LF Projects Budget Best Practices

Table of Contents

1. Introduction to Budgets
   • Where does the budget come from?
   • Who makes it?
   • Who approves it?
2. Timing:
   • Reports
   • Accruals
   • Actuals
   • Reforecasts
   • Surplus/deficit
   • Approving your annual budget
3. Revenue Sources:
   • Members
   • Events
   • Training
   • Swag
   • Donations
4. Renewals/New Business
   • Pipelines
   • POs
   • Renewals timeline
   • Contracting process
5. Reforecasting
   • How to
   • Approving a Reforecast
6. Line Item Glossary
7. How to track transactions
8. Contacts

Introduction to Budgets

Where does the budget come from?

**A Project budget, also known as the Direct Fund is a combination of:

Member Dues

Member dues are billed annually and are what a project uses to operate.

Donations

Donations are one time gifts to the foundation, they are sporadic and should not be included in budget planning prior to receiving the funds.

Project Revenue

Project revenue comes from events, swag stores, and any training and certification income. It is not common that project revenue provides substantial funding to a project but they often make as much as the activities cost. For example events charge registration fees that in turn end up paying for the event itself, swag sold at an event or online can pay for the cost of hosting the store itself. This is not a guarantee as much as it is a goal.

Prior Year’s Surplus/Deficit

Surplus or deficit from the prior year’s budget will be applied. It’s important to retain at least one premier membership’s worth of funds as a surplus when you’re planning your budget. This buffer will protect your budget in the event of a membership cancellation. If you are aware of cancellations it’s important to account for them and ensure your surplus has sufficient funds to cover them. If you have ended the year in a deficit the LF Finance team will need to be consulted before building your budget to ensure the project will sustain another year.

Who makes the budget?

LF Finance prepares the budget based on the Project’s prior year. Major spend categories such as community engagement, legal, G&A, staff, travel and board, and development are populated with assumptions based on the prior year. If you are building a budget for a net new project finance will consult with the project to determine budget categories. The project will review and make edits based on scoping calls and RFPs submitted to vendors and internal LF teams. LF Marketing, Legal, and IT should be consulted as you build your budget to determine pricing for the year. Your Project Governing Board and Executive director will also need to be involved in the budget build process.

Who approves the budget?

Once you have collected all the necessary quotes and edits LF finance is your first point of contact for budget approval. It’s important to address any questions your board has prior to submitting your budget to the LF. Your LF Finance representative will need to confirm that your budget is in line with the expected revenue for your project, they will also need to confirm that you have met with any LF resources ( Marketing, Legal, IT) that you’ve included in your budget. Once your budget is approved by the LF Finance team, you’ll bring your budget to a vote of the Project Governing Board. Best practices are to send your budget to the board for question/comment at least two weeks prior to the date you wish to hold the vote for approval. Once you have obtained approval from the Governing Board you will let your LF Finance Representative know that the budget is final. If your board does not approve the budget you will need to determine why and make necessary adjustments. If you have included the board in the process, it’s very unlikely that they will not approve.

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