Budgeting: The Most Wonderful Time of The Year

October 25, 2019

As a nonprofit organization, you know it’s annual budget planning time!  If you have a January 1 fiscal year, you may be in the thick of it now.

We look forward to budgeting every year, because it’s a time when everyone in your organization gets to put all strategic hopes and dreams on the table, and look to what’s possible in the upcoming year – what’s working, and what’s not.  There is no lack of budgeting frameworks to choose from, whichever framework your organization uses. Here are a few exercises we’ve seen teams use to ensure a more focused and successful year.

What Will You Stop Doing? 

Let’s start with what your organization should stop doing.  This is the most important budgeting exercise you can do, and it’s something many teams overlook.  What do you know you should stop doing?  Put down the new strategies, new tactics and pet projects – new is going to happen.  Surprise your team and leaders, and give everyone permission to suggest what the organization should stop doing.

Start by asking yourselves these questions:

  • Is there a product or service your department is paying for that they’re not getting value from?
  • Which segments of your marketing have the lowest ROI and LTV?
  • Is there a marketing campaign that you’ve always run that maybe doesn’t align with your organization’s position or mission any longer?
  • What is taking the most staff time and providing the least value?

Don’t be afraid, you can do it!   Write it down.  How many staff hours a week can you save?  How much of your expense budget can you cut?  Can you find 3%, 5%, or even 7% of your budget to eliminate?

Without the “stops exercise”, you run the risk of piling on more strategies and tactics, and under-resourcing them, which makes success harder to achieve.

Where Will You Invest for Growth?

Now that you have a piggy bank of money and time, where will you invest it for maximum impact? Think about some places to start.

  • Which segments of your audience are profitable, but you haven’t maximized their full potential? This is an easy place to start. Max out your look-a-like modeling in acquisition.
  • Is there a new segment that research points to as a good bet that you haven’t had the budget or time to focus on? Pilot a campaign that helps you get fast learnings at a level of risk your organization is comfortable with.
  • Find some long-term investments to make to ensure not just good quarterly revenue, but growth into the future. For some of our clients, this may be investing in your monthly donors or piloting a membership program.  Your organization will thank you next year, and the money you’ve found in the couch cushions of your old budget was likely not driving revenue anyway.

Balance Sound Financial Management with Growth

There is always a healthy tension between having a financial operations budget that is low-risk and ensures an organization’s financial health, and keeps your CFO’s stress level low, while still asking your teams to be aggressive about growth.  Creating a financial budget that you know you can achieve while setting a higher goal for your team to aspire to is one way to do this.  Just make sure everyone knows the difference between the two and uses these 2 sets of numbers correctly.

Whether you are a CEO or a department leader, you can use these exercises within your budgeting framework to create a plan for your next fiscal year that gives your teams freedom and space to focus on the top opportunities to drive your organization’s growth.

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