What is the first step in the budgeting process for an organization?

The first step in the budgeting process for an organization involves listing the organization's program goals and objectives and estimating their costs. This foundational step is essential because it establishes a clear framework and direction for financial planning. By identifying specific goals and objectives, the organization can align its budget to effectively support its mission and strategic priorities.

This approach ensures that the budget is not merely a numerical representation but is intimately connected to what the organization aims to achieve, which is critical for resource allocation and prioritizing expenditures. Once these goals are defined and their associated costs estimated, the organization can make informed decisions about funding, resource allocation, and how best to pursue revenue generation.

The following steps in the budgeting process, such as projecting revenues and determining which revenue sources to pursue, build upon the clarity established by this initial step. By focusing first on the program goals and their financial implications, organizations can create a budget that is cohesive and strategically sound.