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5 Steps to Building a Better Budget

Most new treasurers typically create a budget by dividing resources/money like they’re making slices of a pie. For example, if a chapter plans to collect $1,000 in dues, a treasurer may take that $1,000 and allocate those funds to officers based on what they think each officer needs or what each officer received last year. The officers are then told to do their jobs with whatever they’ve been given.

While any budget is better than no budget, this style of top-down budgeting for chapters isn’t much better. It doesn’t leave much room for ownership at the officer-level and tends to be victim to margins of error.

Instead, we strongly encourage chapters and treasurers to flip this dynamic upside down and perform bottom-up budgeting. While this will mean slightly more work than quickly dividing up slices of the pie, it will pay dividends down the road. Below are some steps to help you get started with building budgets from the bottom up.

Step 1 – Fixed Expenses

The first step in this process is to determine your fixed expenses. Whether it’s dues or fees your chapter has to pay to headquarters or rent, get an idea (and write it down) of all the standard expenses your chapter has to pay. Standard expenses are items you can’t change and can predict with some certainty.

Step 2 – Officer Budgets

The next step is to have your officers (or committees) write down all of the things they need for their operations. If your DEI Chair/Committee plans to bring in a guest speaker, they should break down all of the costs associated with this event like speaker fees (or a gift card if your speaker is free), room rental fees, or printing fees. Those individual items each have a cost associated with them, which when added together reveals the cost for that single event.

The same holds true for every other officer or committee that needs financial resources to execute their role. Your Recruitment Committee likely has many events or marketing campaigns, and each can be broken down into specific parts or separated out into individual initiatives.

The critical benefit of this step is that you now have your officers and committees thinking strategically about what they want to accomplish for the semester/term/year and are thinking intentionally about how to achieve those goals.

Step 3 – Revenue

By now you’ve collected all of your variable costs, in the form of officer budgets, and all of your standard expenses. At this point, you should feel confident and have a good idea of all the things that need to be paid for in the coming budget. So how do you allocate the funding?

This part is fairly easy. You simply take your known membership number and multiply that by the total amount of dues. You can also estimate, if you feel confident enough, how many new members you expect to bring in and their dues. When it comes to new members, remember they may pay dues or fees to your headquarters or IFC for new member fees or bid fees so that won’t be money you can count on for your budget.

Step 4 – Plan for the Hiccups

Life happens for everyone and it’s entirely possible that one or more members may not be able to pay their dues on time or even at all. You would be smart to take the expected revenue and subtract about 3-5% from it. This little buffer takes into consideration that chapters rarely collect 100% of their billed dues because of delayed payments, non-payments, or credits to someone’s account.

Step 5 – Reconcile

Now, you should have two sets of numbers. One is for expenses (what you plan to pay for) and the other is your income (what you plan to bring in). If the two numbers match, congrats! But, typically they don’t. In this case you have to reconcile the budget.

If your expenses are more than your revenue, you have two options. The first is to go back to your officers and see what they can do without. Remember, you can’t cut your fixed costs because those items don’t change and you have to pay them. The second option is to increase your revenue which may mean raising member dues.

This part of the process isn’t the most fun, but it serves an important purpose. It gets you and your officers thinking critically about your chapter’s finances and future. Maybe it is time to re-evaluate why you haven’t raised dues in 10 years or maybe it’s a conversation about whether that super expensive social event is more important than a retreat for your members.

A final note on this part of the process: While it’s always good to save some money for that potential once-in-a-lifetime expense, the dues paid by members today should go towards their experience today. Don’t put away too much money for savings and don’t have a savings account continue to grow unless you have a specific and transparent goal like creating an endowed scholarship.


Bottom-up budgeting takes more time to execute, but you’ll quickly see the return on investment with more engaged and accountable officers, a more transparent budgeting process, and ultimately a more efficient use of the chapter’s financial resources with every penny going to a specific purpose.

This process will also serve you well outside of your chapter experience and can be an effective way to build a personal budget or even as a way to wow your future employer

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