Budget Approvals with the Board

One of the main responsibilities for nonprofit boards is to oversee and approve the budget. However, this annual approval is often just a cursory examination where board members peruse a budget that they are unsure is realistic or appropriate to the planned activities. In the backs of their minds, they may not be understanding the budget and figure it’s okay if it’s similar to the previous year’s. So they vote to approve the budget.

The members of the board can usually provide a wide perspective for budget discussions and offer valuable input. Here are some questions the board should be asking at the annual budget meeting:

What are the financial objectives for next year?
Find out if the organization needs to even out cash flow over the year or build reserves. Each year is different and further you can plan ahead budget-wise, the better off the organization will be.

Are there new projects or expansions for the next year?
If there are plans for new programs, what are the associated cost estimates? Determine the financial impact across the organization for any changes.

Are there any upcoming large expenses to budget for?
Should the organization be setting aside funds for computer upgrades or building additions over the next couple years? Try to budget a couple years in advance for large expenses.
Is our dollar allocation generally in line with our priorities?

Make sure the organization is still foremost serving its mission instead of being bogged down with other money consuming activities.