Presenting a Proposed Annual Budget to the Board of Directors
By Dr. Mark Smutny, President of Civic Reinventions, Inc.
Introduction
A well-prepared budget presentation is essential for nonprofit organizations to ensure financial transparency, strategic alignment, and board engagement. The finance committee chair, who also serves as the board treasurer, plays a crucial role in guiding the board through the budget draft, addressing key variances, and facilitating discussion before the final vote.
Step 1: Walking Through the Income Budget
The finance chair begins by presenting the income budget, comparing the proposed income figures with the previous year’s actual income. This comparison highlights trends, growth opportunities, and areas of concern.
- Identify Variances: Explain any significant differences between projected and actual income from the previous year.
- Discuss Revenue Streams: Break down income sources such as grants, donations, membership fees, and earned revenue.
- Entertain Questions: Invite board members to ask clarifying questions about revenue assumptions, donor commitments, and fundraising strategies.
Step 2: Walking Through the Expense Budget
Next, the finance chair presents the expense budget, comparing proposed expenditures with the previous year’s budget.
- Highlight Key Changes: Note any increases or reductions in spending, explaining the rationale behind adjustments.
- Discuss Programmatic and Operational Costs: Ensure alignment between expenses and the nonprofit’s mission.
- Entertain Questions: Allow board members to inquire about cost allocations, efficiency measures, and financial sustainability.
Step 3: Facilitating the Approval Process
Once all questions have been addressed with clarity, the finance chair moves to approve the annual budget.
- The board chair asks for a second to the motion.
- The board chair invites final questions from board members.
- If no further discussion arises, the chair calls for a vote.
- A majority vote determines approval, and the budget is officially adopted.
Conclusion
A structured and transparent budget presentation fosters board confidence and ensures financial accountability. By walking through income and expenses systematically, addressing variances, and facilitating discussion, nonprofit leaders can secure board approval with clarity and consensus.
Contact
For assistance preparing your annual budget, facilitating your strategic planning process or helping your nonprofit navigate unproductive conflict, email me at mark.smutny@civicreinventions.com or call 626-676-0287.
