604: Getting and Spending the Money: The Budget Process
(This article is a summary of an invited talk given by Jane Piehl of Seattle to members of the Special Library Association Chapter Cabinet on January 27, 1977, adapted by Lois Godfrey.)
Preparation of a budget is inseparable from the development of a program of activities.
A program may be set, based on the available income, but a much better way is to set up a good program of activities for the year, then to find the money to make the program possible.
One should estimate expenditures, calculate income, then balance the two.
YOUR BUDGET IS A FINANCIAL SHADOW OF YOUR PRIORITIES.
When budgeting, start with your members’ need and wants: Meetings? Meals with them? Workshops? Bulletins/Newsletters?
Next think about your community in the broadest sense:
Students? Scholarships? Meetings? Publications?
Consider operating expenses: Telephone? Travel? Treasurer’s Bond?
Consider liaison with other library-oriented groups: Bulletin exchanges? Joint meetings or workshops?
Consider responsibilities to the American Library Association and a regional library association: Attendance at A.L.A. annual conference and Midwinter meeting? Regional meeting? Mailings? Neighboring state associations?
Consider the last year’s budget, but realize that it is ONLY a guideline-a starting point for your own planning.
Look at the programs you’ve developed by asking the questions above, and other you think of. Do you have the people-power? Or the cost of hiring it? Are some items self-supporting? Are some income-generating?
Realize that you make policy decisions when you make monetary decisions. For example, when dinner meetings lose money, the policy is to subsidize active members who attend; when they break even, the policy is to charge members for what they get; when they make money, the policy is to penalize those who are active and attend, by charging more than the actual cost of their participation. The Executive Board must make the policy decisions first, then follow by instituting the practices which implement the policies.
The budget is made in whole dollars, and usually rounded to the nearest $5. After calculating the income and totaling the proposed expenditures, you must prepare to balance the budget.
If expenditures are greater than income, you must decrease the program or increase the income. (In the latter case, consider that some fund raising activities generate good public relations as well as money.)
If expenditures are less than income, you may either increase the program or decrease the income. Increasing the program may mean that you see a way to undertake a project you’ve been putting off–if not this year, then by carrying over for a year or two smaller amounts which will make a large project possible.
The member who works for the Association is a precious person, literally. Treat him/her accordingly.
Acknowledge in your budget the contributions made by your volunteer members and/or their employers in the matter of travel expenses, bulletin printing, mailings, etc. These are “in-kind” contributions which will not show up on the annual financial report, but which should show up in the budget, both the income and expenditures sides. Only then will you know the true size and scope of your operations.
Setting aside money to be spent in a future year for a specific project is perfectly permissible with a budget. The money shows on the income side whether it is already in a project fund or expected from some other source. On the expenditure side, it shows as (expected use) to accrue for (year expected to used), or carry over for (purpose, year expected to be used). An example: Union List of Serials, to accrue for 1988, $2,000.
As you spend money, refer to your budget, adjusting allocations and making reallocations to fit the year’s changing needs.
Reserves are necessary for cash flow, but large reserves are usually not required.
Money may be kept in a checking account, if it is to be used soon, or in savings accounts, but accounts need not be separate for each fund in order to keep named or project funds separate. All money earning interest can be in the same account; the ledger sheets will keep track of what sums belong to which project or named accounts.
Consider the use of interest from savings account funds. Do you plan to use it for the operating budget or for a project? Make a conscious decision about interest income, then follow it up with the appropriate practice.