Question 1 ” Discuss 2–3 challenges an administrator may face when developing and reviewing a financial plan or capital improvement plan. Justify your response with examples”
Response to Ronnie’s Original Post
The capital improvement plan is a crucial tool used to prepare for the future as well as raise the capital infrastructure. The CIP is an effective guide for executing the master plan, strategic plan, and other strategy materials of a city (Elmer, 2005). One of the difficulties is that some of the elements in a capital investment strategy can be excluded from the expenditure operating plan due to their high expense. This is because cities must control their finances under the constraints of their budgets, with no flexibility for change. This is why certain large-ticket projects previously included in the budget are transferred to the capital investment plan for consideration later. A second difficulty is determining which programs to abandon, since they could be too expensive to continue being considered for consideration. These high-ticket products would cater to both the local population and the elected officials who order them. Occasionally, it is simply in the capital development plan's best interest to exclude certain things, since they would view the city's financial stability ten to twenty years from now.
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Original Post
Question 2 : “The budget process for a nonprofit organization is different than the governmental process. Discuss 2–3 obstacles that a nonprofit organization might encounter when developing a budget.”
Response
One of the obstacles is limited government funding. Several nonprofit organizations depend on the government’s support for funding. The assistance could be part of grants or a matching scheme. The fund could also be a safety net to offer gaps when finances are limited (Lu, 2015). Budget cuts at the municipal, national, and state levels mean that no significant activity can be completed within the budget. Several nonprofits get less than they expected and sometimes receive no funding. The second obstacle is having a steady income. It becomes challenging for the nonprofit to have an effective income strategy. The unsteady income in a given period, say a year, makes budgeting a problem due to high administrative costs given the need to have the projects available. The third issue is that the funders have unrealistic expectations. Numerous funders are aware that nonprofit organizations often disclose inflated payroll numbers and that donor literature often contains highly misleading program ratios (the proportion of indirect expenses to program-related expenses).
Response to Ronnie’s Original Post
One possible issue that charities may face while developing their budgets is uncertainty in their income period, which can occur as a consequence of contributors defaulting on contributions, the government ceasing support, or foundations withdrawing gifts. Due to the fact that these revenue source issues will emerge at any moment, nonprofit accountants and financial advisors must always stay on the lookout for potential funding possibilities. Due to the inconsistency in financing, their budgets would almost certainly still evolve to accommodate for new and dwindling capital.
Another factor that can impair a nonprofit's capacity to create a fair and viable budget is a lack of financial education. Many institutions lack team members with the requisite budgeting skills, and therefore are unable to provide the detailed line-by-line budgets needed for effective operations (Johnson, 2017). Many of these groups who have effectively created a corporate budget have used nonprofit budgeting techniques such as planning software to assist them in being coordinated and keeping track of all the necessary data.
References
Elmer, V. (2005). Capital improvement plans and budgets. University of California at Berkeley .
Johnson, C. (2017). Engaging democracy: An institutional theory of participatory budgeting (Doctoral dissertation).
Lu, J. (2015). Which nonprofit gets more government funding? Nonprofits’ organizational attributes and their receipts of government funding. Nonprofit Management and Leadership , 25 (3), 297-312.
