Creating a Nonprofit Budget that Propels Your Fundraising
This blog entry was first published as a guest entry on Bloomerang.co.
Every year we set our budget based on last’s income plus just a little more. What’s wrong with that?
Hopeful Executive Director
Do you have a background in finance? Me neither.
What’s funny is that I wasn’t a person who loved data and numbers until I entered the world of Nonprofit. Much to my surprise I now live, eat, and breath numbers every day. I’m a disciplined person by nature, and I suppose with that comes a passion for planning. In my world, everything has a plan and a thoughtful strategy to accomplish the plan.
Early in my nonprofit career, I had the privilege of working with an amazing financial management service provider who, still today, is my go-to person for everything financial. I love her approach (and many of my clients have too!) because it’s rooted in a growth mindset and strategy. (happy to provide her contact info if you email me!).
One of the most important things she taught me was that financial management is not only about the accuracy of the numbers but also about using those numbers to discover trends that will inform your business decisions. Your numbers tell a story about your organization – and when you understand how to read your numbers you can run a better business.
In the same vein, your approach to budgeting every year is a crucial part of propelling your organization forward.
So, while I would never claim to be a financial expert, I’ve learned what a well formatted, thorough, growth-minded budget looks like. I’ve also learned that nonprofits must create their budgets in this way to be able to truly express their needs to donors.
One of the first things I ask my clients when we start a 90-day Fundraising Bootcamp is to tell me what their financial need is for the year. More times than not, I get answers like, “Well, last year we raised $650,000, so I really hope this year we can raise $700,000.”
I completely understand this answer – we all want to raise as much money year after year as we can, right?
But that’s not the question I’m asking. I’m really asking what you need to raise so that your organization can grow, flourish, and result in a sustainable mission. We’re not talking about just getting by on a shoestring budget, but a number that would really support growth.
Your budget and your need are two different numbers.
Now don’t hear me say you should turn your budget into a Christmas wishlist and jump from $650K to $2M! What I am saying is that if there are areas you have been hesitant investing in, now is your time – put it in the budget. Things like new technology that you know would make your entire staff more efficient. Or the content writer you haven’t hired because you can do the writing yourself (on the weekend and evenings!).
I understand the hesitancy. After all, anything you put in the budget means another item for which YOU must find the money! I’ve felt like this so often – I even catch myself doing that for my business today.
Now, let’s think about the greater impact this mindset could have on your donors and thus your organization.
Here’s what I mean:
Donors need to hear you passionately share your plan to grow your programs and learn how their giving can propel the organization forward, thus changing a life. You must educate the donor on what this looks like for your organization. A donor wants to invest in a forward moving mission – not one that hopes to just squeak by with just a slightly better impact than they had last year.
It’s so important to set your annual need so that you can inspire donors to give generously toward that need – and then celebrate reaching it with them. This proactive or forwarding moving approach builds your donors’ confidence that you have a plan and are executing it with great passion and precision.
When I coach executive directors or leaders to sit in front of donors I’m coaching them to confidently share the need of the organization so donors can naturally see the crucial role they can play in supporting the mission.
Learn to love the numbers – don’t be afraid to ask lots of questions. Plan and own the financial need of your organization. March strongly toward the need so that you can do great things this year. Believe that need. Your confidence and passion will come across to your donors and they will respond in kind!
Whenever you’re ready, here are three ways I can help you.
1. Get FREE TRAINING. Discover the proven system that consistently raises more money to fund your mission every year. And perhaps more important, learn the things that are keeping you from growing and making it harder for your donors to give! Register here.
2. In the next 90-days, learn how to secure larger donations for your mission. If you want to move into mid- and major-level individual gift programs for your nonprofit, but you’re not sure what your next step is, I can help. Just email me here and put "Donors" in the subject line and I’ll get you the details.
3. Work with me privately. If you'd like to work directly with me to level-up your current development process and grow your charitable revenue tremendously, just email me here and put "Private" in the subject line. Tell me a little about your organization and what keeps you up at night when it comes to your funding, and I'll get you all the details.