Assume that the CWC has adopted the proposed budget as developed in Term Project I even though it does not hit the 6% budget surplus target. Now they want you to allocate the budget into functional areas. Revenue is not allocated to functions. Just show each revenue item in the Total column. However, expenses are allocated to functions using the percentages shown in the following section.

Part A: Functional Budget

Program Functions

Stewardship: Management of easements and preserves.

Outreach: Publicity and Education.

General Program: Activities directly related to project development.

Support Functions

Administration: Management of the organization and other activities not directly related

to project development

Fundraising: Grant-seeking, special events, and fund appeals

P R O G R A M S U P P O R T

Stewardship Outreach General Administration Fundraising

Program

Expense

Travel 30% 20% 30% 10% 10%

Special Events 20% 80%

Conferences 20% 10% 40% 20% 10%

Fundraising 100%

Insurance 40% 30% 30%

Newsletter 70% 30%

Postage 10% 50% 10% 10% 20%

Professional Fees 30% 50% 20%

Publicity 80% 20%

Salary 30% 10% 30% 20% 10%

Supplies 20% 10% 20% 40% 10%

Payroll Taxes 30% 10% 30% 20% 10%

Telephone 20% 10% 30% 30% 10%

Part A: Create a Functional Budget for the upcoming year. Use the revenue and expense allocations provided above and the Term Project 1 Solution for the next year as provided at the end of this document. (8 points)

1) What percent of the total expense budgeted by the CWC for the next year is spent in each of the five functional areas? (1 point)

2) What percent of the total expense budgeted by the CWC for the next year is Program expense (total of Stewardship, Outreach, and General Program) and what percent is for Support (total of Administration and Fundraising)? (1 point)

Part B: Flexible Budget

The CWC budgeted on the basis of the existing 54 projects (preserves and conservation easements).

New refers to additional preserves and/or easements (projects) beyond the existing 54 projects.

X% refers to the percentage of the original budget.

Add:

Travel: 2% for each new project in Stewardship

5% for each new project in General Program

Professional Fees: 5% for each new project in General Program

Supplies: 2% for each new project in General Program

Telephone: 2% for each new project in General Program

Shift:

Salary and Payroll Taxes

Shift 2% from Administration to General Program for each new project

Note: X% refers to the percent of the original budget. If the budget for a line-item (Space Travel) is $1,000 and 10% ($100) is assigned to a particular function (e.g. General Program), then if an additional 6% is added to General Program (due to 2 new projects with 3% per new project) the new budget for Space Travel General Program is [10% + (2 x 3%)] multiplied by the original budget for the line item. In this case, .16 x $1,000 = $160 while the budget for the entire line-item Space Travel is $1,000 x 1.06 = $1,060.

Part B: Prepare a Flexible Budget for the five functional areas based on 2 new projects. (7 points)

1) Calculate the budget surplus/deficit based on your Flexible Budget both as a dollar amount and as a percent of total expense. Do not change revenue from the total column in the Term Project I Solution Cash Budget. (1 point)

2) What amount, and percent, of the new budget is Administration expense? (1 point)

3) Can the CWC handle the 2 new projects without an increase in revenue if they do not try to maintain a budget surplus? Why? Discuss any concerns. (1 point)

	Current	Proposed	Q1	Q2	Q3	Q4	Total
Revenue
Special Events	40,000	48,000	9,600	28,800	0	9,600	48,000
Contributions	40,000	44,000	8,800	8,800	8,800	17,600	44,000
Grants	40,000	32,000	0	12,800	0	19,200	32,000
Endowment	5,000	5,500	1,375	1,375	1,375	1,375	5,500
Interest Income	2,000	2,000	500	403	451	352	1,706
Total Revenue	127,000	131,500	20,275	52,178	10,626	48,127	131,206
Expense
Travel	3,000	3,090	309	927	1,545	309	3,090
Special Events	40,000	48,000	9,600	28,800	0	9,600	48,000
Conferences	3,000	3,090	0	0	3,090	0	3,090
Fundraising	5,000	5,500	1,100	1,650	0	2,750	5,500
Insurance	3,000	3,090	3,090	0	0	0	3,090
Newsletter	2,000	2,200	550	550	550	550	2,200
Postage	2,000	2,200	550	550	550	550	2,200
Professional Fees	5,000	5,150	1,288	1,288	1,288	1,288	5,150
Publicity	1,000	1,030	258	258	258	258	1,030
Salary	45,000	45,000	11,250	11,250	11,250	11,250	45,000
Supplies	2,000	2,060	515	515	515	515	2,060
Payroll taxes	4,500	4,500	1,125	1,125	1,125	1,125	4,500
Telephone	1,500	1,545	386	386	386	386	1,545
Total Expense	117,000	126,455	30,020	47,298	20,556	28,580	126,455
Surplus	10,000	5,045	-9,745	4,879	-9,930	19,547	4,751
Surplus %	8.55%	3.99%					3.76%
Target Surplus		7,587
Beginning Cash Balance			50,000	40,255	45,134	35,204
Change in Cash Balance			-9,745	4,879	-9,930	19,547
Ending Cash Balance			40,255	45,134	35,204	54,751
Cash / Annual Expense			31.83%	35.69%	27.84%	43.30%
Part A
1a	$10,000	8.55%
1b	Special events contribute nothing above cost. Re-examine.
1c	$5,045	3.99%
1d	No, need surplus of		$7,587
Part B
2a	$35,204	27.84%
	Interest Income is lower due to a lower annual surplus and deficits early in the year.