How to Create and Implement a Budget During Difficult Financial Times
Mason Wilson is an associate editor of The Affiliate and is an associate in the Memphis, Tennessee, office of Baker, Donelson, Bearman, Caldwell & Berkowitz, PC. He also serves as the Treasurer of the Tennessee Bar Association Young Lawyers Division.
As financial markets worldwide continue their downward trend and purse strings across the nation tighten, sound budgeting becomes more and more important to the health and success of our bar associations and legal organizations. This article offers some practical tips for creating and implementing a budget that will enable your organization to reach its financial and strategic goals in an adverse financial climate.
The first step is to analyze your present and future financial posture. If you don’t already have one, create a balance sheet listing all present and anticipated sources of income along with expenses and expenditures. It is often helpful to perform a historical analysis to identify major recurring sources of income and expenditures and to ensure that those historical trends are included in your future projections. For example, on the income side, your organization may have an annual fundraiser that produces a consistent revenue stream year after year, and, on the expenditure side, you may sponsor a statewide or national program that consumes a significant and consistent amount of resources annually. Identifying these historical revenue and expenditure streams will not only help you create your budget, but it will also help you prioritize your allocations. Finally, don’t be afraid to seek outside help in reviewing your books and assessing your organization’s financial position. An audit can be a useful and apolitical tool for examining your strengths and weaknesses.
What is the purpose of your organization? What services do your members expect? To which programs and initiatives has your organization made an ongoing commitment? If your organization is a division or section of a larger bar association, which provides your funding, what does the “big bar” require of your organization? Asking yourself these and similar questions will help you define and prioritize the programs, activities, and services that you will be required to fund in the next budget cycle. Once you’ve done that, you’ll have the knowledge and freedom to set budgetary goals for not only your recurring and required programs, but also for new and aspirational goals and programs that often accompany new organizational administrations and leadership.
The next step is essentially an extension of prioritizing your expenditures. Although no one wants to discontinue programs or services, which oftentimes are viewed as essential by at least one constituency, a gloomy financial climate often necessitates a hard look at cost-cutting or other means of saving money. Cutting back, however, can be an opportunity for creativity. Is your organization producing a monthly or quarterly publication and providing every member with a paper copy of each issue? How about distributing your publication electronically? Not only will you cut costs, you can tout your organization as being environmentally friendly! Is your board of directors top-heavy with fully funded positions? How about reducing the number of board members who receive full funding and increasing the number of board or committee members who serve as volunteers or receive partial funding. Possibilities for trimming costs abound—just put your thinking caps on.
Project a Balanced or Positive Bottom Line
Notwithstanding our current Congress, with its “bailouts” and “rescues,” no one likes a deficit. Your goal should be to project a positive bottom line or, at the very least, a balanced budget. That is, your organization should endeavor to bring in more money than it spends. Surplus funds can always be used for new programs or, even better, can be saved for the next rainy day. Your organization’s benefactors and members will appreciate your good stewardship. And don’t forget to build in a cushion for the unexpected—today’s economy is like Forrest Gump’s box of chocolates: “You never know what you’re gonna get.”
This one is simple—act. Put the budget into practice and educate your members and constituents on your organization’s financial goals and expectations. Share the budget and keep tabs. If necessary, update your reimbursement policies and other financial record-keeping forms and procedures. Of course, as Robert Burns presciently wrote when he was preparing his personal budget, “The best-laid plans of mice and men often go awry.” Hopefully, you will have as many unexpected infusions of cash as unanticipated expenditures!
Follow Up, Monitor, and Revise as Needed