By Susan Rosati
I recently learned that the financial consulting I wanted to offer a group of savvy Executive Directors wasn’t exactly what they looking for. My idea was to come to them with cool tools and colorful fresh ideas that would really impress a board. However, what they really wanted was more simple tangible guidance. In general, my ideas were good but they took a little time to implement. I was painfully reminded that Executive Directors have no time to waste and are pulled in a million different directions on a daily basis. That’s why I keep my approach simple and more practical especially when it came to the budget.
I recommend zero based budgeting for nonprofits because it’s a based on efficient use of resources. You build it from the ground up forcing managers to find cost effective methods for all their programs. Begin with your assumptions and what you would like to accomplish in the next year. Then develop your priorities. The first attempt at this type of budgeting can be challenging but in the long run it builds a culture that encompasses clear cost management. Nonprofits need to be flexible in their budget and carefully evaluate each revenue stream and program expense. A well-crafted budget should be a team effort and this in turn will give you more financial control. Use the best tools for budgeting like Excel or Google spreadsheets if you do not have budget specific software.
Your budget tells a story and when it’s time to apply for grants you need to make sure what you submit ties back into your overall budget. I find that it is easy to get lost in this process. Once your annual budget is in place and you have good visibility into each line item, you’ll have a clear roadmap for the year. When it’s time to write that grant you’ll need to ask for the right amount of money. Funders want you to have a diverse portfolio because it creates stability for your nonprofit. You won’t fool anyone with pulling numbers out of the air.
Finally, don’t forget that your budget must also be aligned with your overall strategic plan and you must allocate resources to make your plan a reality. Overall, try not to look at the budget as a laborious task but rather as a tool that will guide your nonprofit to good financial health.
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