We hope that the Tips are enjoyed by a wide audience of persons in pharmacy, but we know that many of our readers are students. So in keeping with the last two Tips on accounting, this week’s Tip focuses on budgeting. This week, though, we discuss budgeting specifically for a pharmacy student organization.
Feild et al discuss some budgeting tips as well as how to establish a dues structure.1 They remind readers of the importance of budgets for planning that enables an organization or department to carry out its mission. Budgeting takes into account past financial successes and failures, allots funds during the current fiscal year, adjusts according to unforeseen monetary needs, and anticipates future needs or gaps in income. It is suggested that a budget must accomplish the following: clarify the financial goals correlated with each planned program and activity, encourage members to use funds effectively and efficiently, and assist in decision-making by providing accurate financial information and a historical reference for current and future planning. Rather than just one treasurer shouldering all of this responsibility alone, it might be best to have a financial committee. They suggest a stepwise approach to budgeting. First is setting financial goals, wherein the chapter asks itself what does it want to accomplish, how much will it cost to accomplish, and from where will the monies be obtained over what time period. The chapter must be mindful of financial reporting requirements of the University and/or college/school. The chapter then defines its funding sources. After an organization has estimated their costs it must consider funding sources, which would be from dues and external revenues from fundraising, grants, institutional funding, donations, and other prospective sources. Discussing past fundraising events with other student organizations can assist in identifying feasible fundraising activities and determining an attainable goal. Next is defining expenses. These include administrative and operational costs, such as recruitment, travel, promotional materials, speaker fees, venue and equipment rental, and other. Then comes achieving fiscal balance. In simple accounting terms, the sum of expenses must not exceed the sum of revenue. An analogy can be drawn from health insurance policies. Determining the spread of internal and external income can be likened to choosing an insurance plan, with insurance premiums representing member dues and with copayments or coinsurance representing income rom fundraising and donations. Just as a consumer does when shopping for insurance, a student organization must determine whether it would like its members to pay lower upfront costs but more out-of-pocket expenses at the time services are rendered or to pay higher upfront costs but little or no costs at the time of service. With the former strategy, each member of the student organization is responsible for a smaller dues payment, but the organization must ensure that all members help fundraise or obtain donations in order to create new programs or undertake grander initiatives; with the latter approach, members’ payment of higher dues up front allows the organization’s leaders to worry less about fundraising to cover event costs.
Pharmacy students can learn much from participating in the budget process for a student organization. This is good training for the type of budgeting that has to be undertaken for pharmacy organizations.
Additional information about Budgeting in Pharmacy Management: Essentials for All Practice Settings, 5e. If you or your institution subscribes to AccessPharmacy, use or create your MyAccess Profile to sign-in to Pharmacy Management: Essentials for All Practice Settings, 5e. If your institution does not provide access, ask your medical librarian about subscribing.
1Feild CJ, Patel PN, Childs-Kean LM, et al. Budgeting and determining a dues structure for a pharmacy organization. Am J Health Syst Pharm. 2018;75:856-860.