How to Run Your Nonprofit Budget Like a Pro
There’s never an easy day when running a nonprofit. Even when you think all your problems are solved, something else pops up to set you back. These setbacks often arise from budgeting errors, a shortage of funds, or a lack of overall program effectiveness. A majority of nonprofits struggle with these issues, but it doesn’t mean you have to. There are ways to avoid going down that path and that starts with budgeting correctly.
Here are some quick tips on how you can budget for your nonprofit like a pro to better prepare for the future and avoid hitting a major setback.
Focus on Long and Short Term Goals
Knowing your nonprofit’s goals two years from now is just as important as knowing your goals for this month. Setting goals puts you in a position to strategically work toward something. You might not have all the funds now, but you can start small and work your way up while keeping donors involved with your future plans. This also allows you to take a step back and see what programs are working and what programs need some tweaking rather than going all in and depleting your budget.
Review Past Budgets
The best way to know if you are budgeting correctly is by looking at the previous year. Taking the time to review your old budgets gives you incredible insight into the success of your nonprofit. You should take the time to review all your programs’ performances. If you weren’t able to achieve what you had hoped, then you can re-examine the program’s usefulness. If it’s not useful, you can cut it and reallocate those funds for other purposes. Also, you should be checking for any patterns in your revenue. Maybe September has been a historically bad month for fundraising, and if that’s the case, then you’ll need to figure out how your budget will account for those potential slow periods.
Communicate with Your Team
The strongest leader isn’t always the person willing to take charge, sometimes it’s the person who’s willing to ask the hard questions and listen. Your volunteers and your staff are the ones who witness firsthand what works and what doesn’t. The more you’re open and honest, the more your staff will be as well. This can lead to lots of debate, but it also unites people and makes them feel more involved in the decision-making process. Your staff can have a lot of good ideas, you just need to be willing to listen to them.
Monitor Your Budget Throughout the Year
Money is never a guarantee in the nonprofit world. You might surpass expectations one month and then flail in the next. That’s why you need to be prepared for anything that comes your way. If you start your budget planning early, you’ll have plenty of time to receive input from your board members and your team. Once the year begins with your new budget in place, monitor it like a hawk to make sure you have enough funding to last to the end of the fiscal year. By monitoring your budget, you can always make slight adjustments to account for how your funding fluctuates ensuring you’ll have enough money to remain successful.
Operate on Real Data
While building a budget does require some imagination on your end, it doesn’t mean you should ignore what the numbers say. It can be easy to get carried away and assume that a program will work because it makes sense in your head, but you have to remain realistic. The numbers don’t lie and you can’t expect them to turn around just because it seems like they should. Make sure you know exactly where your nonprofit’s funds are coming from and how they are being used or else you might end up hurting your mission more than helping.
While running a nonprofit is never easy, you can make it a lot less painful with careful planning. All it takes on your end is to study the numbers, listen to your staff and board members, focus on your goals, and keep a careful eye on your budgets throughout the year. The more effort you put into understanding your budget, the stronger your decision making will be and you will start to see a positive outcome.