Analysis, News

Budgeting in Non-Profit Organizations

Budgeting for non-profit organizations is quite complex. This is because there are multiple categories at the same time. This is also complicated by the unavailability of funds that are expected to enter during the current budget period. This will certainly complicate the budget system that must be managed in non-profit organizations. This makes budgeting in nonprofit organizations often more complicated than budgeting in business enterprises in general. In fact, as we have seen from the previous explanation, the budget is an important thing in non-profit organizations, because often income in non-profit organizations cannot be increased so that expenditures must be made as effective as possible to be able to utilize the available funds as much as possible to achieve the goals of the organization. Budget is one tool that can facilitate this goal. For that, we must be able to make the right budget for non-profit organizations, which of course will be different from the existing budgeting system in business companies. Adkins (n.d.) revealed several things that must be considered in making a budget for a non-profit organization, including:

Budgeting based on Revenue

Budgeting made by a non-profit organization should be based on realistic projections of revenue. If a non-profit organization selects the activities and projects that must be funded in advance, the organization will often find it difficult if the funds needed cannot be met, and this has a high probability. The thing that needs to be considered in making acceptable income projections is to categorize the level of reliability of the source of the funds, because this income project must be as realistic as possible, so that if there are several sources of funds that are not convincing, they should be removed or separated beforehand so as not to damage the planning. budget to be made.

Meet the fixed costs first

The budget for fixed costs must be considered first through sources of income that come from reliable sources. This is because most of these fixed costs are costs that occur repeatedly from period to period and are direct, meaning that fixed costs are needed to be able to provide products or services, so they must be met first. In other words, the budget for fixed costs must be equal to or less than the amount of funds that can be guaranteed to be obtained for the budget period.

Alignment of projects with appropriate funding sources

The organization must focus its budget on projects that are routine and fall within the main areas of the organization. However, this does not mean that organizations cannot create special projects or activities that are outside of their routine activities. However, the budget of funds used for this special project should not come from regular income earned by the organization, because this will interfere with the main activities of the organization. Expenditures required by special projects must come from special funding that is not planned as well, or use surplus income funds.

Focus on the organization’s operating budget. If there are other budgets that must be made, the budget is carried out after the budget for the organization’s operations is met. Only if there are remaining funds that have not been managed, other budgets are made as needed, such as the capital expenditure budget, and others. It is often this operating budget that is needed to be able to apply for donations or donations by donors. By paying attention to these things, the budget system created can be more appropriate for use in non-profit organizations, considering some of the differences with business companies in general.

Related Posts