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But I haven’t Spent my Budget (p3)

January 26, 2017 By Jay Leave a Comment

If you haven’t read the first part or second part of this series please take a moment to read them.jar of money with the word budget on it and filled with american paper currency representing

  1. Assumption #4 – we can use last years numbers and just increase/decrease them a little, commonly called an incremental budget. The interesting thing is that many churches do this type of budget. While itmay be true that some line items will remain the same or very close, themajority will not. The leadership, as with anyone, probably aren’t fortune tellers that can look into the future of the budget line items.
    1. Zero Based Budget Line method – This is why each budget line item should be scrutinized using past figures (actuals and budgeted), market analysis, mission focus, justification, and so on. This method is called the Zero Based Budget Line method. In other words, before budgeting the monies a ministry may need, the ministry brings their justification to the board for the money they seek. Each budget line item starts at zero until there’s an appropriate justification. The time spent is good to review the effectiveness of each ministry expenditures and ensure nothing is overlooked.
  2. Assumption #5 – the actuals must match the budget. As much as we want things to match in a council meeting, the budget numbers (a forecast into the future) will hardly ever match the actual (real life transactions) exactly. Aside from some of the more stable monthly bills (ie mortgage), the amounts for the actuals and budget numbers should be close but they will hardly be the same. When this is the case the church’s leadership should be making decisions on how to best address the fluctuation. Could it be that the church underestimated (expenses) or overestimated (revenue) the budgeted line item? Was it because an accounting error which affects the actuals, or the budget was initially entered incorrectly? Did the church actually spend that much money on the budgeted line item? If so then your budget is wrong not the accounting transaction. These are all questions that should be answered and a final decision by church leadership.

Which ever assumption listed above or others not mentioned, there’s one indisputable truth with church budgets:

‘A church’s budget numbers don’t dictate that the ministry has the money to spend!’

So what tells the individual ministries what they can spend? The FASB reports as they indicate the actual money that came into the organization for the month (Statement of Financial Activities), at which time the organization can make the decision(s) of how much can be spent, if anything. Additionally, the Statement of Financial Position tells the organization how much money they have currently not spent.

One last analogy comparing budgets to audited FASB complaint reports. The FASB reports are like the accurate gauges in the car’s dashboard with true readings and the trip planning is like the budget. You plan a trip and pull up to a full service gas station for a full tank of gas. Your trip plan uses one tank of gas. Unbeknownst to you the gas station attendant only puts in a half tank of gas and you drive away not checking your accurate gas gauge. After arriving at your destination the car’s gas gauge has a quarter of a tank of gas when it should have three quarters — according to your trip’s planning. Why? There’s all kinds of things that could have happened – gas attendant short changed the gas as in this case, fuel leak, the gas cap was loose, and so on. These happenstances sound a lot like real life in an organization reacting to revenue (gas in this case) shortages to cover the budgeted item. What should you have been looking at all this time? — The accurate gas gauge before leaving the gas station. The accurate gas gauge is just like the FASB complaint reports mentioned earlier as they tell the organization where they stand financially — independent of created budget numbers. The budget is only a tool whereas the FASB reports have factual transactions to back them up.

While budget reports are great tools, organizations should understand their numerous limitations and by the same token spend more time understanding the true financial reports, mentioned earlier, so organizations can make wise decisions on how to spend their money. A system like IconCMO can budget on every fund and copy budgets from one year to the next using the budget numbers or the actual numbers. This gives the church a good budget starting pointing. Keep in mind that the FASB reports are always more important as budget reports are inconclusive.

Filed Under: Finance Tagged With: budget, church accounting software, reports

But I haven’t Spent my Budget (p2)

January 19, 2017 By Jay Leave a Comment

Here’s the second part of a three-part series. If you haven’t read the first part of this series please read it here.jar of money with the word budget on it and filled with american paper currency representing

Budgets work on assumptions, whereas financial statements work on actuals – what really happened to the money. Let’s look at some assumptions below that arise when ministries say they still have money in the budget but the organization doesn’t have any.

  1. Assumption #1 – revenue will come in as expected to fund the organization’s various ministries. What happens when the revenue doesn’t come in as expected? There is a direct correlation between revenue and expenses. In other words if you don’t have the money coming in, you can’t spend what you don’t have. 🙂
    1. The easiest way to explain this is using a personal household budget. Let say the household’s income (revenue) is $1200.00 per month and expenses are exactly $1200.00 per month. Let’s say a person doesn’t go to work one day during the month, so their income drops to $1150.00 but the expenses stay the same at $1200.00. At this point the household has to make a decision. Do they find a way to cut their expenses or pick up some extra work on the weekend to make up for the day they missed? Similarly, donations may decrease during the month, but ministries are expecting the full amount of money for their budgeted expense items. A decision must be made and some possibilities are the organization figures out how to get more donations coming in or cut a ministry’s budget.
  2. Assumption #2 – increasing revenue is easy so we can get the budget looking better. Most financial advisers say increasing revenue is the most difficult, when they discuss personal finances. I would venture to say the same is with organizations. Increasing revenue is hard as it takes time connecting with people, building trust, and so on – just like in personal finances waiting for that next job promotion or salary raise. The fastest and easiest way to stay on budget, is to cut expenses or reallocation of spending – ie. rob Peter to pay Paul.
  3. Assumption #3 – expenses increase/decrease like heat, food, and so on that wasn’t accounted for when the budget was made. In today’s society, inflation or deflation happens and there’s no escaping that. A prime example was just a few weeks ago gas dropped across the country from about $3.80/gallon to $1.90/gallon. There wasn’t one person that would’ve predicted the price deflation, let alone the hundreds of line items on a budget that the church tries to forecast each year. 🙂 Keep in mind that this example would have worked to the benefit of the church, but what would the church’s budget look like if gas sky rocketed to $6.00/gallon and stayed there for 1 – 2 years? In some cases this could mean financial ruins for a church.

Stay tuned for the last part in this series.

Read part three.

Filed Under: Finance Tagged With: budget, church accounting software, reports

But I haven’t Spent my Budget (p1)

January 12, 2017 By Jay Leave a Comment

How many times have church leadership heard a similar phrase to, ‘But I haven’t spent my budget’, when discussing ministry finances? jar of money with the word budget on it and filled with american paper currency representing

In working with churches and their accounting systems, which involves budgeting, I see a lot of focus around budgets instead of the standard financial accounting reports approved by FASB (Financial Accounting Standard Board). While budgets are good tools, nonprofits must understand they are only a tool and don’t replace common sense understanding of financial statements.

Budgets don’t tell the organizations if it’s financially healthy or if they can embark on a new project or mission. Furthermore, when your audited, budgets are not even looked at, but in many instances have the most time devoted to them by staff or volunteers. Auditors want to know the revenue that came in and what you actually spent the money on – not what was projected. 🙂 From the perspective of auditing and organizational financial health, the budget which has the most time dedicated to it, has very little if any importance. It would appear that financial statements that show what actually happened is more important, but less time is devoted in understanding them.

If I could make an analogy here about budgets and what they have become to many organizations – not just non-profits. Budgets are treated like a storage tank for each line item. For example, at the start of the fiscal year, this storage tank gets filled up with all the money for each line item so each ministry has their allotted money for the year. There’s one enormous problem with this thought process. The organization hasn’t collected the money to fill the tanks up yet. Because the organization is just starting its fiscal year and needs donations to fill the tanks, the ministries can’t assume they have the money because the budget says so. The tanks get filled as the year progresses and donations come into the organization, not on the first day of the fiscal year.

Stay tuned for the second part in this three-part series. We will discuss some budget assumptions that can really turn things upside down.

Read part two

Read part three

Filed Under: Finance Tagged With: budget, church accounting software, reports

Year End Processing : Fiscal Year Ending June 30, 2013

June 21, 2013 By Robert Leave a Comment

Church_Fiscal_Year_End_ReportsIf your fiscal year is not on a calendar year, the next most popular fiscal year is July 1st through June 30th. There are steps you need to take in the system once your new fiscal year starts.

Year End Processing Guide

The Year End Process Guide provides step by step instructions to prepare your organization for the new 2014 Fiscal Year. The guide is available under your Getting Started menu in IconCMO or you can click here for a copy. You can also watch our Year End Processing Video.

Year End Reporting

What reports should you provide to your church board with year end financial information?

To have a clear picture of the church’s finances and to make informed decisions, church leaders need reports that show them

  • what’s happening in funds

  • details about expenses and revenues for the quarter

  • a clear overall picture of the financial position of the church – the net worth of the organization, the total liabilities, total assets, etc.

Essential Reports

Below are three IconCMO reports (found in General Ledger: GL: GL-Reports) that can clarify and summarize the church’s financial position and activities.

1. Statement of Activities

This report works like a Profit and Loss (for all you for-profit accountants). It shows revenues for each revenue account, expenses for each expense account, and total net revenues after expenses are taken out. The report should be run for all funds combined to see the overall expenses and revenues of the church, and it can also be run for specific funds of special interest for the meeting (maybe to see how a new Capital Campaign fund is doing). You can set the report’s date range to cover activities for the first quarter of the year.

Click here to see Statement of Activities

2. Change in Net Assets – 2

This report gives a summary of the balances of each fund and the money coming into and out of each one. It also shows any transfers between funds – an important transaction type that won’t show up on the Statement of Activities. Again, you can set the report’s date range as needed.

Church Management Online Change in Net Assets 2

3. Statement of Financial Position (Balance Sheet)

This report shows the overall financial health of the church – total assets, total liabilities, total net assets ( = total assets – total liabilities). There’s no date range for this report, just one “as of” date because this report gives a “snapshot” of the financial position of the church as of that date. Again, the report should be run for all funds combined, and can also be run to see the financial position of any funds of particular interest.

Click here to see Statement of Financial Position

If you have any questions regarding your year end processing or reports, please contact our Customer Support Team at support@iconcmo or 218-236-1899.

Filed Under: Finance Tagged With: balance sheet, church management software, donations, fasb, fund accounting, reports, saas

Memorial Day Blessings and New Pop-Up Calendar in IconCMO

May 24, 2013 By Robert Leave a Comment

Just in case you missed the announcement last week

Another popular customer suggestion has been added to the system! We have added a pop-up calendar to most of the date fields within IconCMO, so now you can just choose a date and click on it. Of course, you still have the option to type in the dates if you wish.

pop-up_calendar_iconcmo_church_accounting

Wishing you blessings on Memorial Day

In observance of Memorial Day, the Icon Systems office will be temporarily closed on Monday, May 27th. We will resume normal business hours on Tuesday, May 28th.

Photo Credit: LenDog64 via Compfight cc
Photo Credit: LenDog64 via Compfight cc

Filed Under: Updates Tagged With: church management software, fund accounting, reports

Updates to IconCMO’s Beta Custom Reports

May 18, 2013 By Robert Leave a Comment

It’s our mission at IconCMO to give you tools that fit the specific needs of your church.

That mission becomes especially challenging when it comes to reports. Church staff often want reports with specific criteria (perhaps a report that includes everyone from a specific town with their cell phone numbers).

We try to accommodate clients as much as we can with our regular reports. Most report windows have somewhere from 10 to 30 different reports you can run, and most reports have filters that allow for you to do some customization.

But, the report lists are getting long enough that it can be hard just looking through them to find what you want, and sometimes clients still can’t get the report they need for a specific purpose.

That’s where custom reports come in.

Using Beta Custom Reports

We need to emphasize the beta here because the Custom Reports window is still in a developmental stage. But it has come a long way since its initial release late last year and is really opening up some exciting possibilities.

It works like this:

1. Go to System: System Tools: Custom Reports.

2. Choose your Data type. Custom Reports has various formats under the categories AR, AP, Contributions, GL, Groups, Membership and Web. (screenshot)

3. Choose your Sort field to define how the report will be sorted (e.g. members’ cities in a – z alphabetical order). (screenshot)

4. Under Fields select what data fields you want to include in the report. (screenshot)

5. Scrolling to the right with the top scroll bar, you can add a Filter (e.g. only including people with last names in the a – j range). (screenshot)

6. Under Search, you can further filter your report by only including lines with a certain name, word or number. For instance, if you type in a certain zip code, only members with that zip code will show up on the report. (screenshot)

The display under your selections lets you see the data you’re producing as you make those selections.

Under File in the upper left of the window, you can save the report you’ve created. Now this doesn’t actually save the report data (the member addresses or such); it saves the fields and filters you’ve chosen. That way, if you come back to print the report later (by going to File and Open), the report will reflect any updates you’ve made to the member or financial information.

Also under File are the options to save or export the report. You can export in three different formats: Excel, XML or JSON.

An Example

Let’s say you want a report that lists members that live in the church’s zip code and have a status of Visitor. You want the report to group the members by their city and include their addresses, household phone numbers, and household email addresses.

You can get your report by following these steps:

1. Data – Choose Membership:Directory.

2. Sort – Choose City and set it to A -> Z (or reverse if you prefer).

3. Fields – Check only the boxes in this screenshot.

4. Filter – Choose Status and set both boxes below it to Visitor.

5. Search – Type in the church’s zip code.

You can now go to File to print the report or export it in your desired format.

Maybe you decide that you want to limit the report to just two of the cities in the area. You can export to Excel and then delete the blocks of lines grouped together for the undesired cities.

Security

You may not have access to this new window. Talk to your database’s administrator about getting access to custom reports.

In fact, you administrators may also need to give yourselves access to the window by going to either System: Security: Membership or System: Security: Fund Accounting.

Note that no user will be able to run reports on data that they haven’t been given access to in the other windows. So for instance, if someone hasn’t been given access to view members’ contribution data in the Contributions module, that person won’t be able to run any reports on Contributions in the Custom Reports window.

Tell us what you think.

With Custom Reports, you have the freedom to build your own reports to serve your church’s specific needs.

This tool also greatly reduces the need to create spreadsheets and do all kinds of acrobatic, contortionist procedures on them.

As our custom report window advances, we’re sure it will become an increasingly useful tool and a growing part of our mission to fully serve each and every church.

Try out Custom Reports. Let us know how the reports are working for you, in what situations they are proving especially useful, and what features you would like to see added. Please leave comments on this post and also in the Support Forum (under ‘?help!’ in the upper right of your account screen).

Filed Under: Tech, Updates Tagged With: church directory, church management software, custom reports, reports

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