American Heart Association: Budget Policy and Recommendations Report

This report provides a comprehensive analysis of the American Heart Association's (AHA) budget policy. It begins with an introduction to the AHA, its mission, and its role in combating cardiovascular diseases. The discussion section details the AHA's budgeting process, including revenue sources such a...Read More

Running Head: BUDGET POLICY
BUDGET POLICY
Name of the Student
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Table of Contents
Introduction................................................................................................................................3
Discussion..................................................................................................................................3
Conclusion................................................................................................................................11
References................................................................................................................................12

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Introduction
The American Heart Association (AHA), one of the oldest and well established non-
profit organisation in the United States, focuses on educating public about healthy living and
funds those who are suffering from cardiovascular diseases and medical researches for the
same. Main goal of the organisation is to make the country free from cardiovascular diseases.
The group was established in the year 1924 as a body to prevent and secure people of US
from heart diseases. In the year 2014, the group issued an additional guideline for preventing
women that suffered from heart strokes and diseases (Saruta & Puig-Junoy, 2016). This paper
aims on discussing the process that AHA takes at the time preparation of its annual budget. It
then provides with necessary recommendations that would help in improving the budget of
the group.
Discussion
Part 1
A budget is a framework prepared by corporate institution in order to estimate the
expenses that are likely to arise in the upcoming financial year and how the company is going
to payoff them. A good budget helps in increasing the productivity and efficiency of the
organisation. Process of budgeting starts with estimating assumptions regarding sales trend,
costs and other factors related to the economy and the business for the upcoming period.
Usually organisations prepare two types of budgets, which are static budget and flexible
budget (Saruta & Puig-Junoy, 2016). A static budget is the one that remains same for the
entire budget period whereas a flexible budget is the one where the budget is altered when
there is a change in the economy or other factors that affect the organisation. American Heart
Association with its headquarters at Della aims at improving the health issues in the United

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States and has taken various measure and policies to improve the same (Heart, 2020). These
steps taken by the group have a major impact on the budget processes of the group.
American Heart Association prepares its budget annually before the start of the
current financial year or at the end of the previous financial year. Board of directors and
executive directors of the organisation establish and revise the budget for the upcoming year
(Heart, 2020). CBO, is a place where regular budget publication is prepared on the basis of
the economic outlook and annual reports of the organisation (Saruta & Puig-Junoy, 2016).
Australian Heart Association takes help from CBO in the annual preparation of their budget
and continuous revision at regular intervals. The functions regarding the budget of the
organisation is prepared at the headquarters of Congressional Budget Office, which is located
in Washington DC at the Ford House office Building (Heart, 2020). The budget of the group
can be accessed from its annual report that is available on the official website of the
American Heart Association.
The Government of the United States or legislative body of the US government has
played a major role in determining the outlines and framework for US’s global health policies
and programmes. There have been a remarkable improvement in the health issues of the
public in America over the last 15 years. This engagement of the US government is carried
out by both the US House of Representatives and the US Senate (American Heart
Association, 2020). They work together with their committee members towards the one
common aim that is to collect funding for the US health program and providing treatment and
protection against heart issues and strokes.
The revenue forecast of the organisation is never 100 per cent accurate. Although
preparing this budget helps in paying off or treat the expenses early. The American Heart
Association forecast their revenue and expenditure in the beginning of the financial year to

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set goals for the coming year. The group considers revising or reviewing its budget at regular
interval to consider variations that would enhance or improve the actual performance of the
standard (American Heart Association, 2020). The functioning of the group is guided by
various factors that are commonly known as five pillars. These pillars are as follows
1. Alteration in Policy
2. Alternating System
3. Converting Communities
4. Enhancing developments in Research and Development sectors
5. Transmuting health care
The group has developed various technologies and policies over the years to benefit
the people of the country in protecting them from heart diseases, strokes and promoting
healthy life style in the country. All these activities requires good amount of planning and
resources to be carried out or to be successfully performed. Hence, a well-planned budget
helps in fetching funds and providing services to the public in order to achieve its goals. The
organisation has more than 3400 employees and has captured the country with more than 147
local offices that are run by more than 40 million volunteers who help as supporters in
various campaigns (American Heart Association, 2020). It aims at creating awareness and
advocate people to achieve health influence goals that lead Americans live healthier life
styles. They advocate policy makers, law makers and other such professional to establish
strong and effective policies to achieve their goals.
The American Heart Association makes sure there is no dispute or conflict arising due
to any external or professional or business interest conflicts in the future. Hence, to protect
the group and the group’s representatives, AHA makes it mandatory for any member of the
association to give in to the disclosure in the form of a questionnaire that records all the

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necessary details which are apparent to back any conflict or dispute (American Heart
Association, 2020). Participation of the country’s citizens is an assessment stage of the
organisation that provides or highlights the recommendations and suggestions for the
upcoming budget plan. As budget is a continuous process it requires input from the public
and hence, these inputs influence the decision making at every stage of resource allocation.
Budget Policies:
The measurement of the performance budget plays a crucial role in determining the
budget cycle for a financial year. This includes a detailed analysis of the revenues and
expenditure that are earned or generated by the organisation in the past years and helps in
getting insights on appropriate choices and decisions that can be made by the organisation.
The American Heart Association prepares a master budget, which records all expected
or future production levels, sales revenue, purchases and capital investments (American Heart
Association, 2020). In short it includes all relevant financial budgets as well as budgeted
income statement and balance sheet of the group. Hence, master budget helps AHA in
strategically plan for its future activities, all these aspects are documented in the
organisation’s record for future predictions. It helps the management of the association to
take vital decisions and prepare long term strategies for future.
The revenue and expenses of the American Heart Association is associated by doing a
detailed analysis of the previous year’s financial statement. Through this analysis various
details are determined about the group’s trends over the years, its overall growth rates year
after year and the deficit in the financial statements. This analysis is done to achieve the goal
of the organisation, which is to reduce the number of deaths that are caused by cardiovascular
stroke and other heart issues. The overall progress of the organisation’s report has recorded

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an improvement of 3.8 per cent by decreasing the total CVD by 15.1 per cent and a 13.6 per
cent reduction in the total stroke rate (Benjamin et al., 2017).
The guidelines of the organisation at the time of preparing the budget are divided in
two major heads, one, from public support and revenue and the other is the expenses that are
incurred annually. Major revenue of the organisation comes from net special events
contributing to 37.3 per cent of the total revenue. 17.5 per cent of the total revenue is
generated from CPR training Revenues, Bequests contributes to the 9.5 per cent of the total
revenue, contributions making up to 21.31 per cent and other revenues make up to around
14%. 85 per cent of the total revenue generated by the group is utilised by the organisation in
paying off the expenses and the rest is kept for the next financial year. Major expenses of the
group are public health education contributing to 33.1 per cent, professional education and
training as 18.3 per cent, community services as 7.1 per cent, management and general as 8.1
per cent, fund raising as 8.1 per cent and research being 22.2 per cent (Benjamin et al., 2017).
Recommendations
Part 2
A budget is an important tool that helps an organisation in presenting a clear picture of
the future expenses and revenue and determining the short term and long term goals of the
organisation. It helps the group to stay focused towards their goals and needs to be performed
after proper research and analysis. Various things or points that the organisation should keep
in mind at the time of preparing budget or documentations are as follows:
1. Clarifying the present context:
To prepare a successful budget that helps in attaining the goals of the
organisation it is very important to have a clear picture of the group’s present
financial situation (Ibrisevic, 2020). Gathering all the information regarding the

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organisations financials and resource allocation, evaluating the year-end forecast,
variances of the current budget and analysing the strength of the balance sheet of the
organisation helps is acquiring a clarity in preparing the budget (Ibrisevic, 2020).
Managers or boards should consider external factors that could influence the current
budget. These factors can be the change in currency’s value, any economic change,
threats or opportunities that would influence the activities. This would give a clear
picture on what are the goals and prioritize that the current budget would be focusing
on. It requires a well thought structure of the budget that would provide best support.
This act requires various resources, which the organisation should keep in
mind and try arranging them. Resources that are required for this act are proper tools
that would help in analysing big data and an analytical professional that would
perform these activities. This would save the time of research and analysis of the
organisation. A detailed SWOT analysis of the organisation’s budget would help in
analysing the economy trends and opportunities and threats that are present in the
economy that would affect the budget directly or indirectly.
2. Do not assume:
A budget should not be prepared on the basis of assumptions or what the
boards thinks is likely to happen. However, it is not possible to eliminate assumptions
completely while preparing a budget. The managers or the budget makers should
work as much as possible with the numbers (Ibrisevic, 2020). They should consider
previous years facts and data in making any estimation so that the risk adhered to it is
minimised. One should also consider analysing the economic trends to find out the
estimated demand in the market and then take actions accordingly. To do this,
consider the list of all the expenses that have occurred in the last two to three years or
is likely to happen this year. Then, consider the best and the worst case scenarios.

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Analyse accordingly and make a call and include the point in the budget plan
(Ibrisevic, 2020). A non-profit organisation like AHA should know from where
exactly their revenues will be generated and how it is to be utilised for attaining the
goal of their organisation.
This is one of the most essential steps and should be done carefully by proper
analysis, which requires highly skilled professionals who know strategies to analyse
these data accurately and estimate based on tools and formulae. They should have
access to all the past records of the organisation financials and the economy in which
the organisation is operating. It is a time consuming process and requires a detailed
proper analysis. Hence, time and skilled professionals are the major resources
required to carry these steps.
3. Team efforts
Budgeting is usually prepared by the boards or the managers. However,
involving the staffs, volunteers, and other employees would help in preparing a more
accurate and comprehensive budget (Ibrisevic, 2020). Discussing the budget with
everyone and considering everybody’s view will make the budget even more goal
oriented. Preparation of the budget is a challenging job that leads to difference in
opinion and conflicts (Ibrisevic, 2020). Uniting with the entire team at the time of
preparation of the budget would give it a better approach and present a greater
opportunity to the group.
This step or recommendation requires equal participation of all the employees,
volunteers and the staffs of the group. Hence, proper meetings should be help before
preparing this budget.
4. Cash-flow priority should be clear:

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Cash flow projection is one of the most vital tool that is to be used by the non-
profit organisation. Cash flow budget is determined as the budget of revenue
generated and expenses incurred. This should be calculated on a monthly basis to
make sure that there is enough cash at the time of deficit. The organisation should
determine its non-profit cash flow and what could be the possible actions that the
organisation can take when there is no or less cash flow (Ibrisevic, 2020). If the
organisation plans to incur all its expenses in the first three months of the year and all
its revenue are generated in the last three months of the year. Then, it is likely to
happen that the organisation will fail to pay its expenses unless there were large
surplus from previous years (Ibrisevic, 2020). Therefore, to plan cash flow
appropriately it is vital to first plan the estimated revenue and expenses.
The board members have straight role in presenting the projected cash flow,
the assumptions that are to be used and revising and reviewing these budgets.
5. Proper monitoring the budget throughout the year:
Budget is not just to plan the estimated expenses and revenue of the
organisation. It should be monitored and review throughout the financial year. These
should not be discussed, proposed and then forgotten (Ibrisevic, 2020). Once a budget
is prepared the estimated figures should be regularly monitored with the real figures
and values as and when the activities are occurred. A proper calculation of the
deviation of the actual figures from the estimated ones should be done and the reason
for this deviation must be noted down for future reference (Ibrisevic, 2020). An
effective budget plan is the one which does not have the same flaws that were
recorded last time.

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The key to monitor budget throughout the year is good communication. Good
communication with the staffs, employees, volunteers and other management helps in
monitoring and determining the deviation.
Conclusion
From the above report it can be concluded that the budget of the group can be
enhanced or upgraded by keeping regular track of the activities and then comparing the same
with the estimated or the budgeted one. Involving more employees or public can improvise
the group’s budget plan. This report focuses on presenting the budget policy taken up by a
non-profit organisation of the United States. The research and development department of the
organisation aims to address various problems faced by the group in attaining its goals. The
guidelines and policies of the American Heart Association is also discussed and elaborated in
the report.

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References
American Heart Association. (2020). Retrieved 18 February 2020, from
https://www.heart.org/en
Benjamin, E. J., Blaha, M. J., Chiuve, S. E., Cushman, M., Das, S. R., Deo, R., ... & Jiménez,
M. C. (2017). Heart disease and stroke statistics-2017 update: a report from the
American Heart Association. Circulation, 135(10), e146-e603.
Chohan, U. W. (2017). Budget offices. Global Encyclopedia of Public Administration,
Public Policy, and Governance.
Heart (2020). Retrieved 18 February 2020, from https://www.heart.org/-/media/files/about-
us/annual-report/american-heart-association-annual-report-for-2018-2019.pdf
Ibrisevic, I. (2020). A Guide to Nonprofit Budgeting: Get Your Basics Right (+ Free
Template). [online] Nonprofit Blog. Available at: https://donorbox.org/nonprofit-
blog/a-guide-to-non-profit-budget/ [Accessed 24 Feb. 2020].
Saruta, Y., & Puig-Junoy, J. (2016). Cost and budget impact analysis of an accurate
intraoperative sentinel lymph node diagnosis for breast cancer metastasis. Applied
health economics and health policy, 14(3), 323-3.