There’s nothing I love more than a good-looking budget spreadsheet.

It’s the well-organized document that bridges the gap between what the donors see and the fly-by-the-seat-of-your-pants reality that nonprofit professionals typically face.

Line items are designated, each month or quarters estimated expenses are accounted for, Excel cells auto update, and graphs make the perfect accompaniment.

If you have never done a budget before, start by creating an anticipated budget for the upcoming fiscal year so you have estimates for costs.

If you have made budgets before, make sure you hold onto them along with the actual numbers you came up with, as they are great for refining your estimates in the future.

But what else are budgets great for?

 

Instant Goal Setting

If you know what you know what your estimated costs will be, then that clearly sets you up to create SMART goals and objectives to get those costs funded.

For example, if you are launching a new after-school program and, after research, the total cost of the program to pay the instructors salary and cover materials is $5,000, then you know you need to get $5,000 from somewhere!

Therefore, a SMART objective presents itself:

  • Raise $5,000 for program costs associated with the new after-school program two months before the program launch with 50% coming from registration fees and 50% from a local grant.

Alternatively, if you don’t have costs planned out before you run the program, you can’t effectively plan ahead and cover your costs, which means more stress for you when you need to figure out where the instructors’ salary is going to come from.

 

Measurement and Evaluation

Not only is a budget great for setting goals, but it is also great for ensuring that the organization and its interventions are running smoothly and don’t need tweaking.

Take the same example above: the after-school program has been running for a year now and the nonprofit has the budgeted $5,000 for program costs. After a couple of months, you find that the portion of the $5,000 you set aside for materials (say $1,000) has all been used up and the program still has to run for another 6 months!

What happened? Maybe the instructor isn’t shopping with the budget in mind. Maybe there was a misunderstanding and they thought they had $1,000 every month to spend on materials. Maybe they are stealing.

It could be a bunch of different things, but the point is that because you researched the estimated costs of the materials and defined it early, you now know that, somewhere, something went wrong and you have to figure out what it is.

 

Getting Money

Yes, planning how to use money with a budget helps get money! How?

Foundations and grant-giving organizations want to see the plan for how you would use a grant if they gave it to you.

In addition to knowing details about an initiative you want to run, they will also ask for an estimated budget for the costs of the program, including staffing costs, material costs, rates for renting space, promoting the program, etc.

For each program (and the organization as a whole,) you should have a budget with estimated costs as well as a summary sheet describing how you estimated those costs. For example, you would calculate the wages item line by noting the total number of paid hours for instructors times the number of staff times their hourly rate.

By giving each program and initiative the nonprofit runs or plans on running its own line item in the budget with broken down costs, you can easily pull that information for the funder without having to do a bunch of extra work.

 

Great! Now What?

If you have never done a budget before, start by creating an anticipated budget for the upcoming fiscal year so you have estimates for costs.

If you have made budgets before, make sure you hold onto them along with the actual numbers you came up with, as they are great for refining your estimates in the future.

Make sure you keep your budgets up to date, evaluate them regularly and keep your summary sheets current. The easier it is to pull relevant information from them, the less stress you will be under!

Build Your Donor List, No Matter Where You Are In The Process

Brandon Reed

Founder at Reed Community Consulting and NPO.lib

Brandon helps people help other people. He has over 10 years experience working with small and medium-sized nonprofits in two countries in many different sectors. He has worked at all levels of organization from entry-level service delivery up to the executive director and board president. This experience affords him insight for whole level management of an organization, which he transfers to his clients. In his free time, he likes to play volleyball and spend time gardening with his wife and dog.

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