Reading Your Association's Budget

Start at the top

Every budget has the same three sections: revenue, expenses, and the resulting surplus or deficit. Look at the bottom line first. If the budget assumes a deficit, the next question is: covered from reserves, or unexplained?

Revenue — where it comes from matters more than the total

Add up your revenue by category. Healthy associations are not 90% reliant on one source. Common categories:

• Dues — predictable but slow-growing
• Conference / events — high margin, high risk (one bad year hurts)
• Sponsorship — relationship-dependent
• Publications / education — usually small but stable
• Investment income — depends on reserves

If any single category is more than 60% of revenue, that's your concentration risk. Talk about it.

Expenses — three buckets

Functional expenses split into:

• Program — what members actually receive
• Management & General — running the association
• Fundraising — costs to raise restricted funds

The rough rule: 65-80% program, 10-20% management, the rest fundraising. Wildly different ratios deserve explanation, not panic.

The five questions to ask

1. What assumptions drive the dues line? (Member count × rate. Is the growth realistic?)
2. Is conference revenue net of conference expenses, or gross?
3. What's the largest single expense category and why?
4. Where is the budget different from last year's actuals, and why?
5. What's the contingency line if conference attendance drops 20%?

If staff can answer those, you have a real budget. If they can't, you have a wish list.