Managing A Nonprofit Organization by Thomas Wolf

Author:Thomas Wolf
Language: eng
Format: epub
Publisher: Free Press

Figure 6.4. Compton Museum Project Budgeting

Once restricted funds and unrestricted funds have been separated, the process of allocating income is as follows (see figure 6.5 ):

1. Put all restricted income into the proper program activity or category. That is, any income clearly attributable to a specific project should be put into that category and marked. Later on, if the budgeting team begins cutting back programs or reallocating income, it is important to remember that these funds cannot be transferred from one program category to another.

2. Cover all of the most basic administrative costs with unrestricted income.

3. Allocate the balance of unrestricted income across all the programs and activities listed. You may want to allocate it on a percentage basis as was discussed in connection with expenses in the section on project budgeting. Or you may want to use a simpler method and divide the money up on a roughly equal basis among programs. The first method, although more work, does help you assess the relative cost-effectiveness of programs.

4. Understate all income estimates by at least 5 percent. Just as you left some margin for error on expenses, so must you be equally conservative on income forecasting.

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