Not-for-Profit Budgeting and Financial Management

Take control of your organization's short- and long-term financial plan

Now fully revised, Not-for-Profit Budgeting and Financial Management, Second Edition, offers a financial planning system that is not only easy to use and monitor, but also ensures true fiscal accountability in the complex not-for-profit arena.

• Adds three entirely new chapters on Footnoting the Statement of Activity, Presenting Cash Prepared and Accrual Statements on the same page, and The Importance of the Executive Summary
• Fully updated with the latest financial advice to benefit your nonprofit
• Explains how to separate controllable, semi-controllable, and fixed expenses
• Reveals how you can prepare and present such top-notch budget documents that budgets will be approved the first time

Written in a nontechnical, understandable format, incorporating dozens of relevant forms and documents, this completely revised and expanded edition will enable your nonprofit organization to create and manage reasonable financial plans that fit their organization's needs.

Preface xiii

Disclaimer xv

Chapter 1 Budgeting and Financial Operation 1

Chapter 2 Cash vs. Accrual Accounting 13

Chapter 3 Basic Accounting and Financial Operations 45

Chapter 4 Effective Use of Footnotes and Financial Ratio Calculations for the Statement of Financial Position 51

Chapter 5 Controllable and Uncontrollable Expenses 57

Chapter 6 Controllable, Semi-Controllable, and Fixed Expenses 61

Chapter 7 Noncash Expenses 65

Chapter 8 Effective Footnotes for the Statement of Activity 69

Chapter 9 Natural and Functional Statements of Activity 77

Chapter 10 Internal Financial Statements 81

Chapter 11 Converting Accrual-Method Financial Statements to Cash-Method Financial Statements 89

Chapter 12 Budgeting Philosophy 99

Chapter 13 Continuous Budgeting System Overview 101

Chapter 14 The Executive and the Budget Process 105

Chapter 15 Executive Summary 109

Chapter 16 Comparative Financial Statements 113

Chapter 17 Expense Reduction Plans 117

Chapter 18 The Monthly Budgeting Process 121

Chapter 19 The Cash Flow Budget 135

Chapter 20 Getting the Budget Approved 139

Chapter 21 Suggested Format of Budget Documents for an Approving Body 141

Chapter 22 The Role of the Budget Coordinator 157

Chapter 23 Accounting and Budgeting for Fringe Benefits 161

Chapter 24 The Capital Budget and Depreciation 163

Chapter 25 Inventory Purchases and Calculation of Cost of Goods Sold 167

Chapter 26 Accounting and Budgeting for Dues 169

Chapter 27 Capital Assets: Lease-or-Buy Decisions 175

Chapter 28 The Long-Range Plan 177

Chapter 29 Financial Ratios 179

Chapter 30 Zero-Based Budgeting 183

Chapter 31 Putting it All Together 185

Glossary 203

Index 207

EDWARD MCMILLAN is a Certified Public Accountant and Certified Association Executive, and is a nationally recognized speaker on not-for-profit financial and management topics since 1992 for the United States Chamber of Commerce, the American Society of Association Executives, the American Institute of Certified Public Accountants, the American Chamber of Commerce Executives and the Destination Marketing Association International. He has written six books, including five for Wiley, as well as Guide to Fringe Benefits for Not-for-Profit Organizations, Complying with SFAS #116 and #117, and The Audit: A Novel. He is also the author of numerous articles appearing in such publications as Association Management, Leadership, and Dollars and Cents. Budgeting Made Easy for Today's Nonprofit

With more and more nonprofit employees responsible for the creation and management of the annual budget, it's clear that budgets must be well designed and easy to implement in order to accommodate the trend toward decentralizing decision-making powers in nonprofit organizations. Continuous budgeting, as explained in Not-for-Profit Budgeting and Financial Management, Fourth Edition offers a system that is not only easy to use and monitor, but also ensures true fiscal accountability in the complex nonprofit arena.

This handy guide explains how to separate controllable, semi-controllable, and fixed expenses; take corrective actions during the year to offset budget shortfalls; define the roles of the CEO, CFO, the staff, and volunteer leaders; establish expense reduction plans before they are needed; and prepare and present such top-notch budget documents that budgets will be approved the first time.

Written in a nontechnical, understandable, how-to language and format, the Fourth Edition incorporates dozens of relevant forms and documents and covers:

• All new material on footnoting the statement of activity

• How to present cash prepared and accrual statements on the same page

• The importance of the executive summary

• How nonprofits can work toward liberating themselves from the year-to-year scramble for increasingly scarce resources

Instead of being controlled by outdated, cumbersome, and inaccurate budgeting processes, nonprofit managers need to be able to effectively direct and responsibly control their resource allocation. Not-for-Profit Budgeting and Financial Management, Fourth Edition helps them get the job done and done right, with its powerful system of continuous budgeting, enabling not-for-profit professionals to meet their organization's needs by creating and managing reasonable financial plans—that work!