Zero-based funding model

The Zero-based funding model is a budgeting approach that starts with a “zero” budget at the beginning of each budget cycle and requires every budget item to be justified based on its relevance, efficiency, and effectiveness in achieving organizational goals.

In a Zero-based funding model, all budgetary requests must be analyzed and justified, regardless of whether they have been funded in previous budget cycles. This requires organizations to evaluate all expenses as if they were new expenditures, and to prioritize spending based on their alignment with organizational goals and objectives.

The Zero-based funding model contrasts with the traditional budgeting approach, Learning Management System, which is often based on incremental budgeting that uses the previous budget cycle as a starting point and adjusts it to account for changes in the current budget cycle.

By using the Zero-based funding model, organizations can ensure that all budgetary requests are aligned with their strategic goals and are prioritized based on their relative importance. It can also help organizations identify and eliminate inefficient or ineffective programs or processes, which can lead to cost savings and improved performance.

Zero-based funding model is commonly used in government agencies and non-profit organizations, but it can also be used in private sector businesses to optimize their budget and resource allocation.