Apr 28, 2014
The recent economic downturn has put an increased amount of financial stress on nonprofit organizations, but that's not to say charities aren't capable of handling the pressure. Blackbaud's "2013 Charitable Giving Report" found that overall giving revenue grew nearly 5 percent year-over-year in 2013 - the highest growth since 2008. However, in years prior, organizations have had to carefully watch their expenses because donations were limited during the recession, Yet despite modest economic growth, it's important that charities continue to watch their costs so as not to rely on a recovery too heavily.
Listed below are four tips for effective nonprofit budget management:
- Identify and incorporate goals: The first step in creating a sound budget in any capacity begins with proper planning. If there are no objectives or goals to strive toward, there's no chance a financial strategy will survive. A fiscal budget should likely include what an organization's plans are for the year, or short- to mid-range goals, and if there's a larger objective at hand, your group's accountants or planners may want to factor in how that long-term goal will play into the upcoming budget.
- Create alternative budgets: While it's important to have a master budget each year, there is room within a charity to create peripheral financial plans that work in conjunction with the yearly forecasts. These types of plans are typically created to help track the progress of a long-term project or goal and don't necessarily include as much of a fiscal plan. More specifically, organizations that operate off of grant subsidies are typically required to provide specific funding and budgeting of the grant, so developing an alternative plan could be in their favor, according to npENGAGE.
- Consult all parties within the organization: The financial department is likely the group of individuals who will be responsible for mapping out a plan, but specific data and figures should be collected from everyone involved within the organization so an accurate budget can be put together. Fundraising can be pulled from a charity's donation software via IT employees, while certain event or ticket costs can be identified from marketing representatives.
- Consult with executives: This may seem obvious because management will likely have to sign off on a proposed budget, but involving every manager or all board members is an important step in creating organization-wide transparency. If everyone is on the same page from top to bottom, a charity can grow a lot quicker with all employees working in unison.