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

The first step in the budgeting process for an organization is to list the organization's program goals and objectives and estimate their costs. This foundational step is crucial because it establishes a clear vision of what the organization intends to achieve during the budgeting period.

By identifying and articulating program goals and objectives, an organization can ensure that its financial resources are aligned with its mission and strategic priorities. Once these goals and objectives are clear, estimating their associated costs allows for a more structured and informed budgeting process. This step helps in preparing a budget that reflects the real financial needs of the organization, enabling effective planning and resource allocation.

In contrast, evaluating past budget performance, identifying funding sources, and drafting reports for stakeholders are all essential components of the broader budgeting process, but they occur after the initial articulation of goals and objectives. Without a clear understanding of what needs to be funded and why, the budgeting process lacks direction and purpose. Therefore, starting with goals and objectives ensures that the subsequent steps in the budgeting process are built on a solid foundation.