Question

How does budgeting in not-for-profit organizations differ from governmental budgets? Provide examples.

Answer 1

Budgeting in NPOs are different from governmental budgets in various aspects. Some of the aspects are:-

1. The governmental budget is a summary or a plan of the intended revenues and expenditures of that government while the budget of a not for profit organisation is the financial reflection of what a NPO expects to accomplish over a 12 month period.

2. There are 3 types of government budget;- the operating or current budget, the capital or investment budget, the cash or cash flow budget. But in NPOs there are only Capital budget and Operating budget.

3. In not for profit organisations, mostly Conditional Budgeting approach is used while in Governmental budgets no such approach is used.

4. Governmental Budgets are mostly Surlpus Budget while budgets of NPOs are mostly Break even Budgets.