PAD 505 Public Budgeting and Finance

Challenges for non-profit organizations while developing the budget:

• Inadequate financial planning background: Inadequate financial education is observed to be one of the major challenges that might disrupt the overall ability of the non-profit organization to build up an effective and realistic budget (Bach-Mortensen & Montgomery, 2018). Most non-profits generally do not have a workforce with adequate knowledge for the budgeting task. They, therefore, are not furnished to put together a line-by-line budget as is essential for effective operation.
• Unstable funding: Another major issue which such an organization might encounter is instability in the revenue cycle originating from the donors who are falling through on the donation, the national authority putting end to withholding gifts from foundations and funding (Shabunova & Kosygina, 2019). Since such a revenue stream can take place at any point of time, thus there is no stability of funding.

Reply to Denise Cooper

Yes, I agree with the point mentioned in your post. Unstable financing is the most significant obstacle in creating the budget for non-profit organizations. Being a non-profit organization, it does not have a defined source of revenue. The revenue made by such organizations is mainly via donations from various individuals and companies, and government foundations. However, it is not only the obstacle faced by such companies while creating budgets. There are other certain factors that create such obstacles for non-organisations like inadequate staff, inadequate financial planning background, etc.

References:

Bach-Mortensen, A. M., & Montgomery, P. (2018). What are the barriers and facilitators for third sector organisations (non-profits) to evaluate their services? A systematic review. Systematic reviews, 7(1), 1-15.

Shabunova, A. A., & Kosygina, K. E. (2019). Public administration issues in the development of the non-profit sector at the regional level. Economic and Social Changes: Facts, Trends, Forecast, 12(4), 86-103.

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