Budgeting For Non-Profit Organizations

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Budgeting for Non-Profit Organizations
Introduction
A budget is a financial management tool or a guide that helps an organization plan for its resources as well as assess the current financial health of the corporation. The same tool can be used by non-profit organizations, especially because budgets for such organizations tend to be referred to severally during the year, by parties who are transacting with the organization. Other than planning for its resources, a non-profit organization can use a budget as a management and communications tool, as will be discussed herein.
The Budget as a Planning Tool From the definition of the term “budget”, it is clear that the major purpose of a budget is to plan the resources for an organization, as well as for its future growth. A budget can be used as a planning tool because it helps organizations analyze the available resources, so that it can allocate the expenditures within reasonable amounts; based on the resources accessible to the organization. The planning of the usage of resources is critical for an organization because it helps to …show more content…

Controlling is among the functions of management. So as to exemplify this, consider a situation where the non-profit organization has budgeted for travel allowances for its employees at $500 each month, using the cheapest airlines available. So as to ensure that the employees observe the budget and avoid catching more expensive flights for work purposes, the management ensures that the employees within the finance department book the flights for those travelling. The other employees should not have access to the resources within the finance department. Such controls manifest how the budget can be used as a management tool within a non-profit

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