Back to Blog

Nonprofits, use your Budget process as a Crystal Ball

By Jacqueline Tiso, CEO & Founder of JMT Consulting, a national consulting firm serving the needs of non-profit organizations in the United States. 

I had the pleasure of having lunch recently with a number of Nonprofit CFOs and finance staff where the topic of budgeting came up.  Specifically, the discussion centered on the tools everyone was using and what their process actually was. No surprise to me that most of the group admitted to using a spreadsheet program for budgeting and that their process was typically a long and painful one.  Unfortunately, I hear this all too frequently with Nonprofits, but I wasn’t really interested in the tools.

While the tool and process of budgeting are important, what I believe is even more important is WHAT budgeting can mean to an organization beyond just the creation of the budget.  I meet with hundreds of organizations during the course of a year and seldom does the discussion turn forward-looking, towards planning and forecasting as part of the budget process at an organization.

If you search the web for “budgeting for nonprofits” you will find hundreds of excellent resources such as National Council of Nonprofits site.  These cover the tools you can use, building a budget, the budget process, etc.  What is harder to find is how to use the budget as a financial management indicator of future trends and the direction your organization may be going versus the one it should be going in.

The budget shouldn’t be just a “snapshot” of where your organization is at a moment in time (last month, last quarter) where we are all happy we came in on budget for that particular moment in time.  Rather your budget should be a financial plan, looking forward at the next two to three years and an indicator of the strategic direction of your organization.  It should be a guide for your organization’s future path at a consolidated-organization level, but even more importantly, at a program level validating your organization’s mission delivery.

So if you’re using spreadsheets for your financial reporting, plan to do some more manual work and start including a two to three-year trend analysis as part of your monthly financial review.  I recommend a minimum of the last 12 months (so prior year) forward to the current year, compared to a budget trend line forward two years.  Yes, that means a 2-3 year budget, hence the crystal ball analogy.  If you’re just done with the manual budgeting process then consider using tools to help you get ahead of this process. The time you save using tools that are designed for this purpose can be better used in furthering your mission.

 

Related Posts:
Communication Service for the Deaf; A Sage Intacct Success Story
October 2, 2017
Communication Service for the Deaf; A Sage Intacct Success Story

Communication Service for the Deaf (CSD) is a 501c nonprofit organization based in the United States and New Zealand, providing a plethora of services to the deaf.  They recently worked with JMT Consulting Group to enhance their financial management solution by implementing Sage Intacct and Nexonia.  We recently sat down with Brad Hermes, CFO and…

Reap the Benefits of Your Hard Work: Practical Strategies for Using Impact Data
June 29, 2018
Reap the Benefits of Your Hard Work: Practical Strategies for Using Impact Data

Can you imagine spending months tending to your garden, only to let the vegetables you’ve been growing rot before anyone can enjoy them? Hardly. Yet when it comes to data collection and use, many organizations do just that. They toil away setting up plans to deliver services and track results. They pour sweat and tears…

The True Costs of Nonprofit Budgeting with Excel
February 23, 2018
The True Costs of Nonprofit Budgeting with Excel

Excel is the go-to reporting and budgeting tool for countless finance teams, including financial planning and analysis (FP&A) professionals. In fact, there are more than one billion users worldwide—that’s about one in seven people! Excel is comfortable and familiar, but for growing nonprofits, it can be a real drag on your budgeting processes and productivity….

Sisyphus Looks Inward: Nonprofit Short and Long-Term Decision Making Starts with Honest Self-Assessment
June 22, 2020
Sisyphus Looks Inward: Nonprofit Short and Long-Term Decision Making Starts with Honest Self-Assessment

This article is the second installment in a guest blog series by Russell C. Pomeranz, President and CEO of Claverack Advisory Group. You can click here to read part one, “Sisyphus Had It Easy: The Case for Nonprofits to Prioritize Long-Term Solutions Even When Short-Term Challenges Abound.” Upon finding out in part one of our series…

 Back to Blog