What Are the Best Tips for Preparing a Nonprofit Income Statement?

The non-profit organization budget is an annual financial income and expenditure plan prepared by the non-profit organization according to the business development plan and the management tasks of public affairs, and approved through prescribed procedures.

Nonprofit Organization Budget

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The non-profit organization budget is an annual financial income and expenditure plan prepared by the non-profit organization according to the business development plan and the management tasks of public affairs, and approved through prescribed procedures.

Chinese name

Nonprofit Organization Budget

Foreign name

Non profit organization budget

Make up

Income budget and expenditure budget

Types of

Modern words

The non-profit organization budget is mainly composed of income budget and expenditure budget. The content of the income budget includes: financial subsidy income, superior subsidy income, business income, operating income, income from affiliated units, other income, and special funds. Expenditure budgets include: business expenses, operating expenses, self-raised capital construction expenses, subsidized expenses for subsidiary units, and higher-level expenses. ^[1]

(1) The funds for the operation of non-profit organizations need to be allocated through the budget. The budget's sources of income and purpose of expenditure fully reflect the economic activities of non-profit organizations. ^[2]

There are many different methods of financial budgeting, and each non-profit organization can choose one or cross-select several budgeting methods according to their own circumstances. ^[2]

I. Principles of budget preparation for non-profit organizations ^[3]

The problem of budget control of non-profit organizations mainly exists in two aspects: management concepts and technical methods. ^[4]

Both budget management and performance management are tools that are led by the organization's financial strategy to manage and control the organization's financial operations. The budget management process includes budget preparation, budget control, budget adjustment, budget analysis and evaluation according to the organization's operating plan. The performance management process includes strategy development, budget formulation, and performance evaluation. Although the two systems intersect, they are different from each other and cannot be replaced. The former focuses on process control, with budget as the management object, and the latter focuses on result control, with performance as the management object. Budget performance is an important part of performance evaluation, but if the budget is used as the standard for performance evaluation, it may lead to interference in the objectivity of the budgeting unit when preparing the budget, and may affect the effect of performance management when the budget is prepared. The impact of existing budget deviations. Therefore, the two systems coexist within the same organization. How to coordinate with each other, complement each other, and achieve efficiency synergy is an important issue that needs to be explored when researching the technical methods of budget financial management for non-profit organizations. ^[1]

When setting non-profit organizations' budget indicators, they should first consider indicators that can reflect the influence factors of their strategies and objectives, and solidify and quantify the established strategies through budgets. Before preparing a budget, non-profit organizations must also consider their political and economic environment, clarify their long-term development goals, link the overall strategy of the non-profit organization with the work goals of departments and individual employees, and determine individual employee behavior standards. Provide a basis for performance evaluation. This requires decomposing the strategic goals of non-profit organizations, first to departments, then to a team, and finally to individuals, based on which to prepare a budget.

Budget-based performance evaluation is the evaluation and test of the ability of non-profit organizations to allocate resources to adapt to market changes. Non-profit organizations should regularly evaluate the performance of employees, and evaluate the performance of employees as objectively and truthfully as possible. One of the more respected methods is the feedback evaluation method. The evaluators include not only superior supervisors, colleagues, subordinates, customers, but also employees themselves. It can gather information from groups at different levels to reflect the performance of employees as truthfully and comprehensively as possible. The application of evaluation results mainly includes three aspects: linking with the employees' benefits; feedback the evaluation results to employees as an important incentive for employees to encourage advanced and motivated backward; and use the evaluation results as the main basis for unit personnel decisions. At present, non-profit organizations generally have insufficient attention to the application of performance appraisal results. Often, only appraisal is not applied. As a result, performance appraisal loses its due meaning, and performance appraisal flows into the form.

Therefore, if the budget is to be effectively implemented, a scientific and reasonable performance evaluation system must be established, and a scientific and reasonable budget indicator system must be set up to make the budget resource allocation more efficient and promote the completion of budget goals.