But expense budgeting is the easy part. The real challenge comes when you budget your income. If you have earned revenues from your programs, this is the place to begin. Assuming your client base is stable, your income projections should be fairly accurate. But if your earned revenue comes from ticket sales, for example, you will probably see fluctuations based on the popularity of the event and your ability to promote and publicize your concert, play or lecture.
Contributed income is the most difficult item to project accurately.
If you have several years of history behind you, it will be easier but this is still an area that is riddled with danger. You will be wise to always take the conservative figure when you are adding up your potential grants, contributions and income from special events. Do not simply total your expenses, subtract your earned income and take the remainder for your projected contributed income. This is the best way I can imagine to put your organization in a budget deficit situation. You must be reasonable and prudent when calculating your income from contributions, even if it means cutting expenses.