Planning cannot happen without having a clear set of objectives. What are you trying to achieve? How are you going to get there? Can you afford it? What are the enduring benefits?
Planning in a financial sense should not be seen as something that happens once a year. Setting a budget, and then reflecting twelve months later can often be a default position.
The concept of ‘scarce resources’ holds true for State Sporting Organisations, particularly for those heavily reliant on funding. By starting with goals, planning toward allocating these resources can begin. Do you want to grow participation? Maybe invest into community engagement programs. Perhaps the focus is on winning? Maybe invest into high performance coaching.
A board or committee should spend time regularly to set out their objectives and strategy. In looking at what you are trying to achieve, a board can then look to plan and prioritise how to get there. A good starting point for a board is to consider:
- What is it we want to do for the sport? For example:
- Community engagement?
- Grass roots support?
- Facilities for future generations?
- What timelines are realistic in achieving these goals?
- What are the enduring benefits these goals create?
- With what resources can we make the vision a reality?
A business planning process to map out what you hope to achieve is a fundamental document for all State Sporting Organisations. It becomes your road map, your game plan. Please refer to Strategy and Planning within the Running Your SSO toolkits.
Funding sources can vary year on year, and it is important to understand the types of income you will likely have available, and how these funds are to be used. As treasurer, and as the board, you should consider:
- Where does our revenue come from?
- When will we receive this money?
- What is the appropriate price to charge for our service / participation etc.?
- What sources of external funding are available?
- Are there any grants we could explore to grow the sport?
It is important to have a strong sense of where funds are available so as to consider how they should be invested. It is worth periodically checking with Sport NSW to better understand what might be possible.
Simply put, a budget outlines your State Sporting Organisations finances and maps your forward direction. Better practice would suggest that a budget should be prepared at least annually, and serves as a reference point for boards and committees to assess actual performance to expectation. Within this guide there is further information on how to assess performance.
The highlights of a good budget link back to planning. In looking at what you want to achieve, you can now overlay the financial elements. Whilst it can be hard to predict the future, your budget will require a series of assumptions. It is suggested that amongst other things you should consider:
- Look at past revenues, and assess if they are recurring or one off in nature;
- Look at past expenses, and assess if they are recurring or one off in nature;
- Consider if any of your goals will drive more revenue opportunities;
- Consider what will be required to be spent to achieve your goals; and
- Understand the timing of your receipts, remember you cannot spend what you don’t have.
History will serve as a guide to the future, but critically challenge the past with an eye to what is possible tomorrow and beyond.
The budget belongs to the board, and it does serve as a wonderful reference point in assessing and approving spend throughout the year. Monitoring it can often be the starting point for sound financial controls.
3 Way Budgets
The trap many State Sporting Organisations fall into is only considering revenues and expenditure in budgeting. This assumes that cash and expenditures are perfectly aligned, which is not the case. It is important to remember, some level of spend will be for the future, creating an asset, rather than an expense.
The concept of a three way budget is intended to extend the planning process beyond revenue and expenditure, and plan how assets, liabilities and cash will be impacted throughout the year. In doing this through your budget process, it is recommended that you:
- Estimate your revenues and expenditure;
- Consider these from a cash in and cash out perspective;
- Factor in this interaction with the balance sheet; and
- Project if there are any likely deficiencies in cash throughout the year and consider the impact on operations or the need to defer or seek funding.
In budgeting or planning, it is important to make the distinction between strategic initiatives and day to day operations. This is a real balancing act.
- Day to day operations should consider the costs that have to be incurred to operate effectively – rent, wages, electricity, insurances etc.
- Strategic initiatives are the things you will invest in for future generations – facilities, coaching, participation etc.
If one is neglected over the other there can be ramifications. Focussing on day to day can lead to losing sight of the future, but equally, neglecting the day to day can sacrifice the ability to be there in the future. As a board, it is really important to plan this accordingly.
A board should sign off on the budget at a point in time they are comfortable the outcomes are aligned to the goals of the State Sporting Organisation. The notion of scarce resources is ever apparent in sports, and the board must look to ensure that monies are spent to better the sport and enable it to reach its goals.
In allocating monies through a budget process, it should challenge you to:
- Prioritise key initiatives;
- Assess those that can have the biggest impact; and
- Consider those that are for the betterment of the sport.
In most instances, a decision of the board or committee will be able to be traced through the budget process. The following worked example demonstrates the interdependencies in planning and the financial outcomes.
|Extract from Committee Minutes
|Outcome to budgeting
|The committee sought and had approved funding to grow the game in regional centres.
Grant revenues should be recognised in accordance with the grant agreements.
Budgeted expenses should be recognised in terms of spend required to reach the desired goals
Any assets created should be considered for inclusion into the balance sheet
The timing of cash flows should be considered – it is highly unlikely that cash in will be at the same time as cash out.
Note: as with any legal and financial documents, this does not replace obtaining legal and financial advice on each sports specific requirements and it is recommended you do so.
The information provided in the framework and tool kit is for your information only. The authors and the NSW Office of Sport accept no responsibility for the accuracy of the information or your reliance upon it.