1 THE NON-PROFIT BUDGET PROCESS

Common Budget Issues 1. Under Expenditures: Often due to delays in release of Grantor funds. Salaries/Fringes or National Training Conference Travel Costs usually during 1st Quarter and Equipment/Supplies in Second Quarter. Often due to late release of funds from the Grantor. Salaries understandable during first Quarter; On-going can be viewed as poor Grantee planning/program management. Remediation: Develop a time tiered hiring process using key staff to coordinate start-up process, hire /train regular staff coming on board, utilizing on-line and webinar training. 2

Common Budget Issues Cont. 2. Travel Expenses/Per Diem : While national meetings are booked by NWIC staff, in state travel for hotels and per diem must follow state PD rates. Only food and hotel expenses within state rates will be reimbursed, no alcohol or other merchandise can be purchased with per diem money. Remediation: For local hotel stays negotiate a non-profit rate with the facility, providing them with your agency’s tax exempt documents to avoid state taxes added to your bill. For per diem food expenses, receipts must be presented to your agency for reimbursement. Only the state allowed per diem amount will be reimbursed. If alcohol is purchased, request separate receipts for food and alcohol. Reimbursed Alcohol is a funder RED FLAG 3

Common Budget Issues, Cont. 3. Supplies/Equipment: There is often confusion between Supplies, and Equipment categories. Supplies are general daily office equipment or outreach materials that cost less than $5,000 or more for each unit. 4. Equipment is tangible, non-expendable property items that cost more than $5,000 for each unit or piece. 5. Other usually small, individual purchase under $5,000 for each unit such as telephones, lap top computers, small equipment like a desk top printer. 6. Contractors vs Consultants: Contractors are NOT employees. They are individuals or businesses which provide services for your organization for a set fee, under a business contract. 4

5 Common Budget Issues, Cont. They Are Independent Individuals or Businesses Which Provide Services for Your Agency, Under a Business Contract For a Specific Set Fee. Consultants: Are Also Not Employees. They Usually Provide Professional Consultation Services Which Assist You In Meeting Your Objectives. Both Have No Benefits Paid To them & Pay for Their Own Work Related Expenses. The Major Difference Is: That a Consultant Provides Specific Professional Program or Operations Related Advice, &/or Other Related Services To Assist an Agency in meeting it’s Goals & Objectives.

Common Budget Issues, Cont. 6 Direct Costs: Costs which Directly affect & support the day to day operations of the program & implementation: Example: Salaries, Fringes, Supplies:. Indirect Costs: Those Costs which Indirectly support the operations of the agency or program. Example: window washing services, costs for printing an Annual Report, recruitment ads for staff. A Federally Approved Indirect Cost Rate is usually is required & is based upon a lengthy Study of the Agency’s operational expenses. A Default Rate of 10% Is Now Available for Agencies Without a Federal default Indirect Cost and can be utilized without CDC’s review and Approval. It must be specifically noted in the budget.

Develop A Budget Forecasting Process When Projecting Your Grant Fiscal Budget: Always follow the CDC Budget Guidelines. (Handout) Utilize the new Budget Program templates to develop your budget. To avoid over/under expenditures develop a Grant Budget Forecasting Plan Guidelines. (See Handout) Develop A Budget Forecast: Use as a fiscal management tool to evaluate conditions past and current financial conditions to guide financial policies and programs. To evaluate past/current fiscal conditions to provide budget decision making and program decisions. 7

Budget Forecasting Questions Determine projected time period involved. Develop Forecast Outcomes: Change Budget? Reduce Staff, Find Additional Funding? Review legal/grant contract issues/guidelines affecting budget: Federal Budget Rules, Contract Criteria, Timelines, Carryover Restrictions? How are major revenues/expenses affected? What impact will they have on current grant budget schedules requirements? How will your agency’s other program’s changes in staffing, supervision, and budgets affect your WIC grant program in the long and short term ? Positively? Negatively ? 8

Budget Forecasting Preliminary Analysis Process Review past and present historical budget and program data and past and current economic conditions, to determine which forecasting methods will be appropriate. Forecasting staff should review historic and current program data and current agency economic and related calendar year cycles conditions looking for trends, in funding revenues and expenses required. Funding Cycle Questions To Determine Budget Trends Are other funds coming in that can affect your budget? Do client population, work cycles, affect services, revenues or expenses that impact your budget? 9

Funding Cycle Questions, Cont. Are there outliers that affect change to expenses? Such as: Changes in salaries, fringes, occupancy, indirect, operations or overhead costs? Do changes in client populations in the organization or your project affect costs? Higher in some months, or some budget timelines that affect your budget? Have you allowed for these changes/trends in your budget? Have you discussed these trends with your finance staff and other program Directors/Administrators to coordinate other budget purchases, expense sharing, program coordination? 10

Types of Forecasting Models Prior to considering a budget forecasting process, staff should review several forecasting models and processes to see what is workable in their program, if at all. The following are two generally accepted models: The Extrapolation Method: Sometimes called the Trending Method it uses current and historical revenues to project future expense trends by projecting data information such as increases/decreases in expenses foreward and attaching projected expenses to the data. See funding cycles above to project trends. 11

Forecasting Models Cont. Regression Method: Analysis based on the current relationship between strategies that are then based on the relationship between independent, unknown, outside financial variable factor and compared to one that is known an one that predictable. Hybred Forecast: A form of forecasting that key, experienced staff and their” feel” for the situation’ rather than data and statistics for decision making. This method can produce excellent results if key knowledgeable and experienced staff are involved. 12

13 Prior Approval Requests $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ CDC anticipates that grantees may need to make post- award changes to their award budgets or other aspects of their approved applications in order to accomplish programmatic objectives. The terms and conditions of the Notice of Award (NOA) outlines the activities that requires CDC prior approval.

14 BUDGET CHANGE REQUESTS Prior approval requests must be made in writing ( is acceptable) at least 120 days before the end of the budget period. The request must be endorsed by the grantee’s Principle Investigator (PI) and the Business Official. Failure to obtain required prior approval may result in the disallowance of costs, termination of the award, or other enforcement action within CDC’s authority.

15 ACTIVITIES REQUIRING PRIOR APPROVAL Change in scope of Project/Program Change of institution Key personnel change Major Budget Category Changes There are many other reasons prior approvals are required. If you have questions or require additional support, contact your Project Manager or the Grants Management Consultant

16 QUESTIONS? Mary Ann Borman, PhD. WICA Grants Management Consultant