Does this sound familiar? Your fiscal year end is quickly approaching so you and your team members (could be comprised of development staff, finance staff and/or program staff) work together to prepare your budget in time to be approved by the board. Is there a strategic approach that you use or is this done through a piecemeal process? Does this require a number of reviews and approvals before deemed final? Typically, you prepare your budget based on operating needs and the projected income you intend to receive and your organizational/programmatic expenses.
If you receive federal funding, this post will be of particular interest to you as the OMB’s Uniform Grant Guidance is more focused on performance-based budgeting vs. the typical budgeting based on operating needs. Wikipedia tells me that, “Performance-based budgeting is the practice of developing budgets based on the relationship between program funding levels and expected results from that program. The performance-based budgeting process is a tool that program administrators can use to manage more cost-efficient and effective budgeting outlays.”
Well, what does that mean? So, instead of creating a budget based on revenue and expenses, the budget is based on intended program outcomes. For example, if you plan on providing an after-school program to at-risk youth, the budget should be tailored to meet the intended outcomes that support the programmatic goals (i.e. improved assessment scores, enhanced self-esteem). All of the budget items should be evaluation focused rather than creating a budget from a purely operational standpoint.
OMB likes this approach because the budget becomes more transparent and can account for how funds are being spent and tied directly to outcomes. However, people need to be trained as to how to appropriately create such budgets, and more importantly, on outcomes measurement in general.
This is the trend, so take the time to learn more about the process, as you may be requested to create such a budget on an upcoming application. This presentation helps to provide some additional guidance to those seeking further clarification.
