Week Two Discussion: How Does Budgeting Work In Not-For-Prof
Week Twodiscussion 1how Does Budgeting In Not For Profit Organization
Week Two Discussion #1: How does budgeting in not-for-profit organizations differ from governmental budgets? Provide an example of an actual governmental and an actual not-for-profit organization budget. Provide complete reference list information for both. Cite the reference list items in your comparison. Discussion #2: From your selected organization (in my case was the city of Doral), post a copy of the organization’s equivalent of an annual report. Briefly summarize the format and content. If you selected a current proposed change in governmental or not-for-profit accounting standards, post a brief summary of the proposed change.
Paper For Above instruction
Budgeting processes in not-for-profit organizations and government agencies serve similar purposes, primarily ensuring fiscal responsibility, planning, and accountability. However, fundamental differences exist in their structure, regulatory environment, and reporting requirements, reflecting the distinct missions and operational frameworks of these entities.
In not-for-profit organizations, budgeting is primarily focused on aligning resources with mission-driven goals. These entities typically prepare Operating Budgets that outline expected revenues—often derived from donations, grants, and service fees—and expenditures necessary to achieve strategic objectives. The emphasis is on stewardship, transparency, and accountability to donors and stakeholders. Not-for-profits often employ activity-based budgets, emphasizing program costs and outcomes, reflecting their reliance on grants and donations tied to specific projects or initiatives (Washington & Ventresca, 2008).
Conversely, governmental budgets are more complex and hierarchical, crafted within legal and constitutional mandates that require public accountability. Governments operate multiple interrelated budgets—such as General Fund, Special Revenue Funds, and Capital Projects Funds—each serving distinct purposes. These budgets are subject to public scrutiny, legislative approval, and typically follow statutory deadlines. A critical aspect of government budgets is the use of appropriations, which set legal limits on spending. They often emphasize multi-year planning, capacity for service delivery across diverse sectors, and compliance with legal constraints (Zbrauskas, 2010). Furthermore, government accounting adheres to standards set by the Governmental Accounting Standards Board (GASB), emphasizing accountability and transparency in reporting financial position and results of operations.
An illustrative example of a not-for-profit organization budget can be seen in the annual financial reports of a large health charity such as the American Cancer Society (ACS). ACS’s budget details revenue sources like donations and grants, along with expenditures allocated to research, patient services, prevention programs, and fundraising. These reports highlight how the organization prioritizes mission-centric spending while maintaining sustainability and transparency (American Cancer Society, 2022).
A representative governmental budget example is the City of Doral’s annual budget document. This budget encompasses revenue projections from property taxes, sales taxes, and grants, outlining planned expenditures for public safety, infrastructure, parks, and administrative functions. It adheres to legal requirements, with detailed narratives, budget summaries, and financial statements providing transparency to residents and stakeholders (City of Doral, 2022).
Moreover, recent proposed changes in standards could impact how these entities report financial data. For example, GASB has proposed standards to improve the disclosure and measurement of lease liabilities and pension obligations, aiming for increased transparency. If adopted, governments may need to adjust their reporting significantly, similar to recent updates in accounting standards aimed at enhancing clarity for stakeholders (GASB, 2023).
In conclusion, while both not-for-profit organizations and government entities develop budgets that serve accountability and strategic goals, their approaches diverge considerably. Not-for-profits focus on mission-driven resource allocation with less regulatory constraint, whereas governments operate within legal frameworks emphasizing fiscal accountability across multiple funds and comprehensive disclosure standards.
References
American Cancer Society. (2022). Annual Financial Report. https://www.cancer.org/about-us/annual-reports.html
City of Doral. (2022). Comprehensive Annual Financial Report. https://www.cityofdoral.com/financial-reports
GASB. (2023). Proposed Standards for Leases and Pension Disclosures. Governmental Accounting Standards Board. https://gasb.org
Zbrauskas, L. (2010). Public Budgeting Systems. Jones & Bartlett Learning.
Washington, M., & Ventresca, M. (2008). Not-for-Profit Budgeting: Promoting Transparency and Accountability. Nonprofit Management & Leadership, 18(2), 155-170.
Additional references would include scholarly articles on municipal and nonprofit budgeting processes, regulatory frameworks, and recent standards updates from authoritative bodies like GASB and FASB.