Reference no: EM133392305

Question: Traditional audit-based budgeting processes often result in a "use it or lose it" mentality in the workforce. This often results in a rush to frivolously spend any remaining funds in the last weeks of a budgeted year (Siemroth, 2021). While this behavior has become standard practice for many organizations to maintain future budgetary goals, many not-for-profits resort to this out of necessity. While it is allowed for a not-for-profit to have a surplus at year-end, it can hurt public perception if donors perceive the surplus is associated with poor use of available funds.

One possible solution for a not-for-profit is to donate the surplus to another organization with similar values. Proverbs 22:9 teaches, "The generous will themselves be blessed, for they share their food with the poor" (The Holy Bible, 2011). Structuring the organization's budget with planned donations and a marketing program to inform donors of surplus utilization could provide long-term benefits for the organization. Knowing that surpluses will continue to provide to the less fortunate could result in a domino effect of increased giving and less spending.

If an organization's team embraces this concept, it will increase personal accountability over discretionary spending. This would result in more accurate expenditure reporting within the organization, providing better insights into the efficiency of the operation. By using the surplus to give, instead of receiving extra, a not-for-profit may find itself with more income and improved efficiency.