Budgeting

One beneficial practice that is frequently overlooked is creating a chapter budget.  An annual budget can help both the chapter and the site plan for expenditures and can go a long way to making sure everyone understands how chapter money is being spent.

Creating an annual budget not only helps plan for expenses but can also help align chapter and site goals for the year.

Starting a Budget

A chapter budget does not need to be overly complicated and does not need to be restrictive.  More than anything, it is a planning and communication tool about the chapter finances.  One of the best places to start is the site’s annual special events calendar.  By scanning through the events of the year, it can be easy to spot programs that will require chapter funds.  At the same time, income from any special events should also be estimated.  Another place to look for budget items is the chapter’s list of priorities.  Most of the expenses for a chapter will come from these two sources.  

Chapter administration expenses such as postage, banking fees, etc. are often overlooked when planning a budget.  Try not to leave these items out of your budget.

Incidental expenses that come from running a chapter are also important to plan for.  It is expected that running a chapter effectively will cost money and while postage for mailing letters of thanks to donors or copier fees for a special event flyer do not seem like big expenses, they can add up over a year.

For most chapters, the identification of these common expenses and sources of income are enough to create a complete and working budget.  If needed, more detail could be added to indicate when and to whom expenses will be paid.  In fact, a budget could be a precise tool for goal setting and complete financial management for the chapter.  However, for most chapters, a list of income and expenses for the year is sufficient.  Once completed, the annual budget should be approved by the Chapter’s board of directors.  Any changes to the approved budget should also be reviewed and approved as may be necessary throughout the budget period.

Unplanned Expenditures

Despite all efforts to the contrary, unexpected expenses will come up.  One way to smooth the impact they may have on the chapter’s finances is to plan for them.  While the amount and circumstances of each one may be unknown, a little advance planning can make dealing with them much easier.

One effective way to plan for the unexpected is to create approval guidelines based on the dollar amount of the expense.  This allows decisions to be made quickly and efficiently while still maintaining financial control. 

The best way to deal with unplanned expenditures is to plan for them in advance with a flexible approval process.

As an example, a chapter may decide the President has the authority to make financial decisions about expenditures less than $500.  For amounts between $500 and $1000, the President must have the approval from one other officer.  Between $1000 and $5000, all officers must be in agreement.  For expenditures above $5000, members must vote at a meeting and have officer approval.  Of course, this is only one example.  The dollar amounts and approval structure will vary based on the chapter’s needs.  However, a guideline like this can go a long way toward making the unexpected less difficult to deal with.