It’s not often that I’m truly excited about what I’ve read on other blogs, but every once in a while there’s a post I find, read and say, ‘YES!” THIS is what school leaders need to know.
Which is why it’s this month’s Good To Know article!
This article shows the difference between what some think strategic planning is and what it really is: https://rg175.com/blog/88
But here’s some additional things to think about – especially when it comes to budgeting. What is the difference between your Operational and your Capital budgets?
My wife and I are now part of our parish’s finance council. During the past few years, we’ve seen funds that we’ve had in our parishes reserves being transferred to the operating budget to meet expenses. All us members stated that this practice couldn’t continue, since even though there’s several hundred thousand dollars in the bank, half of that amount was a contribution that was made with the stated purpose of charitable works.
In my mind, that was translated to, “Put the money into a fund, and use the interest to give to those who are in need. At 5%, that would generate $10,000 a year to assist families who need some help to pay their gas bill in the winter, or need funds to repair a vehicle because they take their elderly parents to doctor appointments, or assist a family that needs a bed for a family member who’s left an abusive relationship. Instead, our charity funds are used to fund the local community’s Meals on Wheels program, since it helps more people than just those who are members of the parish – which is also a noble and compassionate thing to do – but Meals on Wheels also charges for their services, which is operational income for them; our parish’s contribution is considered to be “fundraising” income.
When you’re planning your school’s budget, do you put all your operational costs (salaries, benefits, utilities, programs, etc.) into the budget, and then base your tuition (read, operational revenue) on that amount?
Or do you use what you’re charging now, hope that families won’t bail if you increase tuition by $150 per student, and then see what additional revenue is needed from advancement/development to balance the budget?
If you answered the second way, is that advancement/development number getting larger and larger every year?
When you conduct an annual appeal, engage in planned giving initiatives or solicit major gifts from donors who are engaged with your school’s mission, those funds shouldn’t be used to “balance the budget” or help the school climb out of debt. A donor views a debt of uncollected tuition as something that derives from improper operational practices. Donors will fund capital improvement projects – not salary increases.
Sure – some funds from your operating budget should go toward reserves to prepare for the major repair or refurbishment, but constant requests to help your school’s operating budget will soon become tiresome to donors who want to see successes at your school.
As for development funds, you can make the case that contributed funds will be used for need-based financial aid. This is where the bulk of your development efforts should be focused, so that the experience of your school can be given to those who desire it for their children.
Development funds shouldn’t be used to fund the gap between tuition and the cost of education. This is why many schools find themselves in the untenable situation they’re in.