t is common knowledge; running a nonprofit means continually securing revenue. We constantly hear about funding being cut and expectations being increased. Running a nonprofit without a well-oiled budgeting system is just short of impossible.
Budgeting puts you in control. It shows how much money you have at any given moment, where it comes from, and helps you plan where to spend it. A good nonprofit budget system makes it much easier to run an organization. It enables you to define clear goals and tasks and to do more with fewer funds.
A good nonprofit budget allows you to present easy-to-understand results to donors, both existing and potential. For example, when you show that $10,000 went to provide 4000 meals for homeless children in Ghana, your expenses clearly reflect the impact you’re making. This helps motivate donors to keep giving and help you continue your great work.
When your results are presented in a concise, clear way, donors are more likely to consider you as a serious organization, one they would be more likely to support. The result – more donations, greater impact.
Steps to a good, solid, revenue-generating nonprofit budget system:
- List all your income sources: donations by category, services, campaigns, products, etc.
- List all your expenses, from rent and utilities to the cost of campaign materials and staff salaries.
- Organize the two lists above in a table that will track a monthly balance. Something like the one above.
- Make sure there’s a summary for every month and every line item.
- After you fill in everything you KNOW, set up a procedure to update the table carefully and regularly. A good, clear, easy to use nonprofit budget system makes it easy for new people to hit the ground running when it comes to managing money.
- Nonprofits tend to be complex with several financial components, such as different revenue streams or a number of related programs. When the system is complex and demands a high level or transparency, consider delegating budgeting to a sub-committee. Empower your staff by focusing on the financial side of operations and maintaining an oversight role for the big picture.
Another important aspect of a good nonprofit budgeting system – it should be easy to delegate and easy for the board/CFO to overview a number of budgets that feed into one central financial system.
The benefits of an effective nonprofit budget system:
- Operations are easier, less time consuming and create less confusion.
- New people have shorter ramp-up, They make fewer mistakes, build and maintain more enthusiasm. In short create greater impact.
- Happier donors – Donors clearly see better results, and are more motivated to give. More funds enable greater impact.
- A good infrastructure that’s ready for analysis. When it’s clear where the money comes from, you make better fundraising decisions, raise more funds and have greater impact.