How to Build a How to Build a Better Budget Better Budget
Panel Panel Billy Burnett Vonna Laue Hugh Burns Mark Jones Executive Vice President Partner Vice President of VP and Senior Banking and CFO Operations Consultant CapinCrouse, LLP Joni and Friends Denver Rescue Mission Evangelical Christian Credit Union
Who We Are Who We Are • Advocate for the Disabled • Global Impact – U.S. and Multiple Continents • 35 Years in Service to the Disability Community • $26 Million Budget • 62% Cash, 38% Non-Cash • 9 Regional Centers, 5 Chapters, 100+ Associates • 1,000+ Volunteers • 5,000+ Church Affiliations, Including: – 2 Major Denominational Partnerships – 2 Major Programs – Academic and Tactical Institute CID
Key Stages Key Stages 1. Strategic Assessment and Alignment 2. Financial Information and Forecasting (BBB) 3. Operational and Tactical Definition 4. Board of Directors Review and Approval 5. Implementation – Monitoring and Measuring
Key Stages (1) Key Stages (1) Strategic Assessment and Alignment • Board of Directors Approved Strategic Plan 10, 5, and 1 Years • Top 10 Organizational Priorities • Key Actions that Further Expand Our Mission • Provides Tactical Engine for Our Annual Plan
Key Stages (2) Key Stages (2) Financial Information and Forecasting (BBB) • Multi-Year Historical Data Analysis • Multivariate Correlation and Regression Modeling • Modular Reviews of Segmented Income Streams • Multi-Departmental Input (Consensus Gathering) • Optimization of Predictive Model (Overall Environment) • Set Value of Operating Income for Entire Organization
Key Stages (3) Key Stages (3) Operational and Tactical Definition • Department Heads Define and Set Goals • Integrative Model Involves All Departments • Define 2 nd Tier Supplemental Projects • Senior Management Review and Approve in Real Time • Webinar Style for Field Units
Key Stages (4) Key Stages (4) Board of Directors Review and Approval • Presentation of Operations Plan and Budget to Board of Directors • Discussion and Approval of Main and Supplemental Budgets • Prayer and Implementation
Key Stages (5) Key Stages (5) Monitoring and Measuring • Key Measurements Home and Field – Includes Income and Expense Goals • Monthly Review with Field • Quarterly Review with Home Departments • Quarterly Report to Board of Directors • Biannual Presentation to Board of Directors
Questions? Questions?
Background Background • Total Revenue of $24.2 Million • Cash Revenue of $15.6 Million • GIK Revenue of $8.6 Million • Over 60 Cost Centers • 160 Staff • 100K of Volunteer Hours Annually • 5 Facilities • 12 Major Programs
Budgeting Principles Budgeting Principles • Bottom Up Model • One Person in Charge of Each Cost Center • Zero-Based Budget • Accountability • Significant Time Investment • Most Important Planning Process of the Year • Highly Structured Process • Multiple Levels of Review
Balanced Budget Formula Balanced Budget Formula Operating Revenue (Operating Expenses) Non-Operating Revenue (Non-Operating Expenses) (3% Contingency Allowance) (Sustaining Existing Capital Expenditures) (Expansion Capital Expenditures) = Zero
Budgeting Tools Budgeting Tools • SharePoint • Excel • Template for Each Cost Center • Tabs = Assumption Logs (Each Account) • Prior Year Budgets • Current Year Financial Statements
Accountability Accountability • Monthly Budget-to-Actual Reports by Cost Center • Commentary Required on Variances > 10% • Monthly Review by VPs • Monthly Consolidated Budget-to-Actual Report to Finance Committee and Board of Directors • Financial Overview at Each Meeting of the Board of Directors (9 per Year)
Questions and Resources Questions and Resources • Financial Empowerment: More Money for More Mission , Peter C. Brinckerhoff • Zone of Insolvency: How Nonprofits Avoid Hidden Liabilities and Build Financial Strength , Ron Mattocks
Vonna Laue Vonna Laue Partner, CapinCrouse LLP Partner, CapinCrouse LLP
CapinCrouse Background CapinCrouse Background • Markets served • Number of clients served • Specialties to nonprofit community • How CapinCrouse gets exposed to or involved in ministry budgets
Planning Planning • Relates to overall objectives of the organization • Should be done before budgeting • What is the driving goal? • List the five main goals and objectives of your ministry in descending priority order
Keys to Proper Planning Keys to Proper Planning • Identify needs • Stating goals (overall intent and direction) • Stating objectives • Being specific • Establishing priorities (What if you can ’ t do it all?) • Being able to evaluate progress • Consider short-term and long-term
Master Plan Master Plan • Five-year, continuous plan • Identify: – Different needs for the future from now – What goals, objectives, and programs might be needed – Anticipated sources of income to meet the needs • Should simplify the budget process
Keys Reminders Keys Reminders • Multiple budgets don ’ t take a considerable amount more time, but they can be very useful in reacting to surpluses and shortfalls. • Accountability is crucial for success. • Just because you were under budget doesn ’ t mean you were successful!
Questions Questions
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