What is in a budget?
Budgets are practical statements because the budget establishes and directs what activities and actions can happen within the organisation. It is also an estimate of what the organisation needs, that is, it addresses questions such as: how much will salaries be for the year, what expenses staff and volunteers might need to claim, what equipment is needed for this year. It is a way of hopefully avoiding nasty surprises later in the year. Clearly, before a budget can be set, people need to discuss and agree what the expenditure is likely to be in relation to the aims of the organisation for the year ahead. An organisation’s financial staff will usually be involved in the finer details of the financial information but ‘ownership’ of the budget should be perceived as wider and involving all levels of the organisation.
Budgets are usually internal documents although, for example, if you were writing a bid for funding to an external organisation, you would usually include a budget as an estimate of proposed costs. The organisation puts its financial information into the public domain through its annual report and statements for the Charity Commission if it is a registered charity.
In terms of content, budgets set out financial information about:
income: the resources available to the organisation, different departments and projects
expenditure: how these resources will be used.