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10 simple, practical tips for community and tenant participation workers on preparing and managing a budget (27 Aug 08)
Here are the absolute essentials about the absolute essential - money
Good intentions are all very well, but you won’t achieve anything without money. And the better you manage money, the more you will achieve. In fact it often assures further funding.
But if you don’t manage it well anything can happen. In one case a charity whose main purpose was community development nearly became insolvent – without even knowing it.
Yet curiously, despite such horror stories, managing budgets and finance is a vastly underestimated, far too often ignored subject.
At first sight community work and managing your finances don’t make good bedfellows, which is a shame as it doesn’t have to be and shouldn’t be like this. It’s incredibly important. And there is no special exception for you just because you work in the community.
It’s quite understandable, but a great shame, that people who work with residents often feel like running a mile when the word “finances” comes up. Perhaps it’s the technical jargon, the extra responsibility, the problems that can arise if things go wrong or simply the lack of support you get in managing your budget.
Or perhaps it’s because working with residents is about being non prescriptive and letting them determine what happens as things develop. That’s all very well, but a million miles from good financial management, which is about planning, a clear unwavering course of action, and above all tight controls.
Here are 10 rules to help you manage your budget so you don’t get into hot water.
1. Before you start preparing a budget it is always a good idea to describe in simple language what the money in a budget is there to achieve. If there are non financial performance targets you need to achieve, even better. Being clear on your objectives will help focus on where money is needed most, and even better, make the case to protect or increase funding.
2. Remember the impact of price increases when setting your budget. When bidding for funding it is essential to remember that different types of costs increase at different rates over time.
3. Before you start working with financial matters, try and leave some of the baggage behind. The biggest obstacle to managing money is personal beliefs. These can include that money is boring, a little unpleasant to talk about, too complicated, and that you are no good with money. None of these are true unless you believe them to be so.
4. Bear in mind that a budget is simply a projection of money coming in, and money going out over a period of time. To be able to project money coming in and going out, you need to be aware of the commitments you are making. This is because even though you may not have yet paid to meet them, you will have to one day.
5. The main reason budgets go wrong is not being aware of financial commitments that have been made. When commitments exceed the cash you have in the budget, then your budget is in trouble. This is one of the biggest causes of personal debt problems – commitments (for example credit card repayments) exceeding income. To keep on top of budgets you must manage those financial commitments.
6. All financial matters are based on two things
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