BUDGETING Nancy Woolsey HFHI Accounting Help Habitat X7959

TRUISM Some things are hard to predict, especially the future. Some things are hard to predict, especially the future. attributed to Yogi Berra

WHY BUDGET? ► Financial Road Map

WHY BUDGET? ► Financial Road Map ► Spend on Purpose ► What Does the Bible Say?

Luke 14:28 “Suppose one of you wants to build a tower. Will he not first sit down and estimate the cost to see if he has enough money to complete it?” “Suppose one of you wants to build a tower. Will he not first sit down and estimate the cost to see if he has enough money to complete it?”

FOCUS ► Add God to your Budgeting  Pray about priorities, goals, and processes. ► Budgets are moral issue  What does how you spend your money say about your commitment to your mission?

BIG PICTURE: 30,000 feet

Budget Stages ► Creation  Look at strategic plan ► # of Houses ► Staff changes and / or additions ► ReStore ► Other Expenses ► Capital and Inventory

► Burn Rate  Cash Needs per Month  Quick and Dirty

DETAILS Ground Level Sweat the Small Stuff

DETAILS, DETAILS ► House Costs  Big numbers ► Staff  Usually next biggest number  Remember the cost to employ  Factor in Capital

ROUND AND ROUND ► Initially  Dream Big  No Ideas are Bad  Treat People Respectfully

AND MORE DETAILS ► Historical Spending / Monthly  Adjust for Changes  Monthly / Quarterly Skew ► Use the Chart of Accounts  Budget Like You Spend

VISION VS REAL WORLD ► Manage the Conflict ► Include Both Sides ► Compromise ► Take Risks

ROUND AND ROUND WE GO

START EARLY ► Four to five month process ► Involve everyone who has a stake in the outcome

ROUND AND ROUND ► Back to Reality  Explore options for income  Explore options for cost savings  Explore options for cultivating volunteers and unpaid staff vs. new staff

STILL GOING ROUND AND ROUND ► Important to talk to each other  Staff  Volunteer Committees  Board ► Top Down – Strategic Plan ► Bottom Up – Functional Plan

TIME TO MOVE FORWARD ► Top and Bottom Come Together ► Responsibility and Accountability

REMEMBER ► God is our senior partner ► Bible Says  All things are possible with God ► Bible Doesn’t Say  All things are easy

MORE BUDGET STAGES ► Approval Phase  Staff and Volunteers  Finance Committee  Board of Directors

It’s done for another year!!!! But not for long Time to implement these plans

IT’S TIME MATCH DREAM WITH REALITY

MORE BUDGET STAGES ► Working Phase  Comparison to Actual  Adjustments if needed  Repeat Comparison and Planning  Goal is to eliminate financial surprises

Budget Compared to Actual ► Need good timely data ► Format  Monthly, Quarter to Date, Year to Date  Variances in $, %, or Both  Too Much Data vs Too Little Data  Looking for Balance  Dollars with Names must be Identified

Budget Question of the Day Can the budget be adjusted after if is approved?

ANSWER It Depends  First, on the BOD budget philosophy  Second, is the change something you didn’t have the information to predict  Third, is the change material

WHY ► How is all this information and reporting used? ► Is it worth the time and effort to create all these reports? ► How do I determine what information is a red flag and what is not?

ACTIONABLE DATA  Used to show leaks and ways to plug them  Used to make financial decisions  Used to indicate a change in direction  Used to improve the Stewardship of donated dollars and grant funds

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