BudgetingBudgeting

Civil Air Patrol National BoardCivil Air Patrol National Board

4 September 20094 September 2009

Budgeting is the organization’s Budgeting is the organization’s operating plan for a fiscal period. operating plan for a fiscal period. CAP must demonstrate CAP must demonstrate accountability and stewardship accountability and stewardship of donated resources as well as of donated resources as well as develop financial plans which develop financial plans which support our missions.support our missions.

What is a Budget?What is a Budget?

Making the Case for Making the Case for BudgetingBudgeting

Why should nonprofit Why should nonprofit organizations create budgets?organizations create budgets?

Manage resources more effectivelyManage resources more effectively

Set programmatic goals through Set programmatic goals through financefinance

Budgeting is planningBudgeting is planning

BudgetingBudgeting

Budgeting is a requirement Budgeting is a requirement mandated in the new finance mandated in the new finance regulationregulation

• Wings/units will be required to Wings/units will be required to maintain a balanced budgetmaintain a balanced budget

• QuickBooks has budgeting QuickBooks has budgeting functionalityfunctionality

Types of BudgetsTypes of Budgets

Organizational budgetsOrganizational budgets

Project budgets (ex: Region Project budgets (ex: Region Conference)Conference)

Capital budget (new hangar)Capital budget (new hangar)

Grant budgetsGrant budgets

Fundraising budgetsFundraising budgets

Budgeting Budgeting MethodologiesMethodologies

Zero based budgetingZero based budgeting Budgeting method in which all amounts Budgeting method in which all amounts

must be justified each year, not just must be justified each year, not just increasesincreases

Objective budgetingObjective budgeting Allocating funds to pre-determined Allocating funds to pre-determined

objectivesobjectives

Bottom up budgetingBottom up budgeting Budgets prepared by directors are combined Budgets prepared by directors are combined

to determine resource needsto determine resource needs

Percentage or incremental increasePercentage or incremental increase Prior year budget is modified by a set Prior year budget is modified by a set

percentagepercentage

Characteristics of a Sound Characteristics of a Sound BudgetBudget

Budget must be Budget must be flexibleflexible. Budget . Budget should be modified as requirements should be modified as requirements changechange

Budget must be Budget must be realisticrealistic. Budget . Budget should be created based upon sound should be created based upon sound assumptionsassumptions

Budget must be Budget must be consistentconsistent. Budget . Budget should support CAP’s strategic plan, should support CAP’s strategic plan, goals, and missiongoals, and mission

Where do you start?Where do you start?

RevenueRevenue Analyze sources of incomeAnalyze sources of income

Obtain membership numbers from Obtain membership numbers from NHQNHQ

Review prior year Review prior year

Program ExpensesProgram ExpensesDirectors Directors (Logistics, Operations, etc,)(Logistics, Operations, etc,)

should identify their anticipated should identify their anticipated program requirementsprogram requirements Review current year Review current year actualactual expenses expenses Evaluate new objectivesEvaluate new objectives Budget request should be presented Budget request should be presented

to the Finance Committee for to the Finance Committee for considerationconsideration

Finance Committee should consider Finance Committee should consider “overhead” operating costs“overhead” operating costs

Budget ConsolidationBudget Consolidation

Finance Committee should evaluate Finance Committee should evaluate funding requests from various funding requests from various departments as they build a departments as they build a consolidated budgetconsolidated budget

Frequently, initial budget requests Frequently, initial budget requests will exceed projected revenuewill exceed projected revenue

Finance Committee evaluates requests Finance Committee evaluates requests and prepares the final consolidationand prepares the final consolidation

Amending the BudgetAmending the Budget A budget is a planning document, not a A budget is a planning document, not a

guarantee of funding nor an guarantee of funding nor an authorization to procure goods and authorization to procure goods and servicesservices

Changes in plans, new program Changes in plans, new program requirements, under execution of events, requirements, under execution of events, etc., will require budget amendmentsetc., will require budget amendments

Finance Committee should review the Finance Committee should review the budget frequently and amend the budget budget frequently and amend the budget as events change and new funding as events change and new funding requests are receivedrequests are received

Budget ReviewBudget Review

Finance Committee members Finance Committee members should be provided with current should be provided with current budget execution reports budget execution reports monthly if not more oftenmonthly if not more often

Budget execution should be Budget execution should be considered and discussed at least considered and discussed at least quarterlyquarterly

Year End ReviewYear End Review

Finance Committee should Finance Committee should review the final budget to actual review the final budget to actual report after the close of the fiscal report after the close of the fiscal yearyear

Budget execution and analysis Budget execution and analysis are important considerations in are important considerations in evaluating program evaluating program accomplishmentsaccomplishments

Budgeting in Budgeting in QuickBooks®QuickBooks®

Prepare draft budget for Prepare draft budget for finance committee to discuss, finance committee to discuss, change or approvechange or approve

Can be basic budget or Can be basic budget or detaileddetailed

Basic BudgetBasic Budget

Income & expense in general Income & expense in general detaildetail

Follows chart of accountsFollows chart of accounts

Cannot budget for missionsCannot budget for missions

Detailed BudgetDetailed Budget Department budgets Department budgets

Cadet Programs details supplies, printing, Cadet Programs details supplies, printing, lodging, travel, fuel, etc. lodging, travel, fuel, etc.

Office Supplies broken out to Office Supplies broken out to departmentsdepartments General, Commander, AE, IG, FM, OPSGeneral, Commander, AE, IG, FM, OPS

Activity budgets detail types of expensesActivity budgets detail types of expenses lodging, food, transportationlodging, food, transportation

QuickBooksQuickBooks

Enter budget in any way the wing Enter budget in any way the wing wants to track expenses. wants to track expenses. Enter by accountEnter by account Enter by detail—activity or departmentEnter by detail—activity or department

Consider how the finance committee Consider how the finance committee wants to review. wants to review.

QuickBooksQuickBooks

Enter budget prior to 1 October so you Enter budget prior to 1 October so you are readyare ready

Ensure income and expenses are coded Ensure income and expenses are coded appropriately to follow the budgetappropriately to follow the budget

Print budget report as often as neededPrint budget report as often as needed Send to finance committeeSend to finance committee Send to department directorsSend to department directors Send to activity directorsSend to activity directors

Questions? Questions?