Most not-for-profit associations are not required to provide a provisional budget, unless this is stipulated in their articles of association.
On the other hand, some of them, such as associations recognized as being in the public interest, benefiting from specific approval, or managing establishments in the health, medical-social and social sectors, are subject to accounting obligations, including the preparation and supply of a sound balance sheet forecast.
Finally, an association wishing to apply for public funding in the form of a grant must be able to present this document.
Here are a few best practices to get you started.
What are the management constraints for non-profit associations?
The 1901 law governing non-profit associations put an end to the restrictive and preventive prohibition of the 1854 "Le Chapelier" law, giving every citizen the right to associate without authorization.
It applies to all associations headquartered in France, except those in Alsace-Moselle, which benefit from the concordat regime dating from 1802. Article 1 of the 1901 law stipulates that an association is considered "an agreement by which two or more persons permanently pool their knowledge or activities for a purpose other than sharing profits".
However, the law of 1901 does not prohibit associations from carrying out profit-making activities, but they are not allowed to distribute these profits. These sums must be integrated into the association's treasury. They are often used to cover part of the association's financial needs.
The usefulness of a budget forecast for an association
By preparing an annual budget, the association can ensure that its accounts are balanced. Generally speaking, the treasurer is in the best position to draw up this document, as he or she has access to all the information concerning the association's income and expenditure.
Indeed, a non-profit association, like any other business, needs to manage its expenses properly. By grouping the income and expenditure forecast for the coming year, category by category, on a single document, the treasurer can regularly monitor the evolution of the forecast budget in relation to reality, and ensure that expenditure is always covered by income. If he or she notices any slippage, he or she can alert the management so that they can take the necessary steps as quickly as possible.
What information should be included in an association's provisional budget?
They may differ from one association to another, although certain items are always present.
Recipes
They come from :
- membership fees (the amount of which is set in the Articles of Association; it may be the same for all members or vary according to certain criteria, such as age);
- manual donations ;
- support events (lotos, flea markets, lotteries, etc.) up to a limit of 6 per year;
- refreshment stands at events organized by the association itself, up to a limit of 5 events per year;
- sales of products (for these revenues to be exempt from payment of commercial taxes, the association's management must be disinterested, the activity must represent a marginal share of its budget, and it must not compete with the private sector).
Finally, some associations may apply for a grant if their activity is of benefit to the local community. To obtain a grant, you must submit a budget estimate and justify the use of funds.
Expenses
The main positions to be filled are
- rent for premises plusinsurance;
- electricity and gas charges, telephone and internet subscriptions;
- office supplies ;
- postage, transport and reception costs;
- miscellaneous expenses.
There is also an item for exceptional costs, which can amount to around 5% of total expenditure.
How should an association's budget be presented?
There are no special formalities involved in setting up an optional provisional budget. However, it is advisable to use a dematerialized medium. A spreadsheet program is ideally suited to the creation and use of this type of document. It allows you to benefit from automatic calculation formulas and to create a template that can be reused each year and modified if necessary.
The provisional budget must comply with the principles of sincerity and transparency. This document is usually attached to the annual reports presented by the association's directors to all members at the Annual General Meeting.