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Budgeting

Budgeting

BUDGETING
The objectives of the budgeting phase are to:

  • Understand what a budget and its process;
  • Track the expenses and income;
  • Make projections; 
  • Analyze result; and
  • Be ready to prepare a budget.

 

What is a Budget and Why is it Done?
A budget is always prepared in relation to the strategic plan and developed from the annual work plan. It covers all activities to be done, usually in one year.
A budget is a table of figures showing an estimate of what is expected to be received (income) and how much will be spent (expenditure of money to be applied to specific activities/programs/projects) for a fixed period, normally one year.

*Apart from the budget on income and expenses, a budget on the organization’s assets and liabilities is also prepared. In this resource material, note that the focus of the discussion is budget on income and expenses.

Refer to the Original Resource for Image
(Found in the PDF Document Available in each of the WAGGGS Official Languages at https://campfire.wagggs.org/PlanningBudgeting)

A budget:

  • Is a financial plan for the coming year;
  • Is a financial statement showing the activities;
  • Is a forecast for the year showing areas of under-funding or weakness;
  • Is a management tool for monitoring income and expenditure; 
  • Is a tool to aid fundraising;
  • Shows the sources of income;
  • Sets out realistic estimate of all costs that are expected to incur;
  • Provides a monitoring tool that allows comparison between actual costs and budgeted costs;
  • Ensures that resources are available to carry out activities for the year ahead;
  • Is used for the implementation of objectives; and
  • Is vital in the achievement of WAGGGS MISSION: "To enable girls and young women to develop their fullest potential as responsible citizens of the world."

 

Overview of WAGGGS Budget
The WAGGGS’s strategic plan builds on the success of the last triennium and continues to provide more opportunities for girls, demonstrating greater global influence and being a strong and vibrant movement. 


In order to deliver this ambitious strategy, the World Board proposes a level of income and expenditure (restricted and unrestricted) for the upcoming triennium and sets out how the types of income and expenditure have changed from the prior triennium. Unrestricted income is the funds at the disposal of the World Board to spend as they see fit to achieve the organizational strategy. Restricted income can only be spent as the donor has specified and the World Board has no ability to change the way these funds are spent.


The World Board continues to review and reforecast on a regular basis to ensure that it is making a decision based on the most up to date data (e.g. impact of COVID-19 pandemic).

 

People Involved
People involved in budgeting are usually referred to as “Budget Committee” composed of:

  • Finance / Program Staff / Volunteer who sets the budget; 
  • Executive Officers / Board of Trustees / Members / Directors who review and approve the budget; and
  • Budget Holder who implements and manages the budget.

 
Analysis before Budgeting

  • Look closely to the strategic plan when developing the budget.
  • Look at expenditure against the previous year’s budget if there was over spending or under spending because of changes in programs, activities, office or management cost and others.
  • Analyze the known and expected income for the coming year.
  • Obtain estimates of new items in the budget or items which have increased cost.
  • Look at the planned changes in programs and activities.


Steps to Budgeting

1.    Define the period of the budget (e.g. 1st January - 31st December, 1st April - 30th June, 3-year period).

 

2.    Identify sources of income and expenses for the budget.

Income and expenses relate to the financial performance of an organization or a company.

2.1    Income is the increase in any economic benefits during the [accounting] period in the form of inflow, which generates cash (or cash equivalent) from activities or operations.

Examples of sources of income are:

  • Membership Fee
  • Fundraising
  • Donations or Grants
  • Investments
  • Income-Generating Projects
  • Selling of Merchandise or Trading

Refer to the Original Resource for Graphic
(Found in the PDF Document Available in each of the WAGGGS Official Languages at https://campfire.wagggs.org/PlanningBudgeting)

Income-generating projects may arise from:

  • Product Selling  (e.g. calendar, soap, handicrafts)
  • Rendering of Service / Assistance (e.g. Telephone Kiosk)
  • Animal Related (e.g. poultry, bee keeping)
  • Small Shops (e.g. Bakery)

Refer to the Original Resource for Graphic
(Found in the PDF Document Available in each of the WAGGGS Official Languages at https://campfire.wagggs.org/PlanningBudgeting)

2.2    Expenses are decreases in any economic benefits during the [accounting] period in the form of outflow, which use cash (or cash equivalent) for the activities or operations. 


Examples of expenses are:

  • Project Expenditure
  • Publication Materials
  • Trainings & Workshops
  • Travel / Events and Representation
  • Supplies &  Equipment, Depreciation
  • Salary & Other Cost for Personnel or Staff
  • Utilities (e.g. Electricity, Water, Communication, 

In identifying income and expenses, the organization must consider the activities, projects and programs to be undertaken which are the sources and uses of funds.

 

3.    A code, referred to as “budget code” is made to the items listed in the budget. Budget codes are digit numbers assigned to budget accounts for budgetary reporting. These are designed as a way to keep track of the budget accounts for the organization (e.g. 1000 for expenses, 2000 for income). Budget codes should match (or correspond to) the accounting codes.

 

4.    Transfer the items to the budget.  A worksheet is prepared. There will be heading for income and expenses and their subheadings. 

 

5.    Consolidate the figures.
5.1    Transfer income figures on to the worksheet.
5.2    Establish costs for each item based on the budget analysis and estimates.
5.3    Calculate the sums across the rows and down the columns of the worksheet for the expenses.

The worksheet includes calculations and explanatory notes of the income and expense items. It details the assumptions or basis of the amounts used in coming up with the budget. 

 

6.    Calculate any surplus or deficit. Analyze the results.
In budgetary contexts, a surplus occurs when income exceeds expenses while a deficit occurs when expenses exceed income.
If the organization’s income base is weak or insecure, it is best to undertake a budget review and update quarterly so that, with the approval of the governing body, any new income and expenditure can be incorporated.

 
 

A Sample Budget

Refer to the Original Resource for Sample
(Found in the PDF Document Available in each of the WAGGGS Official Languages at https://campfire.wagggs.org/PlanningBudgeting)