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Preparing, developing and managing budgets in a non profit organisation.

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.

What's involved

Key questions to consider when developing a budget:

  • what are our objectives?
  • what activities will be involved in achieving these objectives?
  • what resources will be needed to perform these activities?
  • what these resources will cost?
  • where the money will come from?

Budget management

In addition to helping you to measure your organisation's financial performance, budget management can:

  • stimulate your planning, helping you to coordinate and control the use of your resources
  • encourage realism so that plans are achievable within available resources
  • help improve the quality of plans, as staff are helped to focus on and discuss service priorities
  • improve clarity of vision and staff motivation.

Budget management involves two processes: preparation and control. These should not be seen as separate processes, as one informs the other.


Calculating Checking
Negotiating Investigating
Revising Projecting
Agreeing Action


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:

  • how are we doing?
  • how much of the budget is left?
  • what will it look like at the end of the year?

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.

Need more?

Studyzone online training courses


How-to guides

How to set up a cashflow forecast in a spreadsheet

Useful links

Help with preparing charity accounts and reports (Charity Commission).

Page last edited Sep 11, 2017

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