Budgeting

Budgets are valuable tools to help chapter leadership plan the upcoming activities of the year. An effective planning process leading to a clearly articulated budget provides a means of tracking revenues and expenses so that resources can be used most effectively to meet the chapter’s goals. A budget helps to provide officers and staff with an early warning if adjustments in spending and revenue collection are necessary.

Budget preparations for an upcoming year begin before the current year is completed. The following steps will help guide you through the initial phases of budget development:

1. Specify the goals of the chapter. Examples include:
   • Long-term goals—building a financial reserve for the chapter that is equal to six month’s expenses, providing for a continuing scholarship fund.
   • Functioning goals—making a profit on the annual meeting beyond the established costs, increasing paid staff to assist in implementation of new initiatives.
   • Short-term goals—purchase a new chapter database system or web services, purchase a laptop for chapter business.
2. Specify the categories of revenues and expenses to be included in the budget. Examples include:
   • Revenues
     • Dues
     • Sponsorship
     • Event registration
     • Interest/investments
   • Expenses
     • Event expenses: hotels, catering, A/V, honorarium
     • Staff salary
     • Printing/postage
     • Legal/accounting
     • Scholarships
     • Contributions to ACS Foundation and/or endowment funds
3. Compare and analyze the current year budget with actual results to date and an estimate of year-end results. See Appendix D for a budget template.
4. Determine if any changes should be made to chapter programming/services that would necessitate a budget change (i.e. changes to number/locations of meetings, increasing staff support, offering scholarships, increasing recruitment efforts via mailed promotional pieces).
5. Finally, identify any budget items that are no longer necessary.

Once you know which current-year budget items will be continued into the upcoming year, and which items need to be deleted, you are ready to prepare the budget for next year.

1. Start with fixed or predictable budget items such as:
   • Salaries for the chapter administrator will increase by 3.5% this year.
   • The number of dues mailings and pieces of mail will remain constant, but the post office will increase the price of stamps by approximately 5 percent during the next dues cycle.
2. Rely on your Chapter’s statistical history:
• For example, if membership has increased by 5 percent each year for the past three years, you would build that expected increase into the dues revenue budgets.
3. Document your efforts in a notes field within the budget
• Include on your budget spreadsheet a column for notes, or attach a schedule, that explains the rationale behind budgeted numbers. These budgeting explanations will help during your review of the budget with council members and will assist with the development of subsequent budgets.
4. Seek experienced help:
• For example, vendors can provide estimates for printing, meeting rooms and the like. The consumer price index may be consulted and interest rate projections will help with your prediction for future revenues and expense.
5. Member support:
• Involve knowledgeable chapter members who work closely with the chapter and make decisions that carry budget impact. This involvement brings responsibility, adherence to the budget and most of all accountability.
6. Approval of the Budget:
• Once the new budget is completed, it should be approved as soon as possible by the officers and the executive council before the start of the budget cycle. Consult the chapter bylaws for specific actions required for budget approval.
7. Compare the budget with actual results on a monthly basis:
   • When the budget is implemented, it should be compared with actual results on an ongoing basis (monthly is recommended). If variances are found between actual and budgeted results, you will need to determine the underlying causes. If the variances are significant enough to affect year-end results, officers and council members should take action to make any necessary adjustments.

A reserve is built when the chapter operates at a profit each year. Reasons for a reserve include:

• To cushion the chapter against unexpected expenses or possible financial losses.
• To fund capital purchases or improvements for paid staff.
• To develop special programs or initiatives.
• To establish a fund that sponsor scholarships and/or awards.

Most not-for-profits and associations set a reserve goal based on their expenses. Reserve goals can be equivalent to operating expenses for three months, six months or one year, although six months is typical for most associations. Chapter officers and staff should set a goal for the reserve based on their knowledge of the organization and the projects in the future. To establish a reserve, the chapter may decide to budget for monthly transfers to the reserve.