A nonprofit’s budget is a critical factor in determining how goals are going to be accomplished and to create realistic predictions about costs and expenses. In this series of posts, we’re going to take a closer look at how budgeting and fundraising plays a role in your clients’ nonprofit and how to better understand each. Part of the essentials of fundraising and budgeting include a general understanding of the process, fundraising knowledge, knowing what not to do, and securing the operation with a Nonprofit Liability Insurance program.
According to Nonprofit Quarterly, budgeting takes a long time and requires lots of work by many people. Ultimately, the board of directors approves the budget, and it then holds equal responsibility (with management) to ensure accomplishment of that budget. It’s essential that all board members understand budgeting, financial management, and reporting at a fundamental level. You also need multiple board members who understand it at a higher level. And then you need a cohort of board members who are experts in budgeting, financial management, and reporting.
Next, your clients should be well versed in cash flow budgets. This doesn’t mean adding up all of the expenses and dividing it by 12. Instead, ongoing expenses and cash balance should be evaluated each month to determine what revenue is needed to cover these expenses. This is also beneficial to know when to focus on fundraising efforts during months where the organization might be lacking in cash. By understanding the budget, the cash flow from fundraising can be used to supplement the tighter months and provide enough working capital to suffice.
Creating the optimum budget for fundraising—both income and expense—requires significant knowledge about best practice, industry standards, and fundraising research. Otherwise, you can’t properly design a comprehensive fundraising program and appropriately plot the required expenses and estimate the probable income.
What NOT do to.
- Assume charitable donations will take care of major expenses.
- Be lackadaisical about raising money throughout the year.
- Estimate yearly expenses and create a budget solely on that figure.
Plan ahead, be proactive about raising funds, and get the entire organization involved. It’s not one person’s job to raise money for the nonprofit, it’s everyone’s. Remember, financial planning, budgeting, and fundraising is a group effort and should be communicated to everyone within the organization to ensure clarity and transparency.
About Domenick &Associates
At Domenick & Associates, we have a unique understanding of the nonprofit sector and how to properly secure your clients’ operation. From personal and advertising protection to volunteer coverage, we offer a range of products that are necessary for their success and longevity. For more information about our products, contact our experts today at (215) 629-5701.