Why Nonprofits Never Have Enough Money

budgeting for nonprofits

How did the board meeting go?

Great,” says my client. “Actually, I was so relieved! The budget passed in like 15 minutes. There were 2 or 3 minor questions, but nothing substantive.”

Um, I’ve got some bad news. This is not what I consider a great budget discussion.

Executive Directors like my client are afraid of two key things:

  1. The board will micromanage the process and the numbers. They’ll walk among the trees and forget they are supposed to be forest people.
  2. The board will believe the revenue numbers are too aggressive or too conservative and never once mention its own responsibility in where those numbers will wind up.

So the way it ends up working most of the time is this:

  1. The staff has some tough conversations.
  2. They present a neat and tidy budget to the Finance Committee (you do have one, don’t you?)
  3. The Finance Committee asks a few good questions, typically about the revenue assumptions.
  4. The program side asks a question or two – cost of benefits, or sometimes the totally dreaded questions about whether someone is overpaid.

Guess what? This isn’t how it should look at all. What should budgeting for nonprofits look like? I’ll tell you.

But more importantly, I have an idea — a “budgeting for nonprofits” process — that could in fact engage and inspire your board to raise even more money than you were planning to budget for in the first place.Continue Reading

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