Accounting is many things. It’s the basis for managing an organization’s financial health. It’s the primary source of balance and reliability with financial data and reporting. It’s the foundation upon which the future of any organization is based—without accountability for the spending of the money with which we are entrusted, there is no credibility in future goals or ambitions.
All of these things are true because accounting is also a system in black and white. It needs to be, otherwise our Board of Directors (or worse, the IRS) might not look upon our records too fondly. This is why accounting professionals rely on all of the other teams to provide our black and white system with some color. Without the context of what an expense is for or why it was approved, we miss half of the story that gives a budget meaning.
Budget Management + You
A team of accountants cannot attest to why $500 more was spent on social media ads this quarter; they can only tell you that it means there is $500 less to spend for the rest of the year and how such a discrepancy may affect the bottom line. Only a member of the Marketing team can contextualize that $500—registration was low for an event and one of the organization’s hashtags started trending, so the team unanimously decided it was worth it to reallocate money from the printing line item to the social media ads line. Then, when the quarterly re-forecasting comes around, they can use this information to guide their resources moving forward and adjust the budget allocation as needed.
Or, when the Events team comes upon a HUGE discount on lanyards for their biggest event of the year, they get to find other areas that might be stretched thin to re-invest their resources. The Accounting team cannot give this kind of context; they can only make sure the numbers are recorded properly so the proverbial ship stays afloat.
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Budgeting + Associations
Unlike for-profit businesses, associations do not have the end goal of making as much money as possible. Instead, associations are tasked with balancing a fine line between spending as much money as possible and putting the longevity of the organization in jeopardy. It is everyone’s responsibility—including Finance—to manage funds with the intention of bettering the community.
This means if there is a huge surplus of money left in the budget at the end of the year, partners and board members alike will wonder why that money wasn’t used for enriching the community in some way. Associations don’t sell products and they don’t generate revenue (hence the “non-profit” label), but they do have the challenge of providing an overall experience to their members that makes their time (and money, in the case of paid memberships like one of our clients) worth the investment. Rather than minimizing the budget to maximize profit margins, it’s up to each organization staff member to maximize the budget approved by the Board of Directors—in no other industry will someone be told to use as much money as possible without going over.
Budget management might seem like something for which only accountants are responsible at face value. However, it’s important that every team member internalizes the responsibility (and liberty!) that budget management has in an organization’s health and wellbeing. Contact us today to learn how Innovatis Group can use a principled budget management philosophy to help maximize the potential of your organization.
