Actual/Budget Reforecast

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  • #2766
    Donald Butler

    Do you do reforecasts at any time during the year?  In what frequency–quarterly, semi-annually, or just once?  What tools do you utilize to create the process?  What is your internal process to validate the created result?

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    • #3262
      AvatarSteve Herman

      Do you do reforecasts at any time during the year? We do not formally reforecast or modify the budget once the board has approved it – we just explain variances to budget throughout the year.

      In what frequency–quarterly, semi-annually, or just once? I produce the budget/actual financials monthly (in Excel), but present them to the board quarterly. This process includes a forecast in which I show actual data for past months and budgeted data for future months. I am able to modify the future month budget data in this tool for anticipated items in excess or less than budget (material items only).

      What tools do you utilize to create the process? Excel only


    • #3225
      AvatarFrances Ferguson

      We are working with a number of groups developing strategies to double … what thoughts do you have particularly about how to handle development / capital cash forecasting?  Do you set up “models” for various product types?  how do you handle forecasting your own capital vs other people’s money.


    • #3015
      AvatarPaul Sussman

      Always a trade-off between the work involved and the value of the forecast.  I have come to prefer quarterly forecasts, which means in practice a late April forecast based on 3/31 financials, a late July forecast based on mid-year financials, and a late Oct forecast based on 9/30 financials.  Ideally the last one is used for your variance comparison with the the materials for the following year’s budget conversation.

      The key is to pick which items to invest your time.  The Q1 forecast really focuses just on material things you already know have changed significantly; for the rest there’s no point in trending out only a quarter, I usually just stay with the budget  You know more with each successive forecast, both in terms of whether YTD actuals tell you anything, and which conditions have changed.  But still sticking to material items.  For example I never invested time in small items even if the expected variance was a large % because the $ just don’t matter.

      You’re the best judge about which items are most important to your org, but generally I’ve found it worthwhile to spend time on these (and maybe set up separate spreadsheet for tracking):

      – Personnel, where you’d track effects of turnover/vacancy/bumps/new positions, etc. both to projec the current year and to set up a baseline for what you’re carrying forward were you to run at full capacity.  In other words, you can’t use the current year projection for budgeting the following year (and projecting multiple years) since it has too many one-off distortions.  So I’ve set up a column to project current year and a column to track the new baseline going forward, with the rows being either individual staff or categories depending on how big your staff is.

      –  Fundraising, where you might be reliant on fundraising staff who are not necessarily good at projecting.  Early projections aren’t usually worth doing unless you’ve had something like a big event that was off budget.  But as the year goes by you may have to partner with fundraising staff to set up a good way of projecting.

      – Earned Income, depending on your organization.  For many, developer fees would be the most material and challenging to project, and the fundraising comments above go for this area too.

      In terms of process, I’d share with exec first, identifying contingencies and areas of uncertainty, (and resisting changes to change numbers for the wrong reasons….) and encourage sharing with board and whatever staff forums are appropriate.

      Hope this is helpful, happy to chat more and wondering what others do.

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