AD Athletic Director Budgeting & Fundraising 2 — Questions and Answers
Question 1: Which budgeting approach requires each department to justify all expenditures from scratch each fiscal year rather than using the prior year as a baseline?
- Incremental budgeting
- Zero-based budgeting (Correct answer)
- Activity-based budgeting
- Envelope budgeting
Correct answer: Zero-based budgeting
Zero-based budgeting requires every line item to be justified anew each cycle, regardless of historical spending.
Question 2: An athletic director discovers mid-year that the football program overspent its travel budget by 15%. What is the BEST immediate corrective action?
- Transfer funds from a reserve account without board approval
- Issue a budget amendment and identify offsetting cuts in lower-priority line items (Correct answer)
- Ignore the variance until year-end reconciliation
- Borrow from the following year's allocation
Correct answer: Issue a budget amendment and identify offsetting cuts in lower-priority line items
A formal budget amendment with identified offsets keeps spending within authorized limits and maintains transparency.
Question 3: Which fundraising vehicle allows donors to receive a charitable tax deduction while directing funds to a specific athletic program?
- Booster club fee collection
- Gift-in-kind donation to a 501(c)(3) foundation (Correct answer)
- Direct cash payment to an athletic team account
- Sponsorship paid to a for-profit booster LLC
Correct answer: Gift-in-kind donation to a 501(c)(3) foundation
Donations to a 501(c)(3) foundation are tax-deductible, unlike direct payments to teams or for-profit entities.
Question 4: A school's athletics department relies on gate receipts that vary significantly year to year. Which budgeting strategy BEST manages this revenue uncertainty?
- Budget gate receipts at their highest historical value
- Use a three-year rolling average to project gate receipt revenue (Correct answer)
- Exclude gate receipts from the budget entirely
- Budget gate receipts at zero and treat any revenue as surplus
Correct answer: Use a three-year rolling average to project gate receipt revenue
A rolling average smooths year-to-year variability and produces a more defensible revenue projection.
Question 5: Under Title IX financial equity requirements, how should an athletic director approach budget allocations between men's and women's programs?
- Allocate equal dollar amounts to every sport regardless of participation numbers
- Ensure per-capita spending opportunities are proportional to participation rates (Correct answer)
- Fund revenue-generating sports first and distribute remaining funds equally
- Base allocations solely on historical spending patterns
Correct answer: Ensure per-capita spending opportunities are proportional to participation rates
Title IX requires proportional benefit, meaning per-participant spending should be equitable across genders, not necessarily equal in total dollars.
Question 6: What is the primary purpose of an athletic department's reserve fund?
- To fund regular operating expenses throughout the year
- To cover unexpected expenses or revenue shortfalls without disrupting program operations (Correct answer)
- To accumulate surplus for capital construction projects only
- To compensate coaches above their contracted salaries
Correct answer: To cover unexpected expenses or revenue shortfalls without disrupting program operations
Reserve funds serve as a financial buffer against unforeseen costs or revenue gaps so day-to-day operations remain stable.
Question 7: When negotiating a corporate naming rights agreement for a school facility, which factor MOST affects the valuation of the deal?
- The age of the facility
- Audience reach, event frequency, and media exposure the venue provides (Correct answer)
- The personal relationship between the AD and the corporate contact
- The number of sports teams that use the facility
Correct answer: Audience reach, event frequency, and media exposure the venue provides
Naming rights value is driven by how many people see the sponsor's brand through attendance, broadcast, and media coverage.
AD Athletic Director Budgeting & Fundraising 2
Which budgeting approach requires each department to justify all expenditures from scratch each fiscal year rather than using the prior year as a baseline?