Funding the Budget

For many nonporifts budgeting has started or will start soon. It means that creating the funding plan for next year should start now.

There are two ways to create a budget:

Mission Driven – Create the programming plans and let those plans drive the budgeting process. Being mission driven is ideal.

Budget Driven – Look at the current budget, add something for inflation, and let the outcome predict what programming changes are possible. This process puts money before mission.

Assuming the budget is going to be mission driven, here is an outline for the process:

1 Isolate all programming from the budget and increase the remaining expenses by whatever your inflation assumption is for next year

2 Increase the programming budget by the inflation assumption plus the population growth for your community plus your assumption the economy will have on your clients* and add the programming back to the budget

3 Talk with the head of operations about the new initiatives he or she plans to start in 2012 and the estimated first year cost of those initiatives to the programming portion of the budget

4 Create several representative focus groups of donors and determine their willingness and enthusiasm for supporting the new programming initiatives (Step 3)

5 Estimate how your donors’ response is likely to impact the new programming initiatives

6 Discuss with head of operations the ramifications of your estimates (Step 5)

7 Develop a plan for growing the donor base and the generosity of the donors sufficiently to meet the need predicted by Step 2

* As an example, if you serve the unemployed do you think the economy is going to improve and lower the demand for your services, decline and increase the need for your services, or remain steady?

There are benefits to this approach:

Doing the work now provides practical guidance for the budgeting process

Doing the work now minimizes the demand to split your time between the budgeting process and the year-end appeal

Having the donor cultivation plan ready before year-end optimizes your opportunity to meet the needs predicted by programming

Next Step:

Predict the need for funds before there is a demand for funds (Steps 1 – 7)

Engage the donors in the planning process and cultivate their support for the mission and clients (Step 4)

Use the preceding process to create a mission and donor driven budget

Sustainability including having a sustainable funding stream depends on having a proactive, predictive, and collaborative planning process. Sustainability depends on planning for the client needs and careful responding to the changing environment. Having a sustainable funding stream depends on having engaged donors who understand and agree to their role in helping the clients.

A mission driven team approach will make budgeting more successful and collaborative.

How much less stressful will budgeting be this year if you are the one leading the process instead of reacting to the demands of others?

As always, contact Mission Enablers if you want help. We use a special process that offers a guarantee. For more information about our process and guarantee, you can click here.

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