Come together: how to marry strategic & financial plans for a more flexible, accurate budget.

• Author: Brock, Paula
• Position: Cover Story

The budgeting and planning process can be a persistent challenge for all businesses. But for an organization like the Zoological Society of San Diego, which runs one of the world's largest zoos, the process can be mission critical--in more ways than one.

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As an audit senior manager with KPMG, and later as a senior financial officer with ITT, I saw how corporate entities were driven by certain acronyms, like ROI and IRR. And, the Zoological Society is no exception.

However, a unique requirement of working for a private, not-for-profit corporation is that we also are interested in our ROM--return on mission. In a sense, our shareholders are the more than five million people who walk through our gates every year and the future generations who will benefit from our conservation efforts.

MISSION IN MIND

We take a long-term view about our goals, and financial decisions are matched against our mission statement: The Zoological Society is a 90-year-old conservation, education and recreation organization dedicated to the reproduction, protection and exhibition of animals, plants and their habitats.

So we ask questions like "Have we been effective in assisting condors to continue?" Or "Have we been effective in saving elephants from being culled in Swaziland?" It's a much different approach than that taken by typical corporate entities and requires a budgeting and planning process that goes well beyond the next quarter's earnings.

Our budgeting and planning process also has been hastened, as our conservation efforts--the science of the zoo, closely linked with our animal collection--become a larger part of our mission to meet the expanding conservation needs in the world.

Specifically, we now link high-level strategy to the budgeting process, uniting the strategic plan with the financial plan. And in addition to several budgeting and planning process improvements over the last few years, we've added a monthly re-forecasting process to keep our budget more flexible and projections more accurate.

ACCEPTED WISDOM

The budgeting process is just one aspect within a larger planning process that is multi-year, strategic and visionary.

There is a formality to an organization's annual budgeting process that includes developing a strategy in terms of where it wants to be over the next year and then determining how that goal fits into a five or 10-year plan.

Budgeting can be done from the top-down or from the bottom-up. The top-down approach begins with an organization's global targets that are then pushed down to the various elements of the company. The bottom-up approach allows each department to build its own budgets, which are then compared to the corporate goals.

Each approach is an iterative process, involving much deliberation as staff seeks to make its preliminary budgets fit into the organization's strategic goals.

BUDGETING HURDLES

But there are several budgeting...