I think there's a number of factors that should be taken into account. Firstly the money is donated to be used, so  in the medium term outgoings should match incomings. Secondly any organisation should have a reasonable contingency reserve, we are not talking about the situation here where (like some charities, that have been castigated by the Charities Commission, among others) we would have a cash reserve equivalent to 20 years turnover.  Thirdly, as a start-up, we cannot predicate too much on the first years figures.  Fourthly it is common for spending to overshoot projections and income to undershoot.  Fifthly income and expenditure are both "lumpy" in different ways, a proper accounting system may well deal with this in terms of accruals, but nonetheless cash-flow still has to work.

As the organisation needs to budget a year ahead, and has no guarantee of income it is not, perhaps, unreasonable - and certainly sustainable -  to budget expenditure based on the predicted cash balance at the beginning of the year.  To do otherwise risks making financial commitments with no certainty of being able to fund them.


On 24/06/2011 17:45, Thomas Dalton wrote: 
On 24 June 2011 13:09, Chris Keating <chriskeatingwiki@gmail.com> wrote:

I agree with this as well, but observe that a big plan to spend lots of
money over the long term is something that takes time to develop if it is to
be effective.

Sure, but if the plan isn't going to be ready until next year, then
pay for it out of next year's budget. There is no need to keep this
year's budget back for it.

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