Developing An Operating Budget For Extended Family Inc

Developing an Operating Budget for Extended Family, Inc.

For this assignment, you will complete the activities from the following case: Mammano, K. A., & Tyson, T. N. (2008). Developing an operating budget for extended family, inc.: A not-for-profit human service organization. Issues in Accounting Education, 23(1).

As part of this case study analysis, you will develop an operating budget. Refer to the Case Requirements located on pages 136–137 of the case study to guide your analysis. Follow Case Requirements steps 1–3 to complete a current and proposed operating budget. You will calculate revenue for each program, allocate specific expenses, and summarize the results in a 2- to 3-page report. Use Case Requirements steps 4–7 to guide the content of your report.

Submit your report in Word format. All written assignments and responses should follow APA rules for attributing sources.

Paper For Above instruction

Developing a comprehensive operating budget is a fundamental process for not-for-profit organizations, as it provides a financial roadmap that guides operational decision-making, accountability, and resource allocation. The case study of Extended Family, Inc., as outlined by Mammano and Tyson (2008), offers valuable insights into the strategic approach necessary for constructing effective budget plans tailored to human service organizations. This paper details the methodology for developing both current and proposed operating budgets for Extended Family, Inc., following the specific steps outlined in the case study, including revenue projection, expense allocation, and financial summarization, culminating in a well-structured analytical report.

The first step in creating an operating budget involves understanding the organization's revenue streams. For Extended Family, Inc., revenues are primarily derived from government grants, private contributions, service fees, and community fundraising efforts. Accurate revenue estimation requires analyzing historical financial data, such as prior year reports, and adjusting for anticipated changes in funding levels or service demands. For instance, if the organization expects an increase in service participation, revenue projections should logically reflect this growth, which will influence overall budget planning.

The second step emphasizes identifying and allocating expenses across various programs and operational activities. Expenses typically include staffing costs such as salaries and wages, benefits, program supplies, administrative overhead, facilities, and transportation. Precise allocation necessitates distinguishing between direct costs attributable to specific programs and indirect costs shared across multiple functions. Mammano and Tyson (2008) recommend employing cost drivers and activity-based costing techniques to ensure that expenses are allocated fairly and transparently, which aligns with best practices in non-profit financial management.

The third step involves synthesizing the revenue and expense data to produce a current operating budget, depicting the organization’s existing financial position. This budget serves as a baseline for future planning, highlighting areas of surplus or deficit. Developing a proposed budget follows, incorporating strategic modifications based on organizational goals, funding opportunities, and anticipated program expansions or reductions. The proposed budget is instrumental for internal decision-making and stakeholder discussions, illustrating how resource reallocation can support mission-driven activities more effectively.

Following the initial budget creation, the next phase involves detailed financial analysis and reporting. A comprehensive report is prepared, summarizing the current and proposed budgets in clear, concise language suitable for stakeholders, including board members, funding agencies, and management staff. It should include an overview of revenue assumptions, expense allocations, and the overall financial impact of proposed changes. Transparency in reporting underscores accountability and ensures all stakeholders understand the financial implications of organizational decisions.

In constructing these budgets, the use of supporting financial tools such as spreadsheets, charted data, and projection models enhances accuracy and clarity. Employing scenario analysis can also help project the financial effects of different strategic options, such as staffing adjustments or program expansions. These tools enable the organization to forecast potential outcomes and make informed decisions aligned with its mission and financial capacity.

In conclusion, developing an operational budget for a not-for-profit organization like Extended Family, Inc., based on Mammano and Tyson’s (2008) case study methodology, necessitates a thorough understanding of revenue sources, meticulous expense allocation, and strategic financial planning. By following the prescribed steps, nonprofit organizations can craft effective budgets that ensure sustainable operations and support organizational goals. Transparent reporting and ongoing review of budgets further enhance organizational accountability and adaptability, which are vital for long-term success in the human service sector.

References

• Mammano, K. A., & Tyson, T. N. (2008). Developing an operating budget for extended family, inc.: A not-for-profit human service organization. Issues in Accounting Education, 23(1), 136-137.
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