Operating Budget for a Group Home
Group homes -- whether housing children, seniors or residents with special physical or mental health needs -- have basic operating expenses the organization must include in its budget. Your operating expenses, generally non-negotiable, are critical to the day-to-day functions of the group home. Identifying those expenses is only half the job of creating an operating budget. The group home’s budget also includes the expected income sources allocated to pay the expenses. A budget review by an attorney or financial professional can ensure that your budget covers all the bases, both operational and legal.
Group home operating expenses include wages, salaries and benefits for group home employees. Other operating expenses are related to the building that houses the group home, such as rent, utilities, housekeeping, lawn care, maintenance and repair. Food, materials, supplies, clothing costs and fees for permits and licenses are operational expenses. A group home’s operational expenses can include travel, recreation and medical services for residents and advertising. Contractual services to perform operational tasks, such as payroll management, financial services or transportation of clients, also qualify as operational expenses. Group homes often set a percentage of the total budget for indirect or administrative costs.
Whether you are developing a budget for a new or existing group home, use existing financial records to create your operating budget. The budget from an existing group home of similar type and size will help with projecting likely operational expenses. Your budget from the previous year will help you to fine-tune your projections and determine the amount of funds to allocate for each line item in the budget. List the income sources and amounts you expect to use to operate your group home. This can include government contracts, grants, donations, resident fees and investment income. Nonprofit Accounting Basics, a program of The Greater Washington Society of CPAs, recommends budgeting to income as a first step in budget preparation.
Ensure that restricted funds are used as instructed by the donors. For instance, a foundation might restrict its grant to use for mental health services. An individual donor might restrict the use of his donation to recreation or allowances for residents. Continue to adjust allocations as necessary, such as lowering non-essential expenses to free funds for essential costs. Nonprofit Accounting Basics recommends not including uncertain income to fill funding gaps and keeping projected expenses a bit lower than projected income. You might find it helpful to establish requirements that specific percentages of the budget pay for salaries and indirect expenses.
A typical group home operational budget uses a standard template that displays the information in columns for line item name, expense amount and description. Some organizations divide the budget and income into quarters of the fiscal year for tighter control. Categories of expenses, listed separately under the headings, include facility, salary and benefits, consumables and other. The budget forms often include a section for income and sources. The budget narrative includes a short explanation of each line item and expense. For instance, the resident allowance total of $3,600 for the year is to provide $50 monthly to each of the six group home residents. The narrative might include a breakdown of salaries, payroll deductions and benefits for each employee or calculations for the rent, such as $1,000 a month x 12 months = $12,000.