rangeplans.

In many organizations, the budget preparersbegin with what was spent last year and addthe amounts anticipated for contractualincreases, predicted inflationary trends andprojected new programs or services. Thebudget should estimate the total costsrequired to achieve program objectives,including staff, supplies, equipment, space,insurance and all other resources. In a staff-driven model, both program andadministrative staff should be involved indiscussions of programmatic costs to be surethat all the resources required by yourprograms are considered.

You can certainly rely on past experience, asreflected in budget to actual financial reports,to determine some of the information forcontinuing programs. Do make sure toaccount sufficiently for anticipated changes,though, especially in areas such as fringebenefits and insurance, which are oftensubject to double-digit increases in cost. Also

Treview other expense line items for normalcost-of-living adjustments like annual rentincreases. It’s axiomatic but still good advicenot to project expenses to the last penny,but to allow some room for the unexpected.

Since personnel costs typically account forby far the largest share of a nonprofit’s totalexpense budget, be sure to plan carefully forthese line items. There can be a lot ofhidden costs associated with staffing newprograms beyond the addition to salariesand benefits. For example, new employeesentail recruitment advertising; interviewingapplicants and hiring the chosen candidate;training and evaluating a new personthrough an introductory period; providingadditional office space, furniture,equipment and supplies; and supportingadditional staff through added supervision,coordination and meeting time.

Of course, you must budget for income, aswell as, expenses. Even though entirelyunpredictable events may influence grants,contributions and fee-for-service income,you can estimate revenues with some degreeof accuracy based on past experience. Aswith any budgeting based on the past, it isimportant to make adjustments for changesand anticipated trends. Grants fromfoundations, corporations and governmentagencies are usually much more difficult topredict than membership income or paidconsulting work. Both the financial andfundraising volunteers or staff, incollaboration with the board chair orexecutive director, have to make aconservatively realistic assessment. In somecases, it may be necessary to develop three(3) contingency budgets: most likely, bestcase and worst case scenarios for therevenue projections. Some foundation

cont. on page 14

revenue forecasts use amethod of discountingthe grant requests forboth likelihood andamount of award. Aproposal for $50K, forexample, may bebudgeted for $30Kafter being discounted25% for yes/no on thefunding decision andthen again 20% for theamount granted.There are manymethods for projectingrevenue, and eachorganization will needto find themethodology thatworks best for itscircumstances.

Finally, carefullycompare revenue andexpense projections. Atdifferent timesorganizations willchoose to incur a smalldeficit, realize a surplusor simply break even.No rule says thatbudgets must balancein each budget period.However, a surplus isthe most desirableoutcome under allcircumstances. Yourorganization shouldplan for financial success and sustainability. That means a surplus year after year. If youanticipate a deficit, are you investing monies in new programs? Deficits can lead toinsecurity in program delivery, staffing and funding, and even eventually bankruptcy. Largesurpluses may mean that the organization is not investing enough in serving the publicinterest. However, for any given budget period, revenue and expenses should be in therelationship that the organization deliberately and strategically chooses.

If the first draft of your budget does not indicate that revenue and expenses are in thedesired relationship, all the organizational activities must be reevaluated and adjustments


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$Foundation $75,000River Festival 55,000Corp Giving/Sponsorships 40,000Individual & Workplace Giving 40,000Government Contract 34,000Fees for Service 10,000Board Contributions 10,000Sale of Materials 5,500Interest Income 1,000In-kind Donations 5,000Other 4,000

Total Revenue: $275,500

Revenue and Support: Annual Budget

Friendly Watershed Council Operating Budget

Costs and expenses:Salaries $108,275Taxes & Fringe Benefits 26,550Consultants 15,500Workshops/Trainings 12,000Printing 12,750Staff Travel 4,000River Festival 29,750Telecommunications 8,500Postage & Shipping 8,500Materials & Supplies 13,125Occupancy 11,000Insurance 3,500Donor Recognition 1,200In-kind Expense 5,000

Total Expenses: $259,650

Net Surplus (deficit) $15,850

Operating Budgets, cont.cont. from page 13

Grant Budgets:


$A

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ET$must be made. Nonprofits often find that their initial projections for income and expensescreate an unacceptable deficit, and so either additional revenue must be generated oractivities must be reduced. When reviewing the revenue budget, it is important to avoid thetemptation of raising the estimate without changing the plans for generating revenue. Thebudget must be based on reasonable assumptions, or you are only postponing a crisis.

If expenses need to be reduced, it is helpful to determine what each program would cost atdifferent capacity and service levels. A fixed percent cut across all expense lines is usually notthe most effective way to reduce expenses. It is often not true that program benefits and costswill move together in the same direction with each additional dollar spent resulting in anadditional dollar of results.

Once you have changed your plans and updated your budget so that revenues and expensesare expected to be in the proper relationship, the full board, in its governance role, willapprove the budget. From that point, staff and volunteers put the plan into action and shouldprepare monthly reports comparing actual income and expenses to the budgeted amounts.

by Sarah F. Moore, River Network

ven though your grant budgetwill likely be attached to the endof your proposal, sometimes it’sthe first item foundation staff

will read. Your budget should tell thesame story as the narrative you write. Itshould show where the project money willcome from and where it will go, and itshould be in line with the priorities of yourorganization.

The detail of your grant budgetdemonstrates your credibility and yourability to effectively carry out the work orproject in your proposal. Does your budgetprovide enough capital to complete thework professionally? Funders do want toknow you’re cost conscientious, but theyusually won’t fund a project that doesn’thave enough resources to accomplish thetasks outlined in the proposal. Be realisticabout your goals, how long it will take, andhow much money you’ll need to do the job.

Your grant budget also reveals yourunderstanding of the funder’s guidelines.

EBe clear what you are asking the foundationto fund. Don’t ask them to pay for travel, iftheir guidelines state that they don’t. (Ifpossible, identify that another fundingsource will cover those expenses, or thatthey will be covered by unrestricted generalfunding.) Is the amount of your request inline with the average amount this funderroutinely awards? For instance, asking for$20,000 from a funder with average grantawards of $2,000 – $5,000 may disqualifyyour proposal from even being considered.Similarly, if you need only about $5,000, afoundation that typically funds projects atthe $50,000 – $100,000 range isn’t the rightfit for your proposal.

Keep the content simple, unless more detailis requested by the funder.

Always double-check your numbers andyour math. Check it again just beforemailing to be sure any changes/editing toyour narrative is reflected in the budget andvice versa.

cont. on page 16

List all sources of revenue for the project and indicate if they are confirmed or pending. Besure to highlight how much of the project funding is already secured.* Put the name of thefunder to whom you are applying on the first line to demonstrate that they are a critical partof the success of the project.

Save this budget template to be sure all other proposals for this project have a consistentlook. (Funders do compare notes.) Work with your financial officer or bookkeeper todevelop a budget format that is flexible enough to meet the budget requirements of differentfunders, but still easy for your bookkeeper to report expenses within. This will makereporting on how your spent the funds simple, defendable and professional.

Finally, save your budgettemplate to modify andre-use for other projectsin the future. Take a bitmore time to create a“wheel” that can reallygo the distance.

*If you receive confirmationof additional funding sourcesafter you’ve submitted yourproposal, use it as anopportunity to send anupdate to all other funderswith whom you havepending proposals (for therelevant project). This keepsyour name current in theirmind and demonstrates thatyour project was considereda good investment byanother foundation.

16 RIVER VOICES • Volume 14, Number 4

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$

Friendly Watershed CouncilProposal to ABC Foundation

Project: Volunteer Monitoring Training Workshop - Spring 2005 (Mar-June ‘05)

Revenue Amount Status

Blue Water Foundation $18,000 Received

Fish Family Fund 10,000 Committed

ABC Foundation 8,000 Pending

Flyfisherman Corporation 2,000 Pending

Unrestricted contributions 1,500 Received

Participant workshop fees 400 $10 x 40 participants

Total received/committed 29,500

Total pending 10,400

TOTAL $39,900

Expenses Amount Description

Project Coordinator (including benefits) $22,320 60% of FTE for 2005

Development/Volunteer Coordinator 4,500 20% FTE for 2005

Outreach brochure & newsletter 300 Design & printing

Mailing & postage 120

Training workshop space rental 1,000 $250 x 4 workshops

Transportation to riverside 800 $200 x 4 workshops

Workshop training materials 200

Monitoring training kits 2,400 $60 x 40 participants

Refreshments & lunches 600 $150 x 4 workshops

Subtotal 32,240

Administration & overhead 4,836 @ 15%

TOTAL $37,076

cont. from page 15 Grant Budgets, cont.

Volume 14, Number 4 • RIVER VOICES 17

$A

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ET$Capital Expenditures Budgets:Reprinted with permission from the Virginia Society of CPAs. www.vscpa.com

apital expenditures are those that acquire assets whose useful lives are greaterthan the current period. Many times a small organization will borrow assets, ormembers will use personal assets for the needs of the organization. Assets thatare given to the organization should be treated as both income (a contribution)

and outgo (the purchase of an asset). Donors of non-cash items will need to help provide asolid estimate of the value of the items, both for the organization’s records and for thedonor’s records for tax and other purposes.

Some donated items, such as stock or a vehicle, require a transfer of title, which is recordedwith local or federal authorities. Make sure this transfer of title is carried through in anorderly and timely manner.

Some gifts bring new responsibilities to the organization. Can you safeguard this asset? Doesit need to be insured? Do you need a safe deposit box? If an asset is housed on premises thatdo not belong to the organization, then a master list of such assets and their whereaboutsshould be prepared and maintained in a safe and central location.

There are other gifts that need accounting and budgeting. One is the forgiveness of rent forspace. The fair market value of the rent should be recognized on both the budget and actualfinancial information as income and expense.

This type of recognition gives a better picture ofthe true state of affairs for the organization. Ifyou lose the free rent, can you make up thedifference in cash donations and afford topay the rent? This question is best answeredwhen the value of the prior gift is recorded.

Capital budgets can be achieved over aperiod of years when a sinking fund isestablished to collect money for a futurecapital expense.

C

CAPITAL BUDGETRank Item Department Organization Cost (E) Essential Justification / Notes

Code (N) New(U) Upgrade(R) Replacement

1 Copy Machine 1 Admin 9000 $5,500.00 R old copy machine does not work

2 Telephone System Update 1 All 9000 $3,000.00 U add voice mail

3 Computer Upgrade 1 Develop 8000 $2,000.00 E upgrade necessary

4

Quantity

Example by Andrea Korsen


n the late 1990s, the MaryReynolds Babcock Foundationselected the Cahaba River Society(CRS) to participate in an

organizational development program.Several of the participating executivedirectors felt a need for financialmanagement training, a common concernof environmental executive directors whocome up from advocacy work. The trainingopened my eyes about the need to be able todo cash flow budgeting—to be able toplan/predictrevenues andexpenses on amonthly basis—because nonprofitshave such unevenrevenue flows, buthave regularexpenses. Youcan’t do goodfundraisingplanning unlessyou can makesure the timingof the revenuesmatchexpenses.

Out With the Old, In With the NewCRS used to have only an annual budgetwith projected total revenues and expensesfor the entire year. The whole budget wason two pages. We couldn’t predict whetherour reserves would dip way too low at onepoint in the year because expenses took themoney out faster than the revenues came in.We did not have as effective a system fortracking whether we were actually receivingprojected revenues each month, thus wewere less aware of missed opportunities thatwe had to redouble our efforts on. It washard to coordinate our budget withfundraising planning. Our updated financialmanagement system marries tight monthly

Cahaba River Society ~ Alabama

Healthy Budgets – Healthy OrganizationsCASE

STUDYby Beth K. Stewart

Executive DirectorCahaba River Society

www.cahabariversociety.org

budgeting and cash flow projections with amonthly fundraising plan. The systemprovides greater accountability and fewersurprises for both staff and board.

It took several years to build the system, sogroups need to start putting the data andsystems in place well before the tight timescome. Because we had this system in place,we were able to weather nearly two years ofvery tight finances without having to cutback on staff or programs.

A Closer LookThe pieces of the system are:

$ Annual Budget

$ Detailed fundraising plan basedon actual past revenues, inmonthly spreadsheets showing allrevenue prospects

$ Cash flow projections for comingyear, by month, updated throughthe year based on actual cashflows

$ Fundraising calendar

$ Diverse revenue sources, withfoundation grant reliance at onlyabout 1/3 of total revenues.

ANNUAL BUDGETOur budget is structured with flexibility. Wehave a “Basic” and Target” budget amountfor each expense and revenue line item. Forrevenues, “basic” includes what we are verycertain will come in—regular grants,membership similar to last year’s, etc.“Target” includes grants we are less certainabout and the more aggressive expectationsfor membership, special events, etc. Forexpenses, “basic” is the authorized budget,and in tight years it’s the bare minimum weneed to get by, equal to our basic revenues.“Target” expenses include special programsor people funded by anticipated grants andthe more aggressive revenue expectations.Staff can spend the “basic” budget without

I

CASH FLOW PROJECTIONSThe cash flow projections are essential toour budget process. Nonprofits typicallyhave similar monthly expenses but feast orfamine monthly revenues. When the moneyis tight, it won’t matter that the annualbudget balances, if most of the revenues areat year’s end and the bank balance crashesmid-year. We use the monthly revenuespreadsheets (built in Excel) and averaged

monthly expenses to do a monthly cashflow projection for the

year, as part of theannual budgeting

process. That tellsus quickly if weare going to get

in trouble during acertain time ofthe year, andwe can workto find orshift revenuesto come induring those drymonths. As we go through the year, weupdate each month with actual revenuesand expenses, which automaticallyrecalculates the rest of the year. That way wecan see the future impact of unanticipatedexpenses or lost revenues, and can haveseveral months to avoid having the bankbalance dip too low.

Organizational development folksrecommend that nonprofits have about sixmonths operating revenue in the bank at alltimes. Your goal is that you don’t fall belowthat, even in your leanest months.Foundation reps (program officers) haveagreed that is a reasonable amount andshows good financial management.Building those reserves either takes manyyears of slowly building them—budgetingfor it each year—or a leap forward from


special authorization. Spending from the“Target” budget requires the executivedirector to authorize it, which is done onlywhen special revenues are received.

DETAILED FUNDRAISING PLANWe track revenues on a monthly basis goingback several years, and these form the basisfor our monthly fundraisingspreadsheets. Each monthlyspreadsheet has all revenue categoriessimilar to the budget, with the amountsreceived (e.g. from membership, fromdonors and foundations, etc.) eachmonth. We use that history tobuild and document a monthby month, line item by lineitem revenue projectionfor the next year. Thosesolid projectionsunderlie our annualprojected budgetthat the boardadopts—it’s notjust a wish list,there are real figuresbehind all of it. As we go through the year,we use the monthly sheets going forwardseveral months, as the basis for planning—what must we do in July, for instance, tomake those revenues happen by September?The spreadsheet also tracks what weactually receive each month compared toprojections. This helps us not leave moneyon the table: if something doesn’t come in,we’re reminded to stay after it. Sometimeswe amend future month spreadsheets tocarry those missed revenues forward andkeep them on the front burner. Thespreadsheets are also a great way to quicklyshow board what sources we are pursuingand engage them in helping, and they helpto keep the whole fundraising teamaccountable.

cont. on page 20


cont. from page 19

Cahaba River Society ~ Alabama, cont.

undesignated revenues, such as a planned gift. That cash-in-hand cushion is absolutelynecessary, not only to protect against the unexpected, but to give you flexibility and strengthto pursue your mission. Sometimes you have to take a tough stand, even if you lose revenuebecause of it. Ideally, you don’t want financial survival to be a factor when you decide whatstands the organization must take.

Our system helps us understand the “cushion” of cash we need in the bank to make sure weare in good position throughout the year, even in lean revenue months. It makes us budgetto build that cushion. We are now close to accomplishing the 6 months goal.

FUNDRAISING CALENDARWe maintain a list of all grant deadlines, with a computer prompt system. This helps ussubmit both timely proposals and required reports. Additionally, it allows us to budget ourtime appropriately. One staff member is responsible to check the calendar monthly andremind responsible staff to write those grants or reports.

DIVERSE REVENUE SOURCESA key to survival is diverse sources of revenue. For Fiscal Year 2004, our revenue included:

With this level of diversity, about 60% of our revenues are what we call “sustainable” —constituent-based, renewable and unrestricted revenues rather than grants.

Words of AdviceThe one most important thing I can say to organizations struggling financially is tell yourboard and staff. Sometimes the executive director may want to gloss over the situation tothe board or staff. You need your board and staff to be full partners in strengthening theorganization, understanding why cost-cutting measures are necessary, and having input onhow to do it. Board and staff will greatly multiply the ideas for strategies. A hallmark of oursystem is great reporting to our board—in addition to the monthly financial reports, theysee actual and projected cash flow monthly, as well as the monthly fundraising plans. Thisensures that the board is a full partner in financial management and fundraising.

39% Grants

25% Members & Donors

20% Special Appeals &Auto Tag Fees

5% Business Members

5% Events

3% Fees for Service

3% Other

not including all our corporate grants

39%

25%

20%

5%5% 3% 3%


As one example, when timeswere at their tightest, the boardasked our landlord to reducethe rent temporarily as adonation, and he did. The staffdecided we would all rathertake a minor temporary paycut then have to lay someoneoff. Board and staff workeddouble hard at raisingrevenues. All these thingshelped us through it.

Forms for the TakingThe Cahaba River Society has generously provided two of their forms for use by othergroups. River Network Partners can access both a Cash Flow Projection and a sample MontlyFundraising Plan on River Network’s Partner webpage: www.rivernetwork.org/Partners.Simply log on to the pageusing your User Name andPassword and then clickon “templates andexamples.”

Both forms are available asExcel documents and canbe modified to suit yourneeds. As always, RiverNetwork highlyrecommends that youdouble-check all formulasused in the form.

Monthly Fundraising PlanRec’d Jan 05 Basic Budget Actual Jan 04 Actual Jan 03

Donors above $1,000new/renewals* $0 $0 $0 $0Total $0 $0 $0 $0Business Membersnew/renewals* $0 $0 $0 $0Total $0 $0 $0 $0CLEAN Education ProgramCLEAN Corporate Sponsors $0 $0 $0 $0CLEAN Contracts $0 $0 $0 $0CLEAN trip fees $0 $0 $0 $0Total $0 $0 $0 $0Other SourcesMemberships $0 $0 $0 $0Board of Director Contributions* $0 $0 $0 $0Appeals $0 $0 $0 $0Events $0 $0 $0 $0Auto Tags $0 $0 $0 $0Special Contribution $0 $0 $0 $0Misc (int, sales, trips, org dues) $0 $0 $0 $0Total $0 $0 $0 $0Personal TrustsName* $0 $0 $0 $0Total $0 $0 $0 $0Planned GivingName* $0 $0 $0 $0Total $0 $0 $0 $0

* Either list each prospect here or on a separate spreadsheet by month

ACTUAL CASH FLOW PROJECTION

Cash Position June 30, 2004$0

July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June ProjectedTotal

Revenues$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Expenses$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Cash Position Month End $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Cash Position June 30, 2004$0

Revenues$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Expenses$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Cash Position Month End $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

NOTES: On first chart, replace projected numbers with actual figures as each month occurs, and recalculate “cash position” projections for each

month in the future based on those actual figures. Keep 2nd “Original Cash Flow Projection” chart as a comparison to know if you are meeting

your original projections.

ORIGINAL CASH FLOW PROJECTION


Resources & ReferencesThe Alliance for Nonprofit Management is the professional association of individuals and organizations devotedto improving the management and governance capacity of nonprofits—to assist nonprofits in fulfilling theirmission. The Alliance is a learning community that promotes quality in nonprofit capacity building. Type “Budget”into their search engine for information on the budget process.www.allianceonline.org

Innovation Network is a nonprofit organization that provides evaluation consulting, training and online tools. Ourorganization and our website are dedicated to developing and sharing evaluation tools and know-how withnonprofits and funders, so you can do your work more effectively. Free registration allows you access to the“Nonprofit Workstation” that allows you to build a blueprint for designing, evaluating and implementing a successfulprogram. Workstations are included for budget plans, program plans, evaluation plans and grant applications.www.innonet.org/

The Internet Nonprofit Center is home to the Nonprofit FAQ. The FAQ is based on “frequently asked questions”and answers drawn from an email discussion forum.www.nonprofits.org/npofaq/

The Management Assistance Program (MAP) for Nonprofits’ Basic Guide to Non-Profit Financial ManagementLibrary is a free community resource. The overall goal of the library is to provide leaders and managers (especiallythose with very limited resources) basic and practical information about personal, professional and organizationaldevelopment. Resources include how to design a budget, manage cash flow, prepare financial statements and more.www.mapfornonprofits.org/

Non-profit guides are free web-basedgrant-writing tools for nonprofitorganizations, charitable, educational,public organizations and othercommunity-minded groups. Guides aredesigned to assist established nonprofitsthrough the grantwriting process andinclude sample budgets.npguides.org/index.html

NonprofitExpert.com provides an extensive, freesite on the web for nonprofits. View informationabout budget basics and much more.www.nonprofitexpert.com/

Nonprofits Assistance Fund seeks to foster communitydevelopment and vitality by building financially healthynonprofit organizations. Click on “Resources & Tools” then“Financial Foundations.”www.nonprofitsassistancefund.org

Budgeting: A Guide for Small Nonprofit Organizations is a publication of the Virginia Society of Certified PublicAccountants, researched and written by Frances C. Taylor, CPA. This online publication includes chapters onselecting a budget committee, setting budget priorities, when to prepare a budget and more. To view, visit theirwebsite and enter the title into the search function.www.vscpa.com

Documents

Budgeting:A Plan For All Seasons - River Network