Most nonprofit organizations have a great deal of experience in the funding cycles of their immediate charitable funders but fewer are knowledgeable about how government budgets are created and managed. Understanding the annual cycle of how government ministries prepare and evaluate their spending proposals can help nonprofit organizations plan and implement their own activities and ultimately co-ordinate these activities to maximize their effectiveness in approaching governments for funding.
The Annual Budget Cycle
Individual ministries prepare an operating plan for the year including programs, staffing, space and IT for the following fiscal year.
Ministries receive an instruction book with guidelines on how to prepare their budget for the following government fiscal year (for example, the guidelines might include instruction that budget must shrink by 3% or can include an inflation adjustment of 2%). The single consolidated annual or operating plan incorporates the ministries’ own activities in addition to the operation of existing programs. The budget does not usually include proposals for new programs or expansion of existing programs. However since the maintenance of existing programs may not fall within the instruction book guidelines, typically budgets include notes on the implications of: a) maintaining the ministry within the budget guidelines or, b) maintaining existing programs at current service levels.
1. To be fully effective agencies should be speaking to their respective government departments in the early fall armed with program reviews, assessments and evaluations including ideally quantitative, as well as qualitative analysis and evidence-based outcomes. Recommendations might include proposals to make existing programs more effective as well as producing new program proposals.
Ministry budgets scrutinized in detail and Ministry of Finance prepares overall government budget with major program announcements.
Ministry budgets are submitted in December or January and scrutinized by central financial agencies (Cabinet Office, Management Board, etc.) and the Minister of Finance begins to prepare the overall budget. This budget does not contain the details of each ministry’s budget, only the overall spending parameters: tax increases/decreases, major program announcements and total ministry budgets. New ideas are being sought from outside government and within government. If the same idea is heard both from within government policy circles and from outside government consultation, it has a better chance of penetrating government decision-making.
2. Continue a dialogue with your respective ministry with program enhancement ideas or new program proposals. Even in periods of severe restraint the government may still add programs if they are confident that they will have successful outcomes. Individual politicians and organizations can have an impact during this period on what is funded. Develop multiple pathways to the government sector through relationships with civil servants in appropriate ministries, ministers’ political offices, M.P.P.s and M.P.s, academics, premier’s ‘kitchen cabinet’, government relations professionals, and the media. Use contacts developed through your own administrative staff as well as the contacts of your board of directors. Don’t rely on one set of government contacts. Cultivate contacts from a broad range of political stripes.
Ministries figuring out how to implement the approved budget and resources.
The new fiscal year for the government begins April 1 and the budget is made public usually in April or early May. Ministries now work within their approved budget envelope to finalize detailed spending for the coming year. Ministries explain detailed budget implications to the individual nonprofit organizations, which requested funding. At this point the ministry may consult with outside associations and agencies about the best use of program funds for the current year.
3. Ministries are now trying to best use their resources for the current fiscal year. A well-organized agency will be consulting with ministry staff with recommendations for the best management of program funding. Even if the ministry cannot tell you final funding decisions there is still a value in speaking to them about the best use of overall program resources. Explore whether ministries have some contingency funding set aside which allows them to address small program improvements, program rationalization or enhancement, pilot projects or short-term funding.
Program review and preparation for the following fiscal year.
Program review can be triggered from a number of different areas. The previous provincial government mandated that every major spending program should have some level of review at least every five years. The new government will create its own review timetable. In addition, an extraordinary review may be prompted by such things as: auditor’s criticism in annual report, policy change by new government, media attention, fiscal constraints, court challenges, prioritization of resources, or a change in federal-provincial relations. Ministries work with the provincial auditor to review programs, which the auditor has targeted. Auditor identifies programs in February, carries out audits over the summer and publishes results in November. If the audit is well done it produces a good analysis of the program’s strengths and weaknesses and a set of recommendations. The ministry will then have to spend some time in the fall responding to the auditor’s recommendations. There is a follow-up review to the auditor’s recommendations one or two years later. Program reviews may present an opportunity for a stakeholder organization to present program enhancement/improvement recommendations or new program proposals.
4. Prepare evaluations and audits of your own organization’s programs with program strengths and weaknesses to be completed by Labour Day to allow output to flow logically into the government budget cycle. In developing new program proposals, look at existing program delivery models. In a risk-adverse environment they provide useful examples of established and effective delivery mechanisms which can be more easily understood and replicated in considering new program design.
5. If your organization’s fiscal year does not fit within the government funding cycle, consider changing your fiscal year to mesh more closely with the above seasonal cycle (for example a fiscal year beginning July 1). This can be particularly helpful to organizations whose fiscal year is based on a calendar year basis, for example, and are often halfway through their fiscal year before government granting decisions are announced.