YIKES! It’s Budget Time :: Understanding Budgeting in Uncertain Times

  • be able to reasonably predict a year’s worth of revenue from fees, grants, donations, and/or contracts based on our program model and past financial performance
  • had a sense of how the social, political, and economic systems would play in our favor or against us
  • Determine several options for what the next fiscal year could look like in terms of changes in program delivery and operational support. This involves both guessing at how long you might operate under each program delivery model over the fiscal year AND noting the conditions that need to be in place to change from one model to another. For example, 1st 3 months in ‘lock-down’ model, next 3 months in ‘social-distance’ model, next 4 months in ‘small-gatherings only’ model…
    (this is an important piece of thinking to have articulated when it comes to monitoring finances moving forward)
  • Determine the financial requirements that each projected scenario requires. This ensures that the assumptions about what you can do programmatically are clearly grounded in both the external conditions that exist and the financial needs each scenario would require.
  • If you have reserves or other restricted capital, this may be the time to put them to use as ‘revenue’ by releasing them from restriction and designating them as general operating cash for the fiscal year. (Yes, it will reduce your net assets, but it will give you needed operating funds)
  • Avoid building false confidence around past revenue models. Clearly identify revenue targets that correspond with the programming and operating model scenarios you created (see above). Identify the gap that would exist. Clearly articulate the strategy you plan to use to fill that gap and any assumptions (about economy, donors, government, etc) you are relying on to make that strategy work.
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  • What thresholds are you setting on reserve spending (both amounts and timing)?
  • What revenue expectations/assumptions do you need to track (and with what regularity)?
  • What levels of deficit/surplus will trigger conversations about revisiting your programming and operating capacity levels?
  • What will you track to determine if the financial models for our operating scenarios are accurate (are expenses and revenues tracking with your predictions)?
  • We need confidence that we are serving the community.
  • Our staff need to know we have confidence in their strategies and ability to adjust.
  • We need confidence that we can reconsider our assumptions and chart a different path.
  • We need to understand how much confidence our predictions warrant.
  • We need to acknowledge where we lack confidence and comfort.
  • And, we need to consider different process that build up our collective confidence in the organizations we serve.

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