What is often the starting point for preliminary budgets for the upcoming fiscal year?

The starting point for preliminary budgets for the upcoming fiscal year is typically the previous year's budget. Using the prior budget provides a baseline that reflects the historical spending habits and funding allocations within the organization. This foundation allows for adjustments based on actual expenditures and income from the previous year, making it a practical reference for forecasting future financial needs.

By analyzing the previous budget, departments can also identify areas where costs can be cut or resources reallocated, facilitating informed decision-making for the upcoming fiscal period. This method allows for continuity and helps ensure that all necessary operational expenses are accounted for, while also providing a framework for any strategic adjustments needed in response to changing priorities or financial constraints.

In contrast, starting from projections for the next year or current operating expenses might lack the context to make effective budgetary decisions since they could be based on assumptions or incomplete data. Projected income from fundraising introduces further variability and can be uncertain, which might not provide a reliable starting point for budget planning.