Southern Tier Nonprofit Executive Directors Group: June 2014

Wednesday, June 11, 2014

National Council Nonprofits: Nonprofit Knowledge Matters

Building a better budget (even if you are allergic to numbers)

During an interview with staff members at the New York Council of Nonprofits, Jenny Chandler, Vice President at the National Council of Nonprofits, learned how to build a better budget:

In an effort to get over my allergy to numbers, I spoke with the terrific team of Kelly Mathews (Chief Operating Officer), Michelle Jarvais (Chief Fiscal Officer), and Elizabeth Mathews (Senior Accountant), who shared with me their “6 P’s” approach to nonprofit budgets. See if you can find the “P’s” in their advice!

Jenny: When you work with nonprofits to build a “better” budget, what are your goals?

Michelle: We’re going for a strategic process that helps you plan – not just taking last year’s numbers and updating them. We encourage nonprofits to look a few years ahead and take a multi-year approach because that will result in a better budget.

Kelly: In my work with nonprofits I often see folks not thinking through the long-term effects of short-term decisions. An example would be a simple cost-of-living adjustment. It’s great in the year it’s given – it bumps up salaries and boosts morale. But has the nonprofit projected out the impact of that adjustment for the next few years? It’s going to change the revenue requirements for many years to come. That could be huge.

Michelle: We encourage nonprofits to think of their budget as a living, breathing, guiding document. Your budget is not something that’s approved by the Board of Directors and then locked in stone for the rest of the year. It’s never going to be static. It’s going to change month-to-month. It’s normal for the actual numbers to turn out differently than you projected when you drafted the budget, so a “better budget” is one that changes with the nonprofit’s experience.

Jenny: It sounds as if you are suggesting that the board-approved budget should be formally amended throughout the year?

Michelle: Perhaps. Many organizations approve at least one budget revision annually. But sometimes adjustments are anticipated and reflected in the budget narrative so that a formal amendment isn’t necessary. If the narrative is thoughtfully drafted it will explain potential variances and alert the board to alternate scenarios.

Jenny: Wait a minute. You just said, “narrative” – You mean budgets aren’t just numbers on an Excel spreadsheet?

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And now for something fun: A summer celebration of charitable nonprofits!

Sit back in your chair, let yourself relax for two minutes to enjoy this short “Motion Graphic” about how nonprofits are essential to the quality of life in our communities. Brought to you by our member State Association, the Nonprofit Association of the Midlands.

Resources to help your nonprofit develop a budget

Budget Best Practice Tips (NYCON)

Financial management resources (National Council of Nonprofits)

NYCON’s Budget and Cash Flow Toolkits: Comprehensive, step-by-step guided & easy to use ● Take a tour ● Information & Online Order Form ● Contact your state association of nonprofits to inquire about a discount.