Budget Priorities

Once you have goals set, it is important to take some time to prioritize. It’s rare for organizations to set too few goals. Usually, goals will articulate more than can be fully accomplished in a year due to unforeseen circumstances. Thus setting priorities will allow you to adjust as needed.

There are many important reasons for establishing and staying within a budget. All can be summarized into one of these four reasons:

1)  Ensure adherence to the purposes of the office
As discussed, a budget should be mission-driven at all times. Resources should be prioritized toward fulfilling the mission first.

2)  Establish priorities among all resources
The budget process causes us to examine where, how and when we direct our resources. Because resources are finite, some “nice to have” items will come up against “need to have” items and choices will have to be made. As an example: Are there longer-term benefits of replacing new computers this year rather than expanding client services with additional staff? Setting priorities requires tough but necessary discussions and decisions.

3)  Set spending limits
No organization has an unlimited supply of any resource, whether human, monetary, time or space. There are constraints in all of these. Budgeting is simply a rationing tool—allocating limited resources to achieve optimum results.

If you are a not-for-profit entity, you will also have a fourth reason to budget:

4) Saving money.
At a government level, you generally don’t have the same control over this. Many times money is a “use it or lose it” kind of proposition. In some government structures, one literally needs to spend every dime allocated to your office for the year, otherwise, this will send the signal to your funders that you don’t need as much money next year. Any money that is saved is generally dealt with at a higher level and not necessarily in your office. While there may be some exceptions to this, it will be important to be familiar with how money flows in your organization.
Save money

For a not for profit office, we’re not talking about just “spending less.” By establishing priorities and setting spending limits, a not for profit organization should be able to anticipate setting some money aside into savings, or reserves to be invested. It is not prudent to anticipate allocating every dollar of revenue to expenses. Saving money for rainy days is a must. There will be rainy days.

Ultimately, this all boils down to setting priorities. As an organization, you probably have many fantastic goals, but you will need to spend some time really understanding what is most important for your office to accomplish and what is the most reasonable in your area. Even if you have all the money you need, funding challenges are sure to appear at some point and you want to be prepared.

Let’s start by listening to Joan talk about how she sets priorities for her organization:

Funding Challenges

Many offices have faced severe cuts due to the economy and are expected to do more with less. There are ways to be successful regardless of funding, but “defining” what success looks like may need to change. Priorities may need to be set and then readdressed on a regular basis to assure you are doing what you can with what you have.

Managing expectations is critical. If you set your region up to believe that success means Brad Pitt or George Clooney coming to town, there’s a strong chance you will not meet that expectation. In this scenario, you have actually set yourself up for failure and when the small indie lands in your lap, it is a disappointment when it may very well be something to celebrate!

Example: An active film office with a burgeoning film and media industry (experiencing 10x’s the activity than in the past) gets cut to a staff of 2 and $100,000, down from 5 people and $1.5M. How does the film office manage? The first step is assessing what it the most effective and then anything extraneous is cut. But deciding what is “extraneous” and what is “essential” can be difficult and will vary greatly from one film office to another. Some choices may include:

• Rethinking marketing efforts.
• Choosing to do only advertising that gives the office the biggest bang for the buck. For instance, advertising only when a publisher agrees to include editorial on your region in that particular edition of the magazine.
• Hiring a contractor only when needed to help with scouting, rather than full-time staff.
• Engaging in cooperative advertising activities other film offices for a more regional approach. Pooling resources can be very effective.
• Recruiting the film community to take on some things that the office no longer has the staff or the money to do. For instance, hosting dinners, airport pickups, and complimentary hotels.
• There may be whole areas of focus – such as workforce training – that now need to be farmed out to the community, area educational institutions, etc.
• Look into being included on industry panels or participate in other film events. Rather than paying full freight to attend an event or a festival, participants often are given a free pass.

In this scenario, we are not talking about lowering the bar; we are looking at alternate ways to reach the same goals.

Losing funding is not the only potential issue. A sudden increase in funding can also create just as many issues if you are not prepared. While not terribly common in not-for-profit entities, an increase in funding for government entities can and does happen. For instance, there might be a change in administration that brings with it more of a focus on economic development… including film production development. Or the funding sources for a state may come in better than projected and your agency may be allocated more funds. Regardless of how it happens, it will be important to be prepared to expand your services and know what your next priority is as well. As discussed, in many governmental models, all funding must be spent by the end of the fiscal year or it is gone forever – “use it or lose it” – and next year’s budget will reflect this lower number.

To recap, we determined that, in the funding and budgeting process:
• Step One has very little to do with numbers at all. It is about developing and committing to your office’s vision and mission.
• Step Two is forming a plan with the specific actions necessary for accomplishing your mission
• Step Three is discerning what it will cost to implement your plan.
• Step Four is prioritizing your tasks and programs, should your funding be cut or you are under-funded.
• Step Five is creating a budget – which will be explored in depth in the next chapter.