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Q: What systems/process does a brand new Nonprofit need to put in place to begin preparing an accurate cost plan?
Anytime you are building out a cost plan for the first year it is usually a process. The first year you begin by gathering any information you have available.
Next decide what departments' costs you are going to allocate. What departments support the other departments in the agency (Central Service Departments)? Once you know what departments you are going to allocate you can then determine what functions they perform.
After deciding the functions, you can start to determine how you will allocate the costs out. This is where you can build systems in place to gather the information necessary to build an accurate cost plan. Ask yourself what is the
service this function is performing and how
can you best allocate out that service that is relative to the service received (common allocation basis: full-time employee count, expenditures by department, payroll checks, AP transactions).
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Finding what information is available now and what system you can put in place for gathering data in the future/for next year is extremely important. You should always try to get the
best basis available. For example, if you
determine that AP transactions would be the best basis to spread the AP function in Finance,
but your system currently does not keep track of AP transactions by department you would want to put a system in place to allow you to have that information for the following year, but then for the current year you could use a default basis such as expenditures per department.
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2016 Q1 ISSUE COSTTREE CAPTURE. 23
Thank you to everyone who submitted a question into CAPTURE by CostTree. All questions submitted and not shown below will be answered via email.
Enterprise Fund: used to report any activity for which a fee is charged to external users for goods or services.
Intangible Costs: consist of the amortization of hard to value items that are not tangible by nature, meaning they cannot be seen or touched.