Our Budget vs. Actual report is designed to move beyond simple bookkeeping and into strategic oversight. This guide explains how our core calculations work and the logic behind these choices we’ve made to support your organization’s growth.
1. Variance: Measuring Performance Gaps
Instead of focusing solely on "Remaining Balance," this report prioritizes Variance. This shows you exactly how much you are over or under your target.
The Calculation: * Dollar Variance: (Actual - Budget)
Percentage Variance: (Actual - Budget/Budget) x 100
The Strategy: We have replaced a calculation of difference with Variance. While "Remaining Balance" tells you what's left, Variance supports faster decision-making by immediately highlighting performance gaps. This aligns with standard nonprofit board reporting, where the focus is on whether the organization is sticking to its strategic plan.
How to Interpret Your Variance
| Category | Positive Variance (+) | Negative Variance (-) |
|---|---|---|
| Expenses | Overspent (Unfavorable) | Under Budget (Favorable) |
| Income | Exceeded Target (Favorable) | Under Target (Unfavorable) |
Example: If your Actual Expense is $1,200 and your Budget is $1,000, your variance is +$200. Because this is an expense, a positive number means you spent more than planned.
2. Dual Period Logic: Current Month & YTD
The report gives equal prominence to "Current Period" and "Year-to-Date" (YTD) figures.
The Calculation:
Current Period: Uses your specific monthly budget. For custom ranges, it uses a prorated amount.
YTD Budget: Sums monthly allocations from the start of the fiscal year through the end of the report run date.
The Strategy: Board members often need to see "this month" to understand immediate tactical performance before reviewing long-term "YTD" strategic trends. Relying on YTD alone can often mask recent, sudden changes in spending patterns that need immediate attention.
Please note, that if you are running this report to view budgeting data from previous fiscal years then utilizing the YTD column will not be helpful as it is set to be for your current fiscal year when the report is ran.
3. Smart Proration: Handling Mixed Data
Not every organization budgets at the same level of detail. Our report is designed to be flexible regardless of your data entry style.
The Calculation:
Monthly Detail: If you provide monthly allocations, we use those exact figures.
Annual Only: If you only provide an annual total, we calculate the budget as: $(Annual Budget/12) x months elapsed.
Mixed Data: We prioritize monthly detail where it exists and prorate the rest. For custom date ranges, we use daily proration to maintain precision.
The Strategy: We recognize that teams have varying levels of budget sophistication. By using smart proration, we ensure that every line item shows a budget comparison. This ensures the report is "plug-and-play" for basic users while remaining highly accurate for advanced power users.
💡 Pro Tips for Board Presentations
Presenting financials to a board can be daunting. Use these tips to leverage the new report features during your next meeting:
Focus on the "Why" of the Variance: Don't just report the numbers. If you have a +$5,000 variance in expenses, be ready to explain if it was a one-time emergency repair or a permanent increase in utility costs.
Check the YTD vs. Current Period: If the Current Period shows a negative variance but the YTD is positive, highlight this as a "recovery month" where you are successfully making up for earlier overspending.
Explain the Proration: If your board asks why a budget line looks like a round number (like exactly 1/12th of the annual budget), explain that the system is using Smart Proration to provide a benchmark even for non-linear expenses.
Highlight "Favorable" Income: Boards love seeing a positive variance in income. Use this to pivot the conversation toward which programs or fundraising efforts are over-performing.
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