About HealthHIV
HealthHIV is a national, 501(c)(3) working with organizations, communities, and professionals to advance effective prevention, care, and support for people living with, or at risk for, HIV through education and training, technical assistance and capacity building, advocacy, and health services research and evaluation. HealthHIV supports primary care providers treating HIV, as well as community and faith-based organizations involved in HIV prevention, care, and treatment. HealthHIV, through a cooperative agreement with the Division of Training and Technical Assistance in the HIV/AIDS Bureau of the Health Resources and Services Administration, provides fiscal management training and technical assistance in fiscal management for Ryan White-funded grantees and sub-grantees.
For more information on HealthHIV’s fiscal management trainings, please email training@healthhiv.org
Budget Basics for
Financial Health
& Sustainability For additional information on HealthHIV’s fiscal management trainings, please email training@healthhiv.org
www.healthhiv.org
8
Budget Basics For Financial Health & Sustainability
For additional information on HealthHIV’s fiscal management trainings, please email training@healthhiv.org
The Basics
HealthHIV’s Fiscal Management Series Helping build and sustain organizations offering HIV services in communities across the country is the mission of HealthHIV. One way HealthHIV achieves this goal is by helping organizations better understand the basics of the budgeting process and how a financially healthy non-profit can sustain and expand HIV services. For more than 6 years, HealthHIV has delivered in-person fiscal management trainings through the Health Resources and Services Administration funded Fiscal Health: Systems To Sustainability project. Additionally, HealthHIV has developed a series of materials, including online factsheets and webinars, addressing the most common concerns raised by non-profit administrators including: financial managers, non-financial managers, executive directors, CEOs, and Board members. For additional information on fiscal management www.healthhiv.org or email training@healthhiv.org.
trainings
The Process ✓ Identify your program goals. ✓ A lign your program goals with the mission of your organizations.
✓ Determine what financial resources you need. ✓ I nvolve your staff and Board in developing a budget process.
✓ Document your budget process. ✓ Customize your budget planning process. ✓ Use your budget as a guide.
2
A budget is a plan that identifies the fiscal resources required to achieve an organization’s program objectives. Once constructed, a budget assists the Board of Directors, management, and staff in guiding effective operations to implement programs and initiatives which support the organization’s mission. A budget also includes a schedule of key action and decision points, as well as, identifies time for information gathering and decision-making.
Budgets There are a number of different types of budgets commonly prepared for successful management of a non-profit’s resources. They include:
visit
Annual Operational Budget:
Cash Flow Budget:
Captures all expected sources of revenue (such as contributions, grants, membership dues, etc.) alongside all the expected expenditures on a yearly basis.
Projects cash receipts and required cash expenditures over a given period.
Program or Activity Budget:
Other Financial Budgets:
Addresses specific funding sources (such as government or corporate grants), details the funds expected to be received from each source, and assigns funding toward an expected use.
Allows management to see if the organization is making efficient use of particular resources. Common types of these budgets include: fundraising, communications, technology, or staffing.
Capital Expenditure Budget: Projects revenues and expenditures for tangible items (such as land, buildings, and equipment), which provide benefit to the organization over an extended period.
Typically the budgeting process should begin at least four months before the end of the fiscal year to ensure approval by the Board before the start of the new fiscal year.
3
The Budgeting Process (Step-by-Step) While approving and implementing a budget is the goal, the process of achieving this is equally important.Therefore, the budgeting process should begin at least four months before the end of the fiscal year. This ensures there is ample time to develop, review, and receive Board approval for the budget before the start of the new fiscal year.
Step 5
Plan
• I dentify who will coordinate the budgeting process and which staff, Board members, and committees need to be involved
Committee Review
• S et timelines and key deadlines
Communicate
•C learly communicate responsibilities, expectations, and deadlines to everyone involved in the budget process
Step 7
Final Approval
•E xplain and distribute forms and assumptions to appropriate staff, Board members, and committees
Step 3
Set Goals
•C onsider staffing requirements, as well as salary and benefit assumptions, based upon program goals
Step 4
Gather Information
•D istribute information to the Board, including budget draft, program goals, and other supporting information •E nsure program and development committees play a role in making an informative presentation to the Board based on the opportunities, challenges, and resources behind the budget numbers
•D etermine program goals
• S eek the Board’s approval on program goals, salary, and benefit assumptions
• Ask finance committee, appropriate staff, and Board committees to review a budget draft and key budget assumptions • Allow enough time between committee meetings and the final approval deadline to address questions and recommendations, as well as make revisions
• Agree upon key definitions, assumptions, and document formats
Step 2
• I dentify one person to compile all information, review it for consistency, and redistribute to appropriate staff, Board members, and committees • Allow time for review and revisions
Step 6 Step 1
Compile and Review Information
•P resent the budget proposal to the Board
Step 8
Implementing and Managing
•C ommunicate the approved budget, program goals, and timelines to staff
•R esearch information about program income and expenses based on goals and budget assumptions
•R eview actual income and expenses compared to the budget on a monthly basis
• L ist budget details on a program by program basis
•U pdate and revise the budget as changes occur during the year. Depending on the significance of changes, the Board may need to approve revisions
•C ommunicate regularly to avoid duplication of efforts and to share information and budget assumptions
4
5
Example Budget Preparation Schedule
Example Budget Preparation Schedule
July/August Step 1: Planning the Process Executive Director meets with financial staff and finance committee to plan budgeting process and set timelines. Budget worksheet and template formats updated.
Step 5: Compilation and Revision Designated coordinator compiles information to prepare an initial organizational budget draft. Managers review and revise initial draft. Step 6: Committee Review Finance Committee meets to review budget draft and assumptions and make recommendations.
September/ October Step 4: Information Gathering Managers draft program or department budgets based on plans and assumptions.
November
September Step 2: Communicating the Process Staff meets to communicate process, responsibilities and deadlines to all participants. Report made to Board about process, timelines and assumptions. Step 3: Programmatic Goal Setting Board and committees review strategic goals and identify priorities. Staff meet within programs/departments to plan for next year’s goals.
6
December/January Step 7: Final Approval Board meets to review budget proposal -- programmatic and fundraising assumptions are presented for approval. Step 8: Implementation and Management Staff meets to discuss budget, program goals, and timelines for new fiscal year.
7
HealthHIV’s Fiscal Management Series Helping build and sustain organizations offering HIV services in communities across the country is the mission of HealthHIV. One way HealthHIV achieves this goal is by helping organizations better understand the basics of the budgeting process and how a financially healthy non-profit can sustain and expand HIV services. For more than six years, HealthHIV has delivered in-person fiscal management trainings through the Health Resources and Services Administration funded Communities Learning Together: Advancing HIV Care and Support through Effective Fiscal Management project. Additionally, HealthHIV has developed a series of materials, including online factsheets and webinars, addressing the most common concerns raised by non-profit administrators, including: financial managers, non-financial managers, executive directors, CEOs, and Board members. For additional information on fiscal management www.healthhiv.org or email training@healthhiv.org.
trainings
w
The Basics A budget is a plan that identifies the fiscal resources required to achieve an organization’s program objectives. Once constructed, a budget assists the Board of Directors, management, and staff in guiding effective operations to implement programs and initiatives which support the organization’s mission. A budget also includes a schedule of key action and decision points, as well as, identifies time for information gathering and decision-making. There are a number of different types of budgets commonly prepared for successful management of a non-profit’s resources. They include:
visit
The Process ✓ Identify your program goals. ✓ A lign your program goals with the mission of your organizations.
✓ Determine what financial resources you need. ✓ I nvolve your staff and Board in developing a budget process.
✓ Document your budget process. ✓ Customize your budget planning process. ✓ Use your budget as a guide.
2
Typically the budgeting process should begin at least four months before the end of the fiscal year to ensure approval by the Board before the start of the new fiscal year.
3