What a Program Costs, and What We Choose to Fund

When a program brings in $8,000 and its vendor bills total $6,000, it is tempting to report a $2,000 surplus.

Before I would call it that, I would want to know where the staff time went. Who handled registration, prepared the speakers, resolved problems, reconciled payments, and followed up with members? What other work waited while those tasks were completed?

Those questions matter whenever an association is deciding what it can keep offering. They become particularly useful when revenue is uncertain and every service has a constituency that wants it protected.

My recent learning about economic pressures has brought me back to a practical concern: whether our commitments can survive a change in the assumptions behind them. An association does not need a prediction of the next crisis to examine that.

Count the work the invoices leave out

Here is a simplified, hypothetical example of one education program. These figures are illustrative, not results from an association I have worked with.

The program may still deserve that $800 investment. It might serve members who would otherwise have little access to education, prepare future volunteers, or support an important professional responsibility. The board can consider those purposes once the investment is visible.

This calculation allocates existing staff and administrative costs to the program. It does not mean the association will recover $2,800 in cash by canceling it. Salaries and some shared expenses may remain. Ending the program could release staff time while producing much smaller cash savings.

It is also only an operating-cost example. Full organizational funding needs can include reserves, working capital, debt repayment, and future investment. Research and practice guidance on nonprofit financial capacity distinguish surviving a near-term disruption from maintaining services over time. I would keep both in view rather than treating an annual balanced budget as the whole financial picture.

Ask the question the calculation is meant to answer

A cost number becomes useful when we know which decision we are making.

If we are setting the annual investment in a service, allocated operating costs help us understand what it draws from the organization. If we are deciding whether to admit one more participant, we need to examine the additional costs that participant creates. If we are considering cancellation, we need to know which costs and obligations would actually change.

For shared staff time, a reasonable estimate can be more useful than false precision. Ask the people doing the work to estimate their hours, include preparation and follow-up, and use a consistent allocation method. Record the assumptions and check them after the next delivery. Avoid counting the same salary, benefit, or administrative expense twice.

Volunteer effort deserves attention as well. It may create no payroll expense while still being essential to the service. Record the hours and the dependence on particular people separately. An association needs to know whether a program survives only because one volunteer keeps supplying extraordinary effort.

Choose the subsidy openly

Many associations use dues or other flexible income to support work that will never pay for itself through fees. Advocacy, access, member assistance, and smaller communities of practice may belong in that category.

I would ask the board to make that choice explicit: whom the investment serves, why it belongs in the mission, what funds will support it, and when the association will review the arrangement.

That is a more useful conversation than asking every program to break even. It also makes it possible to discuss whether the benefits and costs are distributed fairly. A low enrollment figure might reflect a small audience with a substantial need. A popular event might consume resources that the association has never properly counted.

Test one change before the pressure arrives

Organizational resilience research describes preparation, response, and learning as capabilities organizations can develop. Much of that work is conceptual, so I would treat it as a way to improve our questions rather than a formula that guarantees survival.

For an association, start with one believable disruption: fewer registrations, a late sponsorship payment, a key volunteer becoming unavailable, or a supplier cost increasing. Use your own figures and describe the assumption plainly.

Then work through what changes:

• Which commitments are already fixed, and what can still be adjusted?
• What happens to cash timing, staff availability, and the member experience?
• Who can change the format, spending, or scope, and what needs board approval?
• What evidence would prompt that decision early enough to be useful?

The exercise should end with a choice and an accountable person. “We will monitor it” needs a measure, a review date, and an agreed response if the assumptions change.

For your next budget conversation, bring one program's revenue, allocated operating costs, purpose, and avoidable costs. Those four pieces of information give directors a much better basis for judgment. They also give staff a fairer account of the work the association is asking them to carry.

References

1. Duchek, S. (2020). Organizational resilience: a capability-based conceptualization. Business Research, 13, 215-246. Read the source.
2. Bowman, W. (2011). Financial capacity and sustainability of ordinary nonprofits. Nonprofit Management and Leadership, 22(1), 37-51. This study concerns public charities that are not primarily membership associations; its concepts are used here without importing its benchmarks. Read the source.
3. Nonprofit Finance Fund. (n.d.). Full Cost Framework [Practitioner guidance]. Read the source.

Training and reading background

• Salois, M. (2026, September 25). Surviving the Next Economic Reckoning: A Playbook on How to Rethink Everything and Thrive [Training slides]. VMAE INSPIRE!; Veterinary Management Groups.