Ideas to bring your budgeting to life

To what extent does your budget align with your mission and strategic goals? Do your budget decisions contribute to fulfilling the organisation’s purpose?

Ideas for action:

• List your budget expense items as a percentage of total budget cost and look at what % is allocated against each expense.
• Review your annual budget. Write down the focus areas your budget prioritises.
• Have another look at your mission statement and see where budget focus areas align with your mission.
• Consider your strategic goals. Which 2 or 3 are key for your mission impact?
• Look at your budget focus areas and check that you have allocated sufficient finance to your key strategic goals.

Your answers are only visible to you.

Do you take time to identify and diversify revenue sources, including donations, grants, membership fees, program fees, fundraising events or other? Are you ensuring you avoid over reliance on a single source of income to reduce your financial risks?

Ideas for action:

• Looking at your budget income items and count how many income sources you have.
• If you have one source of income (e.g. donor funding), how many individuals/organisations make up the source?
• Consider to what extent this might limit your growth and your sustainability?
• How might you diversify your income streams? Take time to discuss this with your team.
• How might you diversify your donor base?

Your answers are only visible to you.

Do you break your expenses into categories? Are your clear on what percent of your expenses are going to the various categories? Do you have guidance on what the allocation is for organisations similar to yours?

Ideas for action:

• Categorise expenses into categories (for example programs, administrative, and fundraising costs) to give better clarity on how your funds are being used.
• Clearly define the most appropriate proportion of funds allocated among these categories.
• Do some research on what proportion other organisations work on.
• Consider whether enough goes towards programs and activities to ensure your can make the difference you intend to make.

Your answers are only visible to you.

To what extent do you prioritise budget allocations that have a direct impact on the organisation’s programs and activities? Do you assess the cost-effectiveness of each program and allocate resources accordingly?

Ideas for action:

• Check whether your budget has a breakdown of information by program or activity to give you an understanding of how you are spending your funds.
• List your key programs and activities that are core to your mission.
• Compare your total budget allocation to each program/activity and look at each as a percent of the total program/activity allocation.
• Reflect on whether these percentages are healthy and truly demonstrate the importance of each program/activity.

Your answers are only visible to you.

Do you use historical financial data and trends to create realistic revenue and expense forecasts? Do you take into account seasonality and other external factors that may affect income or expenditure?

Ideas for action:

• Analyse prior year financial statements by recording month by month income and expenditure. See you if you can spot trends and patterns in income and expenditure over the course of the years.
• When preparing your budget for the next year, take time to look at prior year finances, see where you were under or over budget, decide what needs to be adjusted going forward, and use the prior year as a starting point.

Your answers are only visible to you.

Are you setting aside a portion of the budget for a reserve fund or contingency fund to cover unexpected expenses or revenue shortfalls? Do you aim for a reserve equivalent to 3-6 months’ worth of operating expenses?

Ideas for action:

• Setting aside finance for the future is not easy, especially when funding is low. Organisations that have prepared well are more likely to get through tough times. Build in the discipline of saving into every month by including a sustainability line item in your annual budget.
• Keep the sustainability funds in a separate bank account if at all possible. If you can, try to get the most interest you can on the account. Banks often give better interest rates for longer term investments.
• Consider approach a few donors to contribute specifically to your sustainability fund. In order for them to trust the management of these funds be sure to show good management of the funds.

Your answers are only visible to you.

Is there transparency in your budgeting process? Do you share the budget with key stakeholders, such as board members, staff, and donors, and provide regular updates on financial performance?

Ideas for action:

• Do you find it difficult to share your budget with others? If you do, start with someone close to you in the team, someone you know you can trust. Then try and push yourself wider.
• Ask your Board/Overseers to view your budget and give input.
• Send out a monthly or quarterly financial report to your team and ask them for their ideas of how to do your budgeting better.

Your answers are only visible to you.

Do you engage your Board/Overseers in the budgeting process? Do you seek their input, expertise, and approval of the budget? Do you report your actual income and expenses against budget to the Board/Overseers?

Ideas for action:

• Ensure your annual budget is reviewed and approved by your Board.
• Report your actual income and expenses compared with your budget to your Board/Overseers on a regular basis. A quarterly report is a good rhythm.
• Set agreement in place with your Board/Overseers that expenses substantially above budget will need to be approved by the Board. For example, you could set it that if expenses are forecast to exceed budget by 10% or more than Board approval will be required.

Your answers are only visible to you.

If your organisation relies on grants, do you make sure to budget in accordance with grant requirements and reporting deadlines? Do you have accurate tracking and regular reporting on how grant funds are used?

Ideas for action:

• Reporting to donors when they expect builds trust. Log your donors reporting expectations into an annual calendar and set reminders to ensure you don’t miss them.
• When reporting be open about your financial situation. Don’t try and report what you think will give your donors a good view of your organisation. Regular, open and honest communication is always the best way to build trust.
• Be sure to have clear reporting expectations set at the start of a relationship with a new donor. If they don’t mention anything, ask what would serve them best.

Your answers are only visible to you.

Do you have a comprehensive fundraising strategy that outlines fundraising goals, methods, and timelines? Have you allocated sufficient budget resources for fundraising activities?

Ideas for action:

• If you do not have a funding strategy, take some time to do the courses in the Funding section of the FiftyFour platform.
• If you have an individual or team responsible for fundraising, include them in the budgeting process.
• Relationship with existing donors is important. Check you’ve got sufficient connection times with donors built into your budget.

Your answers are only visible to you.

Have you got good cost control measures to manage overhead and administrative expenses? Have you looked for opportunities to streamline operations without compromising program quality?

Ideas for action:

• Check costs to date against budget will enable you to note where costs may exceed budget.
• Review year to date income and expenses against budget on a monthly basis.
• Make sure your leaders are well informed on their spend against budget.
• Anticipate cashflow shortages early and be aware of where costs can be reduced if needed.

Your answers are only visible to you.

Do you periodically review and evaluate your budget to assess whether it aligns with organisational goals and whether adjustments are needed? Are you flexible and willing to adapt your budget to changing circumstances?

Ideas for action:

• Remain alert on events that will have an impact on your budget, and pull your team together to adjust your budget when review is needed.
• Do a quarterly check your priorities in your budget to make sure they still align with your goals.
• When circumstances change, respond quickly by reviewing the impact on your budget and adjusting your forecast

Your answers are only visible to you.

Have you got clear financial policies and procedures that outline how funds are managed, including authorisation levels, expense reimbursement guidelines, and financial reporting standards? Do leaders have insight into how much of their budget has been spent on specific line items? Do leaders know what to do if they are likely to exceed their budget?

Ideas for action:

• Make sure leaders of key areas are seeing a monthly comparison of actual income and expenses to date compared with budget.
• Be sure to show the remaining available budget for each line item
• Have good guidelines documented showing how leaders should respond when they are likely to go over their budget.
• If all the responsibility of the budget sits with you, you are missing an opportunity to grow your leaders. Take time to consider who else you could include in managing the organisation’s budget.

Your answers are only visible to you.

Do you do a monthly report of income and expenses to date compared with budget? Does it show where you are under or over budget? Do you forecast likely total income and expenses for the year against budget?

Ideas for action:

• Prepare monthly financial reports showing income and expenses to date, compared with the budget.
• Show over or under spend very clearly for easy decision making.
• Calculate the forecast income and expenses to the end of the year (year to date plus budget for the remainder of the year) compared with budget total to give a sense of likely over or under spend for the year.
• Make sure your Board/Oversight group get to see your financial reports on at least a quarterly basis. Ask them for input on your finances.

Your answers are only visible to you.

Do you involve the rest of your team in your annual budget planning? Does the team have a sense of ownership and understanding of what the budget plan is and how it will help achieve your goals?

Ideas for action:

• When creating your budgets, get input from key leaders. Let them prepare and present their annual budget to the leadership team.
• For leaders within your organisation that are not confident in how to prepare a budget, consider getting them some training.
• Get your team to regularly review your budget with you and to give their input on how to best align your budget with your goals.
• Ask your Board/Oversight group to give input into your annual budgeting process.

Your answers are only visible to you.