SOCW 6371: Community & Admin Practice Class 9: Financial Management: Budgeting, Budget justification, Fund Raising, Reporting UTA School of Social Work

SOCW 6371: Community & Admin Practice

Class 9: Financial Management: Budgeting, Class 9: Financial Management: Budgeting, Budget justification, Fund Raising, ReportingBudget justification, Fund Raising, Reporting

UTA School of Social Work6371: Community & Administrative Practice

Dr. Dick Schoech

Copyright 2009 (permission required before use)

Suggest printing slides for class using: Print | Handouts | 3 slides per page | grayscale options 1


Review Previous ClassesReview Previous Classes

2. Theories, values, perspectives

3. Problem definition, theories of need

4. Capacities and needs assessment

5. Evidence based interventions and logic models

6. Program descriptions, community linkages

7. Mission, Goals and Objectives

8. Information Management, performance measurement, program evaluation

9. Budgets and budget justification & Financial management

and fund raising 10. Leading, implementing, scheduling, service marketing, public relations§

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Budgets and budget justification

SOCW 6371: Community & Admin Practice 3


Views of an AgencyViews of an Agency

View = colored glasses to filter other views

• Personnel mana = view agency as people

• Information mana = agency as info flow

• Facilities mana = agency as building & things

• Financial mana = agency as money

• Collaboration = agency as part of network

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Budget type: line itemBudget type: line item

Definition Cost by item

Advantages of Line Item• Easy to understand

Disadvantages• Focuses attention on input & throughput vs.

outcomes §

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Line Item ExampleLine Item Example

• Coley & Scheinberg, pg. 78, & 89

• KKM, pg. 182 & p. 240

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Budget type: programBudget type: program

Def = costs out by each program

Advantages– Relates resources to programs– Focus on programs & output– Helps planning and evaluation

Disadvantages– Must cost out everything (staff time, supplies) by

program– Time and complexity §

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Program Budget ExampleProgram Budget Example

• Focuses on cost to achieve objectives of a program/service (if you have outcome objectives, it will focus on outcomes)

• KKM, 186, 245

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Budget type: Budget type: performance/functionalperformance/functional

Def = cost out outcome objectivesAdvantages• Focuses on cost for outcomes• Compares costs to achieve each objectivesDisadvantages• Requires cost per unit of service• Requires calculating indirect costs• Most people think in terms of programs and

not objectives §

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Performance/functional Performance/functional budget Examplebudget Example

• Focuses on functions such as training and evaluation

• Coley & Scheinberg, p. 79, table 8.2

• KKM, p 201

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Budget JustificationBudget Justification

• Addresses all major items in the budget

• Shows how costs are calculated

• Tries to show costs are reasonable

• Addresses any item that could be controversial

• Justifies matching funds

• Tries to give a cost per unit of service

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Budgeting TechniquesBudgeting Techniques

Cost Benefit analysis– Translates outcomes into economic benefits/cost for service

Cost effectiveness analysis– Focuses on cost-efficiency

Break even analysis– Focuses on when you stop loosing money

Zero-based = levels from 0+– Links planning, budgeting, and evaluation– Challenges basic service assumptions– Time consuming – Focuses attention on costs vs. outcomes– Destructive to staff morale: threatens jobs §

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Financial reportingFinancial reporting

• Statements (periodic summary)– Income, expenditures, balance– Changes in fund balance

• Annual reports• IRS 990 www.give.org

www.guidestar.org • www.charitynavigator.org• Audits (using approved procedures) §

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Financial Management and Fund Raising

SOCW 6371: Community & Admin Practice 14


Overview of Financial Overview of Financial ManagementManagement

• Financial management– Non-profit accounting – Budgeting– Financial reporting

• Funding raising– Often human service $s have strings

attached §

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Financial Management Financial Management AssumptionsAssumptions

• Not a major contingency (people, task, structure, tech, goals)

• A tool/resource to support mission – (treat same as computer, office, people)

• Diversity of funding sources is required• One of the best managed resources in

HSOs (compared to people, information) §

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Basic TermsBasic Terms

• Accounting = Standard tools & procedures to manage money

• Budgeting = techniques/processes to project/track income, expenditures & balances

• Budget period = That period which the budget covers, fiscal year, calendar year, academic year

• Direct costs = expenditures requiring new $s, e.g., salary, equip

• Indirect cost = overhead (electricity, bookkeeping)• Matching funds = hard $ or In-kind (soft) e.g. volunteer

hrs)• Costing out = determining costs as in finding unit costs• Capital expenditures = money for equip & buildings §

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Non-profit Accounting--Non-profit Accounting--bookkeeping methodsbookkeeping methods

• Cash method– Record credit or debt as money is exchanged

• Accrual method– record when transactions occur, accumulate debt

and credit

• Modified cash/accrual method– record revenue on cash basis, expenditures on an

accrual basis §

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Non-profit Accounting -- Non-profit Accounting -- bookkeepingbookkeeping

• Accounts– the categories/funds $s are charged or credited to

• Chart of accounts– standard list of accounting codes, usually based on

items in the budget

• Journals– list of entries recorded as they occur, e.g., accounts

receivable, accounts payable, payroll

• Ledgers– list debit and credit column for each account §

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Securing FundsSecuring Funds

• Fundraising

• Sources of Funds

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Fundraising BasicsFundraising Basics

• Social Workers often are not good at asking for money so use committees and board members

• Use fund raising committee to educate and solicit indirectly

• Think that you are giving people an opportunity to give to a cause they like

• Takes a consistent and managed effort• Relationships are important as in direct

practice §

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Sources of Fund (1 of 2)Sources of Fund (1 of 2)

• Direct appropriations by government – (TX Victims Assistance funds)

• Non-service alternatives – (Low income tax credit, child support enforcement, property

tax freeze for seniors, ADA)

• United Way allocations• Grants (federal and foundation)• Contracts for services

– TDFPS and Catholic Charities• Fees for services §

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Sources of Fund (2 of 2)Sources of Fund (2 of 2)

• Special projects and events– Byron Nelson Golf Classic—Salesmanship Club

• Direct mail campaigns • Sponsorships & advertising

– Grocery store cards

• Noncash donations, e.g., items, cars, stocks• Planned giving, endowments, nonprofit capital,

e.g., venture philanthropy http://www.dsvp.org/

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Reducing ExpendituresReducing Expenditures

• Zero based budgeting

• Diversity funding sources

• Brody (text for SOCW 6314), pg. 243 Has good list of 50 ways to reduce expenditures

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Implications for program designImplications for program design

• Always budget total costs• Always show donated column• Budget justification is very important

– Include all items– Address potential issues, cost per unit of service

• Be clear on budget period – Hire accordingly, 10 months vs. one year

• Well designed programs are much easier to fund (good logic model) §

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ConclusionsConclusions

• Financial management should be– Proactive vs. Reactive– Planning vs. Control– Outcome vs. Input

• Use good software & management

• Use board & committees for expertise, education and oversight

• Diversify to many sources of funds• Expect accountability to increase and agencies able to

show accountability to grow §

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Questions and AnswersQuestions and Answers

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Documents

SOCW 6371: Community & Admin Practice Class 9: Financial Management: Budgeting, Budget justification, Fund Raising, Reporting UTA School of Social Work