Wise Giving Wednesday: Charity Budgeting

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calendar icon Jul 17, 2020

A quote attributed to the late, great American actor, Spencer Tracy, provides a reminder of the importance of managing finances: “There were times my pants were so thin I could sit on a dime and tell you if it was heads or tails.”  During the last quarter of the year, many charities are seeking to finalize their budgets for next year.

In terms of charity financial reporting, the public’s attention is usually focused on either the annual financial form filed with Internal Revenue Service (the IRS Form 990) and/or the charity’s audited financial statements which is prepared by an outside CPA firm. These items are looking backwards in time by showing users how the charity spent its funds in the past fiscal year. They are historical documents, not future forecasts.

A charity’s budget, however, shows how the charity plans to spend its funds in the current or coming year. Depending on the circumstances, it might reference new services, programs or priorities that won’t be found elsewhere. When properly prepared and produced, a budget can provide a valuable planning tool that is essential to good financial stewardship.

One of the BBB Standards for Charity Accountability (Standard 14) calls for charities to have a board-approved budget that includes certain information.  It should identify the projected total amounts to be spent on program activities, fund raising and administration. Such an expense breakdown will help the board gain a better understanding of how the charity’s resources will be used.  While a table of budgeted expenses in natural categories such as salaries, postage, travel, etc. provides essential detail, the recommended allocation totals helps complete the financial picture.

In addition, the budget should be periodically reviewed and updated to reflect any changes in circumstances that has come to the charity’s attention. Good budgeting practices help a charity track its finances and potentially avoid financial shortfalls that could cause it to worry where the next dime will come from.


Video of the Week

As part of our Building Trust Video Series, we are pleased to provide a video featuring Rachel Laser, President and CEO of Americans United for Separation of Church and State (a BBB Accredited Charity), an organization that works to preserve the separation of church and state through litigation, advocacy and education efforts.  This includes initiating and supporting lawsuits, providing legal counsel, as well as producing a monthly magazine, issue papers and legislative alerts.


Recent Reports

We are always working with charities to publish or update reports for donors. Visit Give.org or local BBBs to check out any charity before giving. Our recently evaluated charities include:

Finally, remember to let us know by going to give.org/charity-inquiry if you are interested in seeing a report on a charity not on the list and we will do our best to produce one.

H. Art Taylor, President & CEO  
BBB Wise Giving Alliance


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