The Honor Society's First Budget
Planning Income and Expenses for Operations
An honor society has the responsibility to manage funds that it receives for the operations of the group appropriately and prudently. One of the first steps is to determine the amount of money that will be needed to sustain a chapter of STTI.
Per STTI bylaws, honor societies and chapters must operate on the same fiscal year as the STTI organization – 1 July through 30 June.
Establishing a Budget
A budget is the financial plan for your chapter and provides a means by which the financial well being of the chapter can be monitored. As such, it reflects the priorities and goals of your chapter and serves as:
a management tool to help plan the activities of the chapter;
a method to monitor progress toward reaching chapter goals; and,
a means of identifying short-term and long-term trends.
The treasurer can propose a "first draft" of the annual budget that can be presented to the board of directors for review. This first draft budget will then be revised based on strategic planning by the board of directors and input from each of the various committees regarding projected income and expenses. It is important that the final budget be approved by the board of directors before any expenses in the new fiscal year are encumbered or paid.
Budget Preparation Guidelines
The budget must be realistic. That is, it must be based on real revenues and expenses from previous budgets. If an honor society is just beginning and there is no previous financial information, be conservative in estimating income and expenditures. Budgeting that your honor society/chapter will make US$5,000 in fundraising when you have typically made US$500 in the past may over-inflate revenues and may allow unjustifiably high expenses to be encumbered. The following points are helpful in your approach to budget development:
- Gather historical information including budget and actual financial performance from previous years (if applicable), new and renewing member fees, induction costs, costs of standard expense items like postage, printing, telephone, and supplies.
- Interview the board and committee chairs responsible for honor society/chapter programs to learn their plans and goals for future programs and activities.
- Using the Sample Budget Worksheet, develop a form specific to your honor society/chapter. You will need at least five columns on the form to develop your basic format for an annual budget.
Column I List budget classifications by activity or program.
Column II List the prior year's activity in each classification by activity or program,
Column III List the budget for the current year for each classification by activity
Column IV List the actual activity for the current year.
Column V List the variance (difference) between the budgeted and actual activities
for the current year listed in Column III and Column IV.
Once the budget worksheet has been prepared, the honor society should consolidate the information into a report form that can be shared with the honor society’s board of directors and membership. Honor societies will need to supply financial information in the application for chapter charter. The template is based on the report that is needed for the chapter charter application. Honor societies will be asked to report financial information for last fiscal year, the current fiscal year and projections for the next fiscal year.
Information from the budget worksheet can be compiled into the budget template.
Monthly budget breakdown
After developing the basic format of the annual budget, determine the revenue and expense for each activity or program on a monthly basis to determine your cash flow during the year. For example, you may receive renewal income from members for the month before, month of, and month after your honor society’s membership renewal date; you can anticipate new member income and expense during the month of your honor society's new member induction; you may have planned a social event in October, a scientific session in November and a special fundraising event planned for February.