Evaluation of the Salvation Army’s Budgeting and Cumulative Report

The Salvation Army International is a non-profit organization that conducts charity work in operational countries while preaching the gospel of Jesus Christ. The organization has been existent since the late 19th century and continues to live its mission and vision statements to date. The Salvation Army has diverse programs it funds across countries of operation, such as disaster response and providence of relief aid, healthcare services, education, emergency shelters for the abused and homeless, education, and poverty alleviation in communities. Budget allocations for the Salvation Army centralize funds to the above core functionalities, which summate the primary reason for the organization’s existence. The Salvation Army plans its budget annually and presents it to relevant departments for vetting and approval, before resources are distributed by ordained officials to critical areas. Over the years, the Salvation Army’s budget allocation has been guided by federal decisions, such as the FY 2012 unusual government resource distribution, international policies on donor funding in foreign countries, and intergovernmental agencies. The extensive analysis of the Salvation Army’s budgetary allocation process and influencing government processes and agencies helps provide a basis for recommending future techniques to distribute resources better within the organization. 

Budget Overview

The Salvation Army International has budget planning departments in all its countries of operation, which receive support from the United States headquarters when necessary only. Most appointed commissioners appoint financial experts to help with functions, such as planning budgets, recording revenue incomes, and allocating resources efficiently. The Salvation Army mandates all territories to request church leaders to provide their budgetary needs in the previous year before implementation. For instance, church managements within the Western African territory must submit their budget plans for the fiscal year 2022 in 2021, for approval and advanced request from the United States HQ for support if necessary. However, grass root Salvation Army leaders can plan their budget internally and allocate funds as they deem, if they will not require extra help from territory management. 

The Salvation Army is categorized by the federal government as an agent offering social work, employment, education, and training. The organization’s federal budgetary allocation would, therefore, help to compensate vocational, secondary, and elementary education offered to needy beneficiaries in the organization’s host countries ( Budget Functional Classification, 2016) . Additionally, the federal government would set aside funds to pay for the Salvation Army’s programs, such as feeding and nutrition of the economically disadvantaged populations under the organization’s care. Moreover, the federal government would include budgetary allocation for the Salvation Army’s employment and job training initiatives in host countries and within the United States. Finally, the federal government’s budget allocation would factor in the Salvation Army’s social work aspect, which comprises activities, such as poverty alleviation efforts for needy families, construction of unpaid community rehabilitation centers, caring for neglected older adults, and charity healthcare services. 

The Salvation Army International adheres to federal budget authority and outlay planning and implementation techniques, as they rarely fail. For instance, in the financial year 2019, the proposed budget authority for the organization was $1 billion. The proposed amount was to be spent on critical functionalities, such as social work, education and training, healthcare, and emergency response. Other discretionary areas where the proposed budget authority was to cater for included women empowerment, combating human trafficking and modern day slavery, child protection, and more engagement in policy formulation in host countries. However, the Salvation Army had not anticipated the rise of critical issues, such as Corona Virus 2019 that affected followers in host countries and mandated injection of more funds to alleviate people’s suffering exacerbated by the mentioned pandemic. Economic downturns resulting from business closures from COVID-19 effects caused many followers to lose sources of income and turn to the organization for help, primarily during lockdown periods. In the end, the Salvation Army’s actual budget authority was $1.8 billion but actual overlay catapulted to $2.4 billion. In 2020, the Salvation Army’s proposed budget authority was $2 billion and budget overlay $1.8 billion. However, the organization’s actual spending amounted to $3 billion. Therefore, the Salvation Army’s budgetary allocation and impactin processes are as explained. 

Budgetary Assessment

The Salvation Army’s budgetary allocation is partly impacted by the federal government, as highlighted above. For instance, the United States federal government deems the organization’s services as discretionary, and will often allocate funds to aid its operation in host countries in grant or donor form. Political processes that influence the overall Salvation Army’s budget include Congress approval of suggested presidential budgets and proposed and implemented budget cuts. For instance, in the financial year 2012 (FY 2012), President Obama submitted a budget proposal for mandatory and discretionary areas of the United States’ economy. The president faced severe opposition from Republican political leaders, who wanted the budget reduced by $61 billion. If the Republicans had been allowed to disapprove President Obama’s FY 2012 budget, they would have implemented budget cuts that targeted food safety funding, child nutrition, and college funding. The Salvation Army would be impacted by Republican’s decision because feeding the needy is part of its core accountability initiatives in host countries. Therefore, if Congress had approved the proposed Republican budget that excluded aid for feeding programs, the Salvation Army would not have adequate funding to help the underprivileged in host nations, which is part of its accountability areas as stated in its mission and vision statements. 

However, in realizing the impact of Republicans’ proposed budget, President Obama revised his FY 2012 and re-submitted it to Congress for approval again. In the new budget, President Obama had indicated he would implement budget cuts, but aim the healthcare sector instead. Over the next 12 years, Medicare and Medicaid would receive less federal funding of up to $12 trillion, but the amount would be spread out equally within the noted period ( Amadeo & Potters, 2021) . In the end Congress approved President Obama’s budget and rejected the Republicans’ idea to cut funding for feeding programs, which would impact the Salvation Army’s operation negatively. In 2012, President Obama spent $1.285 trillion on discretionary services, which also comprised fund allocation for Salvation Army’s operations. Two political decisions, budget cuts and Congress approval of proposed presidential budget, would have impacted the Salvation Army’s operation if the Republicans had won. To date, the Salvation Army partially relies on government grants to perform its core activities as listed. The organization could be impacted by two federal government’s political decisions, as highlighted by the FY 2012 budget planning process. 

Program administrators must ensure they are accountable to ensure the Salvation Army achieves its objectives. Therefore, after reviewing the FY 2012 budget process, the organization’s administration should have programs set to offset budgetary deficits that may accrue if federal government budgets are impacted by political decisions. For instance, the Salvation Army’s financial planning administrators must have a contingency plan if the federal government does not allocate resources for the organization because of political interferences. The Salvation Army’s program administrators must ensure that in the event the federal government is unable to provide grants, the organization will still perform its mandates by using contingency funds. 

Analysis of Budget Planning and Actual Expenditures

The Salvation Army’s budgetary decisions are impacted by several intergovernmental agencies. Politically, the Salvation Army plans its annual budget based on local authorities’ input and decisions. For instance, the Salvation Army must seek for permission from political leaders in a host country to implement programs to help needy community members ( Rodríguez Bolívar et al., 2014) . The Salvation Army cannot build a school in a host country without seeking political leaders’ approval. Therefore, budget allocation for constructing a new educational center in a host country would depend on political leaders’ responses to the Salvation Army’s query on if it can build a school to help the community. Additionally, intergovernmental agency that would impact the Salvation Army’s budget allocation is the finance department.

If the Salvation Army submits its grant request to fund a project that would help the needy in the community, the finance department may disapprove or approve its request depending on the current economic cycle. For instance, if the country has experienced an economic downturn for the past one year and revenue and tax incomes are less than usual, the Salvation Army’s request for a government grant may be denied ( Ritonga, Clark, & Wickremasinghe, 2019) . The federal finance department may allocate most of its budget on mandatory aspects of the economy, and being that the Salvation Army’s activities mandate it be placed under discretionary services, it may be denied funding as it is not priority. The Salvation Army may have to alter its budget to reflect the finance intergovernmental agency’s decision not to fund a potential venture because of reduced tax or revenue income from an economic downturn. For instance, the Salvation Army may cut the expense associated with the project from its budget, if the source of funding was federal government grant. 

Lastly, the federal government’s legal intergovernmental agency can influence the Salvation Army’s budget allocation plan. Legal government decisions impact non-profit organizations’ activities and project implementations through decisions on if they are allowed or not ( Rodríguez Bolívar et al., 2014) . For instance, the Salvation Army may be allowed access in a non-Christian country, whose laws are regulated by a separate religion apart from Christianity. The legal rules of the country may mandate that the Salvation Army can only provide charitable aid to its needy communities but never advance the Christian gospel. If the Salvation Army had created a budget plan that includes constructing a faith-based school in the area and the government rejects its proposal because it is illegal, then the amount allocated for the learning institution must be channeled elsewhere. Funds that had been allocated to the school may be used to construct a clinic in the region or perhaps be saved for funding another venture in the future. Therefore, the Salvation Army’s budget planning may be affected by legal, economic, and political intergovernmental agencies, as explained. 

Implication of Foreign Policy

The Salvation Army’s current year’s budget was impacted by foreign policies concerning social work and helping the needy in host country. For instance, in most host nation, it is illegal for a foreign case worker to assess the needs of the community and then present the outcome to a charitable organization from abroad to seek for funding ( The Library of Congress, n.d.) . The Salvation Army did not allocate any funds for needy cases assessment for most host countries because foreign policies do not allow the same. Nations that wanted the Salvation Army to help alleviate poverty in their communities planned for social worker assessment salaries and compensated the involved employees. 

Further, foreign policies mandate that donor organizations from other countries should only align their objectives with already set goals by host countries. Therefore, the Salvation Army cannot budget for, say, distribution of Covid-19 vaccines for free in needy communities in host countries if the nation does not approve of the action, even if it is beneficial. Furthermore, international policies mandate that donor countries from other nations must measure and share the outcomes of their projects in foreign lands ( Estes, n.d.) . Therefore, before the Salvation Army budgets for a new project in any host country, it must first prove the benefits of previous ventures. For instance, before allocating budgets for new schools in host countries in the current year, the Salvation Army had to adhere to foreign policies and conduct audits to prove the effectiveness of existing projects. After submitting the audit results to relevant host nations’ authorities, the Salvation Army was allowed to proceed with implementing its new projects, which reflected on the 2021 budget. Therefore, foreign policies impact the Salvation Army’s budget allocation, as indicated.

Budget Request and Recommendations

The Salvation Army’s budget planning process could be better if the organization had prior information about proposed presidential budgets and the anticipated political response. For instance, if President Obama’s FY 2012 budget had been disapproved by Congress and the Republican one taken instead, then the Salvation Army’s budget would need to be cut to accommodate the change. However, if the organization had inside information prior to President Obama submitting the FY 2012 budget to Congress and anticipated Republican reaction before the information was publicized, then it would adjust its budget for the year appropriately. Finally, the Salvation Army could better plan its budget if it had economic performance prediction softwares and experts. For instance, most host countries’ economies have been impacted negatively by the Corona Virus 2019 pandemic, but are recovering after businesses adjusted to the shock associated with the disease’s effects. The Salvation Army should have technology to predict the economic performance for 2021 and 2022, and then use the information to budget for projects appropriately. Therefore, the Salvation Army should have advocates in host governments to influence grant allocation and tools to predict economic performances of host nations for better budget planning. 

References

Amadeo, K., & Potters, C. (2021, March 1).  How the 2012 budget created the 2011 debt ceiling crisis . The Balance.  https://www.thebalance.com/fy-2012-u-s-federal-budget-and-spending-3306318

Budget Functional Classification . (2016). GAO-05-734SP Budget Glossary.  https://budgetcounsel.files.wordpress.com/2016/10/gao-glossary-of-terms-used-in-the-federal-budget-process-appendix-iv.pdf

Estes, R. J. (n.d.).  United States-Based Conceptualization of International Social Work Education . Council on Social Work Education.  https://www.cswe.org/getattachment/459d3db5-d4b8-413d-9ed0-a7633e306e8c/US-Based-Conceptualization-of-International-Social.aspx

The Library of Congress. (n.d.).  Regulation of foreign aid in selected countries .  https://www.loc.gov/law/help/foreign-aid/regulation-foreign-aid.pdf

Ritonga, I. T., Clark, C., & Wickremasinghe, G. (2019). Factors affecting financial condition of local government in Indonesia.  Journal of Accounting and Investment ,  20 (2).  https://doi.org/10.18196/jai.2002114

Rodríguez Bolívar, M. P., Navarro Galera, A., Alcaide Muñoz, L., & López Subirés, M. D. (2014). Factors influencing local government financial sustainability: An empirical study.  Lex localis - Journal of Local Self-Government ,  12 (1), 31-54.  https://doi.org/10.4335/12.1.31-54(2014)

Appendix 1-Interviews

Question: What are the components of effective budgeting for the organization?

Answer: The Salvation Army budgets for projects, such as education, feeding programs, emergency response, women empowerment, and healthcare.

Question: What are the purposes for budgeting at Salvation Army?

Answer: The main purposes for budgeting are to allocate resources effectively and to achieve Salvation Army’s mission and vision statements.

Question: What are the Salvation Army’s sources of revenue?

Answer: The Salvation Army relies on donor funding and government grants to actualize its projects.

Question: What challenges has the Salvation Army faced from today’s economic downturn?

Answer: The organization has had to cut its budget and reduce reliance on government grant.

Question: Has the Salvation Army’s budget been influenced by any political issue in the past?

Answer: Yes, the FY 2012 budget’s resistance by Republicans almost cost the organization important grants for completing its projects.

Question: What was the reaction of accountability administrators from the FY 2012 issue?

Answer; The administration determined to not plan budgets before having a clear picture of the federal government’s budget approval by Congress possibility or failure.

Question: Has the Salvation Army experienced any differences in planned and actual budgets in the past three years?

Answer: Yes, in 2019, the organization had not anticipated the impacts of Corona Virus 2019 on its beneficiaries so its budget did not take into account possible needs for extra funding to help affected people. However, in the end, the Salvation spend more than planned on the budget to cater for needs of followers who lost jobs because of COVID-19 effects on business. 

Question: What are the future agency plans that may affect its operations?

Answer: In the future, the agency plans to have systems to predict economic performances in host countries and an inside team in Congress to predict the availability of government grant after presidential budget submission.

Question: Do you have any recommendations for improvement areas in budgeting, efficiencies, and sources of revenue?

Question: Yes, in the future, the Salvation Army’s budget should create disappointment room in the case the host governments cannot offer it grants to complete projects. The organization should also diversify resource seeking venues, instead of relying on donor funding and government grants.