Avoid Programmed-to-Fail Budgets

08/06/2019

Avoid Programmed-to-Fail Budgets

Let children walk with Nature, let them see the beautiful blendings and communions of death and life, their joyous inseparable unity, as taught in woods and meadows, plains and mountains and streams of our blessed star, and they will learn that death is stingless indeed, and as beautiful as life.
John Muir

In the book, Managing Money in Early Childhood Organizations, Roger Neugebauer writes:
“A director draws up a budget for which projected income equals projected expenses. However, the budget will inevitably fail because faulty assumptions were made in projecting both income and expenses.

The most common mistake here is to project income by multiplying weekly fees by the number of spaces in the center by the number of weeks the program is open. This does project the center’s maximum potential income if every space is filled for every week, but this will never happen!...

Centers often under-project expenses by failing to include certain line items altogether. Most frequently neglected are expenses for staff training, leave time, salary increases, fuel cost increases, and major appliance repair…”

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