Besides accuracy, one of the most important things about financial management is using those numbers to discover trends that will inform the business decisions that lead to growth. Your numbers tell a story about your not-for-profit organization – and when you understand how to read your numbers, you can strategically use them to grow your funding.
In the same vein, your approach to budgeting every year is a crucial part of propelling your organization and your fundraising forward.
One of the first things I ask of my clients when we start working together is their financial need for the year. More often than not, I get answers like, “Well, last year we raised $750,000, so I really hope this year we can raise $800,000.”
This makes complete sense – all not-for-profits want to raise as much money as possible year after year.
But that’s not the question I am asking.
I am really trying to understand what the organization needs to raise this year so that it can be fully funded – program, admin, and fundraising. Secondly, I am trying to determine if there is enough growth planned into the budget so that the organization can grow and truly flourish into a sustainable mission.
The Case for a Need-Based Budget
So often, budgets are set with a very reactive approach, rooted in more of a “squeak-by” number versus a thoughtfully determined financial need of the organization. Most times, I find that organizations are simply not setting their budget to a number that will help them grow. Once a not-for-profit does this, it can create a true, step-by-step development plan to balance the budget.
This principle is why some not-for-profits seem to grow quickly while others fight for every single $10 donation. Successful not-for-profits design need-based budgets.
Are you unconsciously hesitating to invest in things that would allow you to grow your organization? I’m not suggesting any organization haphazardly turn their budget into a wish list of frivolous expenses. What I am saying is growth costs money. There are several investments I see organizations try to avoid for too long. Directly stated, these hesitations are preventing growth. Look at the tools and processes that create a strong framework to streamline your development processes; donor management software, a (paid) financial partner or bookkeeper who can truly help you understand your numbers, online technology for an easy giving experience, mission-focused photography from a professional or graphic design services to create stronger communication templates. Sure, sometimes volunteers can do these things, but not for the long haul.
The Bottom Line
Let’s look at the bottom line: What impact could this mindset have on your donors?
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 squeak by with just a slightly better impact than they had last year.
It’s so important to create an annual need every year that inspires donors to give generously and then celebrate reaching that goal with them. This proactive or forward-moving approach builds your donors’ confidence that you have a plan and are executing it with great passion and precision.
Your key takeaway? March strongly toward establishing a needs-based budget so that you can do great things this year. Believe that need. Establish a fundraising plan to meet that need. Your confidence and passion will come across to your donors and they will respond accordingly.
For more information, contact Sherry Quam Taylor at [email protected] or visit QuamTaylor.com.