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In honor of ASAE & The Center's Financial and Business Operations Symposium next month (it starts one month from today), we decided to give April a mini-theme: Money Month. It's "mini" because we've only got a few posts scheduled to cover the topic, but who knows, maybe by the time the month is over, it will be something bigger.

I'd rather start with something more upbeat or positive, but, well, when I was thinking about what to write, I kept falling back to an electronic mailing list discussion that took place a while ago. In it, someone asked how to account for unbudgeted spending when a need arises. CFO after CFO chimed in saying they don't, only their boards can approve new spending. It sounds to me like those are associations where new ideas go to die. So how do you balance the governance tenet of fiduciary responsibility and the need for an organization to be nimble and seize opportunity? Several ideas spring to mind:

I covered this idea before, but I think the whole notion of budgeting and accounting needs an overhaul. Rather than developing a 12-month budget 9 months before that budget starts, followed by financial reporting back based on that budget, make the whole process much more fluid. Choose shorter intervals, no less than quarterly, and use the financial reporting to create an entirely new budget that covers the next interval and projects two or four intervals into the future. Budget approval every single time.

Have a fund that is X% (2 or 4 maybe?) of your operating budget that the board earmarks for unbudgeted items to be used at the discretion of the CEO. The smart association will develop a system and culture for using this money and assessing the results. The catch: There should be a policy of some sort that says this money is not the first thing chopped if financials are below budget. Otherwise, it will just get chopped most years.

I'm sure there are plenty of other ideas about how an association can have the financial flexibility to pursue new ideas. Here's what not to do:

Don't use gimmicks or tricks or cheats. I know of examples where new ideas can find funding as long as an equal amount is taken away from something else. Even if you're transparent about it, you're taking the fiduciary responsibility away from the board.

Second, and this is the biggest sin to me, don't use the approved budget excuse to silence new ideas. If there's a reason the organization shouldn't do something, then use real reasons. No one wins, no one learns, when talk of a new idea that needs funding is stopped dead by saying it's not in the approved budget so we can't do it.