Week 1 -Discussion 1 Budget Comparison of Two Budget Types ✓ Solved

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Compare and contrast at least two (2) different types budgets highlighting organizational benefits. Which of the two types do you think is most beneficial or advantageous to organizations, and why or how? Your initial post should be at least 300 words credibly supported with one current (no more than 7 years old) scholarly source that you briefly cited and referenced in keeping with ethical scholarship.

Paper For Above Instructions

Budgeting is a critical component of financial planning for any organization, particularly for mental health facilities that often deal with volatile funding sources. Two commonly used budget types are the incremental budget and program budgeting. This essay examines both budgeting approaches, highlights their respective organizational benefits, and evaluates which method can be considered more advantageous.

Incremental Budgeting

Incremental budgeting is a traditional budget approach that involves taking the previous year’s budget as a base and making adjustments for the new period. This method is straightforward; it usually involves adding or subtracting a percentage to account for inflation, new programs, or reduced funding (Dropkin et al., 2007). One of the main advantages of incremental budgeting is its simplicity. Managers and staff are already familiar with the previous year’s budget, which streamlines the planning process. Furthermore, incremental budgeting can contribute to stability in funding, as it allows organizations to plan for adjustments based on historical data.

However, a significant downside of this method is that it may encourage complacency. Organizations may overlook necessary investments in new programs or innovation since they primarily build on past budgets. This could lead to a cycle of stagnation, where funds are allocated based on historical expenditures rather than the current or future needs of the organization.

Program Budgeting

On the other hand, program budgeting is a more modern approach that focuses on the costs associated with specific services or programs rather than merely adjusting previous expenditure. This method requires a thorough evaluation of which services are essential and how resources can be allocated to maximize benefits (Sperling, 2015). Program budgeting facilitates a priority-driven approach by linking funding directly to anticipated program outcomes, thereby enhancing accountability and effectiveness.

The primary benefits of program budgeting are its flexibility and focus on results. It allows organizations to adapt to changes in community needs and funding opportunities actively. Through program budgeting, mental health facilities can better align their budget with mission-driven approaches by thoroughly assessing and adjusting resources according to the efficacy of programs (Health Services Administration, 2015).

Comparison and Conclusion

While both budgeting types have unique strengths and weaknesses, program budgeting proves to be more beneficial for organizations, especially mental health facilities, looking to innovate and respond to changing population needs. Unlike incremental budgeting, program budgeting enables service providers to make data-driven decisions by focusing on available programs and measuring their impact. This can lead to improved resource allocation and enhanced service delivery, ultimately better serving the mental health community.

Overall, although incremental budgeting offers a stable financial model, program budgeting’s adaptive framework encourages a more strategic approach to resource allocation, enabling organizations to invest in areas that most benefit their clientele and community.

References

• Dropkin, M., Halpin, J., & LaTouche, B. (2007). The budget-building book for nonprofits (2nd ed.). Jossey-Bass.
• Sperling, M. (2015, February 20). President Obama’s 2016 budget: What does it mean for mental health?
• The Substance Abuse and Mental Health Services Administration. (2015). The Substance Abuse and Mental Health Services Administration operating plan for FY2016.

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