We all know the importance of a budget for ourselves, but do we consider the future needs of our Lodge and its finances? The lodge may be blessed with having money in the bank this year, but what about the next 5, 10, 50 years? Every year at your Annual meeting, you should propose the yearly budget to the Lodge and adjust accordingly to the will of the lodge.
The hardest part about the lodge budget, is that the income is not fixed or completely known. You know how many members you have and the dues income that you can expect. However, for most lodges the dues do not cover all expenses and charitable donations. The lodge usually needs to get involved in some form of fundraiser in order to keep the finances in check. The problem is that it is very difficult to determine the amount of funds that you can raise for the upcoming year.
There are a couple different ways to you can prepare a budget for the year. One is to try and determine an average income and expenses from the last few years and use this information to layout the budget. Another option is to set a fixed dollar amount from net earnings in the prior year. Neither is a preferred method over the other, and will really be determined by what the lodge has available in funds versus what they feel would work better for them for planning. The suggested budget planning may be a mixture of the two, which is described below.
First, we need to determine our planned expenses for the year. You can usually determine these by looking over the prior years for utilities, rents and insurances. Find an average over the last 3 years and add a small cushion for inflation (maybe 3-5%). The non-fixed expenses are the hardest. Look over the last few years and identify the remaining expenses that are not related to the above and are also not the charitable contributions. Get an average of these expenses and add a bit more substantial cushion (10-15%). Charitable contributions are a separate matter and should not be considered expenses in this model.
Second, determine the incomes that are available. For most lodges, this will only be from dues. Do not consider the fundraisers at this time, as those really should be saved for the charitable contributions. The income can be a bit of a struggle because lodges do remit dues for certain members. For this model, we will not consider the remitted dues at this time and just assume that all dues will be paid in full.
This is where we stop and take a serious look at the difference in our operating costs are versus the income from dues and rentals. If you find that the income falls short of the expenses, then the lodge is NOT living within its means and adjustments need to be made. Either some expenses need to be cut, or other income sources will need to be applied to at least come out even or in the black. Fundraising to meet the operating expenses may be needed, so determine the shortfall amount and hold specific fundraisers that are clearly earmarked for operating expenses. It is not a pleasant feeling to go out in the public with a fundraiser and not be able to say that all monies being raised will be used for charitable purposes. It should be clearly noted to the public that their donations to the lodge are for the purpose of helping to maintain operating expenses.
Once the full operating expense and income issue is resolved, then you can look at what charitable donations you plan to make for the year and the necessary fundraisers needed in order to meet those goals. It may be that your donations may be small for the year at first, but as your fundraising efforts expand and have excess monies you can then earmark those monies to go into the charitable donations fund for upcoming years.
The real goal for the lodge is to separate the idea of operating expenses and dues income from the goals of the lodge to do charitable works and donate monies to their communities. All fundraisers should be clearly defined as either an operating expense fundraiser or strictly for charitable donations from the lodge. Monies for operating the lodge should be held in a separate checking account from the charitable donations account. This will help avoid using general funds for charity and definitely keeping separate using charitable funds for operating expenses. If you have to dig into the funds meant to be donated to the community, you are not operating in a respectful and prudent manner.
At the end of the year, you can forward the remaining amounts from each account into the respected accounts for the upcoming year’s budget plan. But most of all, always keep these two accounts separate. Throughout the year, each month or quarter you should assess the current status of the budget and if you think you may have a shortfall, it is time to plan the next round of fundraising in order to meet your goals. You may find you will have to cut back even more over the year. If it is an operating budget issue, you may consider asking the brethren to chip in a bit more funds halfway through the year. If your shortfall is in charitable donations, then you are better off to limit the donations until funds can be replenished.
If you stay true to your budget plans, you can really start to get a handle on what the lodge can or need to accomplish in the upcoming years in order to improve your bottom line. If you start to stray from following the budget plan, it will be harder in the years to come to understand what will need to change so the lodge can stay solvent. You can adjust the plan during the year, but either way stick to what you say you will do.