1. Power in Numbers: Breaking Down Budgets & Financials

2. Board Roles & Responsibilities
Budget Preparation
Review and Approve Framework
Provide Guidance
Approve the Budget
Monitor results
Measure, evaluate and adjust

3. Treasurer Responsibilities
Include oversight role in the following:
Chair the Finance Committee
Finances
Reporting
Compliance
Financial Planning Process
Policies & Procedures
Expertise Resource to Staff & Board
Liaison between Board & Staff

4. Finance Committee Responsibilities
Include:
Review of Financial Statements
Provide analysis & recommendations for improvement
Involved in policy formulation
Actively participate in oversight & controls
Audit (unless you have an Audit Committee)
Standing vs. Advisory committee

5. Financial Goals As provided by the Board and/or Executive Management
Income
Growth Rate
New funding sources
  Expense Net Income
Growth % Increase
Containment Flat
Reduction % Decrease

6. The Six Core Competencies of Financial Management
PLANNING CONTROLLING REPORTING
Budgets Procedures Accurate, meaningful
Forecasts Review Systems and timely financial
Projections Continuous Improvement statements
Annual Business Plan Audits
COMPLIANCE ORGANIZATION RETENTION
Legal Training Plan Records Storage
GAAP Staff Evaluations
Funder Software Tools

7. Budgets
A budget expresses an organization’s goals and objectives in dollars and cents.
A budget is a financial plan that estimates the monetary receipts and expenditures for an operating period.
The budget needs to be at the level of detail for someone to adequately monitor performance and make effective decisions.

8. Budgets
By monitoring actual results to the budget throughout the operating period, it can provide an early warning to the board and management that financial goals are or are not being met.
The budget becomes an essential financial management tool that will help the board and management monitor and control ongoing organization activities throughout the period.

9. Types Of Budgets Organization Program Capital Fund Raising Events
Operating Budget (or annual budget) - Shows planned revenue and expenses, usually for the coming year
Cash Budget- Cash you expect to receive and pay over the near term, for example a month
Program Budget- A budget for each major service you provide to clients

10. Planning Provide Budget Guidelines Financial Goals Timeline Realistic
Meaningful
Measureable
Linked to Strategic Plan
Timeline
Establish Dates For Completion
Board Approval
Implementation
Time Horizon and Reporting Periods

11. Preparing a Budget Timing of Budget Activity
Who should be involved in the budget process?
What are the steps in the budget process?
Preparing a monthly budget

12. Provide Budget Guidelines
Level of Detail
Type of Revenue and Expense
By Activity
Program
Event
Department
Responsibilities
Who Does What

13. Budget Development Where the numbers come from:
History
Activity Based
Economic Assumptions
A combination of the above
What to include in the budget:
All sources of revenue and all expected expenditures
In some cases, In-Kind Contributions

14. Planning Process Budget Approval Forecasts Projections Updates
Verify budget is in accordance with the Mission
Verify budget meets guidelines
Forecasts
Periodic updates or revisions to original budget
Projections
Cash Flow
Updates
Periodic revisions

15. Time Period Determine what period the budget covers:
Less than a year
One year
Multiple years
Other considerations
Fixed period versus a rolling budget
Time increments within the period
Based on the fiscal year, what is the start date and final approval date with dates for completion of all tasks in between.

16. Expense Categories Staff Program Travel Occupancy
Salaries & Wages
Payroll Taxes (FICA-Social Security Tax, Federal ,State and City)
Benefits (Health, Dental, Life, Worker Compensation, Unemployment Insurance, etc.)
Program
Supplies, postage etc.
Travel
Local Mileage
Airfare, Hotel, Meals (etc.)
Occupancy
Rent
Utilities
Insurance 
Professional Services
Accounting
Legal
Information Technology

17. Link To Strategic Plan
Does the one-year or a three to five year plan tie to:
Financial Goals
Planned changes to programs & services
Any other planned changes which may impact revenue or expenditure flows

18. Financials

19. Effective Financial Statements
…are timely (generally, they are produced on a monthly or quarterly basis)
…are meaningful (they should be understandable, with footnotes and other explanations when necessary)
…are accurate (it’s hard to make good decisions when you don’t have the right information!)

20. Cash Flow Statements Do we have enough cash for operating expenses?
Usually goes month by month or quarter by quarter.
Provides the information needed to establish your “burn rate”.

21. Statement of Activities
Also known as the P&L or Profit & Loss Statement.
How am I doing according to the budget?
Tracks income and expenses by program.
Shows whether you have a surplus or deficit both overall and by program.
Allows you to evaluate the sustainability of programs.

22. Statement of Financial Position
Also known as a Balance Sheet
How does my organization look on paper to funders and donors?
Tracks Assets and Liabilities
Assets: cash, investments, equipment, furniture, accounts receivable.
Liabilities: loans, accounts payable, payroll taxes, accrued vacation.

23. Statement of Financial Position
Assets minus liabilities equals net assets (current and prior year net assets)

24. Net Assets How healthy is my organization financially?
3 kinds of Net Assets
Unrestricted = funders and donors allow you to use it as you choose.
Temporarily restricted = until a program or a time period is completed.
Permanently restricted = the principle is never spent, only the income it provides from interest.

25. Net Assets
Tracks how much of your current and prior year net assets fall into those 3 categories.
Allows you to look at the big financial picture – not just monthly or yearly.

26. Financial Activities Checklist

27. Financial Activities
Organization prepares financial statements on a budget versus actual and/or comparative basis to achieve a better understanding of their finances.
Organization prepares cash flow projections.
Organization monitors unit costs of programs and services through the documentation of staff time and direct services and the use of a process for allocation of management and general and fundraising expenses.
Organization has established a plan identifying actions to take in the event of a reduction or loss in funding.
Organization files IRS 990’s in a timely basis.

28. Financial Activities
All expenses of the organization are approved by a designated person before payment is made.
Organization has a written policy related to investments.
Organization has a review process to monitor that they are receiving appropriate and accurate financial information whether from a contracted service or internal processing.
Organizations that purchase and sell merchandise take periodic inventories against theft, to reconcile general ledger inventory information and to maintain an adequate inventory level.
Organization periodically forecasts year-end revenues and expenses to assist in making sound management decisions during the year.

29. Questions and Answers

30. Contact Information
Sonia Plata
Program Manager
Nan Jessup
Finance Director
x303