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A budget is the financial description of an action plan outlining how you will use your money, based on knowledge and assumptions against which you will measure your actual performance. It is important to be honest about what you can manage in income and expenditure, so that you develop a realistic budget that helps you weather the unexpected throughout the year.
Key questions to consider when developing a budget:
In addition to helping you to measure your organisation's financial performance, budget management can:
Budget management involves two processes: preparation and control. These should not be seen as separate processes, as one informs the other.
Your organisation should regard budget preparation as the joint responsibility of finance and non-finance staff. Each group brings their own areas of knowledge and expertise which contribute to creating realistic and informed budgets. The trustees will need to have a say in budget planning as they have the legal responsibility for approving the annual budget.
There are three questions that underpin budgetary control:
Source: Published with permission from Cass Centre for Charity Effectiveness. This material is taken from "Tools for Success: doing the right things and doing them right", published in October 2008. Download or buy your copy from Cass Centre for Charity Effectiveness.
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