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Nonprofit Q&AA service of Jeane Vogel and Fund Raising Innovations June 7, 2004
For other On-Line Services for nonprofit professionals, visit On-Line Services.
Here is this week’s question:
A foundation director told me that I didn't
get a grant because we're in the red. I know! That's why I needed the grant.
He said I needed to submit a balanced budget. We don't know where all the
money is coming from. How can I give them a balanced budget?
I think I spent the first part
of my career arguing with financial officers about this very question. The
budget is the hardest part of the organization's structure for most people
to understand, especially volunteers and program staff.
Yes, your budget should be
balanced. The amount of the income should match the amount of the expenses.
The question is: HOW? You have no idea how much money you can raise!
Oh, sure you can. A budget is a
plan -- only a plan. Don't get tripped up by the idea that the budget is
cast in stone once it's adopted by your board.
The same planning process that
tells you how much you will spend, will tell you how much you can raise.
When creating your annual budget, look at last year's budget and your
current year's actual expenses and revenues. Look for spending patterns and
consistent revenue streams. It's even more helpful if you have several
year's worth of budgets to analyze. Look for opportunities to use the
resources better. In other words, are there expenses you don't need? But
don't be cheap or foolish. Professional development, staff benefits, board
training and hiring help for special projects are worthy investments in your
long-term organizational health.
Estimate your expenses for the
coming year. Be realistic but error on the high side. Running an
organization is like remodeling your kitchen -- it will cost more and take
longer to reach the goal that you expected.
On the revenue side, look for
reliable funding sources over the years. Plug in those numbers. Got
multi-year contracts or pledges? Put them in. Make your best guesses on
revenue from regular events or donors. Be conservative with these numbers.
Now, if you're like most
groups, your expenses column will be larger than your revenue. This is the
point where groups start cutting programs. Don't! That's the negative
approach. Instead, take the high ground. Challenge your staff and board to
find new ways to close the gap. Be creative and think strategically. Are
there foundations and major donors to be courted and won over? Can you take
your signature event to the next level? Can you start a new fund raising
effort? What opportunities have you missed in the past?
Budget time can be the most
exciting time of year -- no, I'm not kidding and I'm not nipping at the
hooch. It's the time to get a new focus on the year and energize the troops
to meet the goals. If your mission is worthwhile -- and you know it is --
then reach toward your goal at budget time, not away from
it. Just make sure the budget is balanced.
One final note: once your
budget is adopted, let it alone. Don't keep changing it every time there's a
major revenue or expense adjustment. It's a plan, remember? Your budget
narrative can explain the difference between your budget and your monthly
P&L to your funders. But you will want your ordinal budget for comparison to
actual expenses and revenue when your start this process again next year!
©
2004 by Jeane Vogel and Fund Raising Innovations
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