{"id":584243,"date":"2016-04-27T15:02:06","date_gmt":"2016-04-27T19:02:06","guid":{"rendered":"https:\/\/joangarry.com\/?p=584243"},"modified":"2022-07-06T14:27:45","modified_gmt":"2022-07-06T18:27:45","slug":"budgeting-for-nonprofits","status":"publish","type":"post","link":"https:\/\/joangarry.com\/budgeting-for-nonprofits\/","title":{"rendered":"Why Nonprofits Never Have Enough Money"},"content":{"rendered":"

How did the board meeting go?<\/p>\n

\u201cGreat<\/em>,\u201d says my client. \u201cActually, I was so relieved! The budget passed in like 15 minutes. There were 2 or 3 minor questions, but nothing substantive<\/em>.\u201d<\/p>\n

Um, I\u2019ve got some bad news. This is not what I consider a great budget discussion.<\/p>\n

Executive Directors like my client are afraid of two key things:<\/p>\n

    \n
  1. The board will micromanage the process and the numbers. They\u2019ll walk among the trees and forget they are supposed to be forest people.<\/li>\n
  2. The board will believe the revenue numbers are too aggressive or too conservative and never once mention its own responsibility in where those numbers will wind up.<\/li>\n<\/ol>\n

    So the way it ends up working most of the time is this:<\/p>\n

      \n
    1. The staff has some tough conversations.<\/li>\n
    2. They present a neat and tidy budget to the Finance Committee (you do have one, don\u2019t you?<\/a>)<\/li>\n
    3. The Finance Committee asks a few good questions, typically about the revenue assumptions.<\/li>\n
    4. The program side asks a question or two \u2013 cost of benefits, or sometimes the totally dreaded questions about whether someone is overpaid.<\/li>\n<\/ol>\n

      Guess what? This isn\u2019t how it should look at all. What should<\/em> budgeting for nonprofits look like? I\u2019ll tell you.<\/p>\n

      But more importantly, I have an idea — a “budgeting for nonprofits” process — that could in fact engage and inspire your board to raise even more money than you were planning to budget for in the first place<\/strong>.<\/p>\n

      WHY NONPROFITS NEVER HAVE ENOUGH MONEY<\/h2>\n

      The board looks at the budget and sees \u201ctidy.\u201d But it didn\u2019t start out tidy. It started out with program folks who really need resources and development staff to work their hardest to project the highest possible number.<\/p>\n

      Projected revenues and needed expenses never match. But by the time they hit the Finance Committee, they get massaged by staff to be very close. By the time they hit the full board, they are even.<\/p>\n

      Voila. Revenue = Expenses.<\/p>\n

      And that\u2019s sure easy for the board to just approve, isn\u2019t it? No wonder budget approval goes by lickety split.<\/p>\n

      BUDGETING FOR NONPROFITS: A NEW PROCESS THAT WILL ENGAGE THE BOARD<\/h2>\n