Program of Work and Budget Development and Management
At least annually, the board should create or update a master plan of yearly activities that reflect the affiliate’s short-range and long-term goals. With these goals, the board can move forward with developing a program of work and budget.
The following information provides budget development and financial management processes used by Academy; use what information will be valuable and useful to the affiliate.
- Prepare a list of objectives or goals for the upcoming year based on progress to date on your strategic plan. Reevaluate the relative priority of existing programs and include new initiatives.
- Have Committee Chairs work with their committee to evaluate the objectives and goals, refine, and recommend new ones.
- Committees work to estimate the cost of each objective or goal on the list. For continuing programs, the previous year’s actual expenses and budget will be helpful in estimating the cost. Usually, a slight cost increase may need to be figured into the budget for some items, such as annual meeting.
- Estimate the expected income of the goals and objectives. This may include membership rebates, sponsorship, and publication sales.
- Committee Chairs submit their goals and objectives along with projected expenses and revenue to the finance committee for compilation and review.
- Compare total expected income to the expected expenses. When you have a deficit, determine which programs can be cut or ways for the affiliate to earn additional revenue. The Academy recommends that you have a reserve of 50% of your operating expenses.
- Once the numbers balance or end in surplus, submit the entire budget to the board for ratification. Carefully present and review so that board will be committed to the plan.
- It is recommended that the treasurer and/or executive director review the budget line item codes at the end of each month as ongoing up-to-date review. Make notes for changes to be recommended at the annual budget meeting.
- It is also recommended that the treasurer, treasurer-elect and executive director if there is one, conduct a financial meeting at the 6 month end of the fiscal year. This can be a teleconference call.
Program of Work
The program of work tracks how programs and activities relate to the organization’s strategic plan and help the affiliate estimate expenses for the upcoming year. Ideally, each project should have its own project code and, in turn, its own grid or section in the document. You will also want a project grid for administration activities, such as e-mail upkeep and conference calls.
The Project Code Grid includes:
- Basic information: Affiliate name, fiscal year, project title and project number
- Strategic Plan Goals: Outline the strategic plan goals so that you can track how the projects correlate to the strategic plan
- Project description: Outline the overall project vision
- Objectives and strategies: Outline the actions required to accomplish your project
- Source of revenue: Include all potential revenue for the year – do not list the same revenue (i.e. membership dues) in several project codes, as this will throw off your revenue estimations
- Expenses & footnotes: List all potential expenses for the project in a bulleted list. When you enter your estimations in the budget spreadsheet, you will include footnotes in order to help explain rationale.
Budget Spreadsheet Once your Program of Work is created and balanced, input the numbers in a budget spreadsheet. You can use a spreadsheet from accounting software or create your own. Be sure to include a summary worksheet so that you can gauge your total revenue versus expenses. Some key items to include in each spreadsheet are:
- Project Code & Title
- All accounts used
- The previous fiscal year’s numbers
- A footnotes column (to track rationale via the Program of Work)
- Forecasting columns in order to track when monies will be due and received throughout the year
Chart of Accounts A Chart of Accounts helps you categorize your affiliate operations. Each affiliate creates its own codes – we recommended matching each code to a program or part of the strategic plan and to use codes in numerical order to decrease confusion – i.e. project 1, project 2, and project 3.
PLEASE NOTE: It is recommended to discuss appropriate codes with your CPA or accountant who can advise on appropriate order of numerical codes and classifications.
Fiscal Management The treasurer is most likely responsible for generating invoices and processing payments throughout the year.
- Processing Revenue: Whenever money is received, track the amount and to what project code in a “cash receipts journal.” This can be done via a software program, excel spreadsheet etc. Once coded, deposit the money in the bank.
- Paying Expenses: Whenever the treasurer receives an invoice, write the corresponding account code on the invoice, sign it and send it to the second signer (usually the president.) Also enter the expense, date received and project code in a “cash disbursements journal.” Once signed by the second person, enter the date paid in the “cash disbursements journal” and generate a check to the payee.
- Controls: Compare your journals to the bank statements on a monthly basis to ensure the information is correct. Discuss as a board how you will monitor banking practices to ensure that fraud is not being committed.
Financial Statement
The board of directors should review the financial statements (or the financial status) on at least a quarterly basis. Financial statements can be as simple as a word document as long as they include these key items:
- The amount of money in the checking account(s), savings, investments, etc.
- Revenue received and expenses paid during the last several months (and how this compares to the budget)
- Information on investment performance, if applicable