Streetsmart Financial Basics for Nonprofit Managers

Chapter 13Budgeting: Taming the Budget Beast

Budgets are often regarded like instant lottery tickets—expend a bit of effort and the number is magically revealed. This idea leaves you wondering where the numbers came from. The real work in budgeting has nothing to do with the numbers that wind up on the final copy of the final version. By the time the budget amounts are published, it's too late to change much anyway. It's what underlies the numbers that counts. Putting the budget together in the first place is where the hard work gets done.

In budgeting, a single phrase trumps everything else: It's not in the budget. More good ideas (and bad ones) have shipwrecked on that simple phrase than on any other. More programs have not started, and more frustration has been generated, from the use of those words than with just about any others in the manager's vocabulary.

This is backward. Budgets are supposed to help managers, not intimidate them. Budgets are intended to be a tool, a means to an end, not a holy grail. It seems so unnecessary, doesn't it? And yet it happens so often that it hardly seems accidental.

There is a lot written about budgets and budgeting processes, and much of it is simply wishful thinking. Budgets, especially program budgets, get built and approved in a variety of ways that don't always adhere to the theories. Any useful budget had to have been constructed from the ground up at some point. Starting with the numbers in the budget therefore begs the most important ...