Ultimate Nonprofit Budgeting Checklist – Alan Weiner

Nonprofit budgeting is no small task. In order to accomplish your goals your approach to budgeting will have to reflect the uniqueness of your organization. Conversely, while your exact recipe for success may differ slightly, you’ll still need to check many of the same basic budgeting boxes that are reflected in the list below. Here’s your ultimate budgeting checklist for nonprofit organizations:

1. Review Previous Performance and Budgets

If you have them, be sure to closely examine your budgets from years past and compare them to actual performance. This will give you a greater source of knowledge from which to base your projections and assumptions. Just keep in mind that past performance is just one measure; it is not always the best measure of future returns.

2. Assign Decision-making Authority

Depending on your organization, you may have several people involved in the budgeting discussion. While it’s important to hear multiple perspectives, at the end of the day someone will have to make tough decisions. Be very clear about this from the beginning by assigning responsibilities, roles and authority.

3. Define Your Risk Profile

Investopedia defines risk profile as “an evaluation of an individual or organization’s willingness to take risks.” This needs to be clear from the start so that everyone is aligned in terms of how much uncertainty they’re willing to tolerate. Otherwise, it will be hard to reach an agreement on smaller issues because your colleagues will make decisions based on their own risk tolerance rather than the organization’s.

4. Build a Schedule

You’re going to need a new budget at the beginning of each fiscal year. If you’re new to budgeting, give yourself and your colleagues plenty of time to prepare, at least three months. Make sure you allow yourself time for discussion and revision as well. Once you’ve gained some experience, you may find that you need more or less time.

5. Define Your Mission, Including Short and Long-term Goals

Every dollar spent, saved, borrowed or raised should be serving your mission. To make sure your budgeting decisions stay focused on the greater mission; tie your goals to the hard numbers in your budget.

6. Projected Expenses

With your mission as well your short and long-term goals defined, the next step is to figure out how much those goals will cost to accomplish. This should include salaries, real estate costs, fundraising costs, administrative costs, and much more. Your projected expenses are vital because this will serve as the reality check on what can and can’t be done for the year.

7. Projected Revenue Gains and Losses

You’ll never be perfectly accurate, but that’s okay. If you can get your revenue projections reasonably close to reality, you can then build in contingency plans. Another option is to build in conservative and aggressive projections and plan a course of action for both scenarios.

Depending on the nature of your non-profit, your revenue projections could also include grant money and other fundraising activities. The idea is to get an accurate picture of what money is coming in and going out.

8. Identify Sources and Uses of Funds

Building off of number six and seven, it’s essential that you assign sources of funds, such as loans, endowments, or grants, to a use. For example, instead of just identifying that you’ll receive a $30,000 grant, take it a step further and assign those $30,000 to a specific use, like technology improvements.

9. Projected Cash Flow

Cash flow is as important as just about anything else for any business, including a non-profit. Unfortunately, many non-profit leaders (and business owners) don’t pay enough attention to their cash flow. In your budget, ensure that your cash flow calculations reflect cash that’s actually coming in and going out of the organization. That way, you’re don’t get caught in a pinch when you have bills to pay but your accounts receivable is 30 days late.

10. Emergency Reserves

Every personal finance professional will tell you the importance of a rainy day fund. Leaders of non-profits would do well to heed that same advice when it comes to their organization. Whether it’s a large grant that falls through or a disappointing quarter, things happen, and your budget should include a line item for cash reserves in case your organization hits hard times.

11. Set Priorities

Setting priorities is one of the most significant results of creating a budget. Your priorities will define your day-to-day activities for the next year. This will likely involve lots of discussion with key stakeholders in your organization. Fortunately, by defining cost, income, and goals early, the discussion of your organization’s priorities will be far more productive with real numbers to look at.

12. Review, Present and Implement the Final budget

Ensure that you’ve reviewed the budget inside and out before presenting it for approval. Once it’s been approved, assign the appropriate personnel to manage implementation and monitor ongoing budget issues for the year. If possible, build the budget into your accounting system so the final budget remains in use regularly.

13. Check Your State for Best Practices

As mentioned in the introduction, every non-profit is different, as are their budgeting needs. But there are also budgetary considerations to be made that are unique to the state or states you operate in. To help with that, check your local or state government websites for non-profit financial management guidance.

A Living, Breathing Budget

Making reasonable assumptions and well-founded estimations is vital to productive non-profit budgeting. After all, a good budget that’s implemented successfully will serve as the roadmap to your organization’s success. That said, you’re not going to get everything right; that’s why it’s called a projection. So when things change, don’t be afraid to make tweaks to your budget. Just ensure that you’re staying true to your mission when you do make changes. And as always, be sure to check with your financial adviser before adjusting budgets or implementing new tactics.

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Alan Weiner is the President of Weiner’s Ltd, a wholesale supplier of travel size products to businesses ranging from intimate B&B’s to large five star hotels, gift shops in hospitals and airports, as well as airlines and charter services, college bookstores, e-commerce, pharmacies, vending, government institutions, charities and event planners. Over the last 26 years Alan and his team have worked with numerous nonprofits to help maximize their budgets for various events and projects.

*The author’s recommendations come from his experience working with non-profits. Before implementing these new tactics or adjusting your non-profit’s budget, be sure to check with your financial adviser first.