For many nonprofit leaders, annual budgeting processes are approached with at least a slight sense of dread. We often treat them (though we know better) as relatively simple math problems looking for a passable solution we can collectively agree on; the real work of budgeting is way more complex, of course, involving such stuff as projecting revenue, incorporating equity, and measuring the real value of a donated dollar.
So, what if nonprofit financial leaders were to accept and even embrace the dynamism that is part and parcel of our operating environments and treat budgeting as an opportunity to reflect our values, build financial literacy and agility, and excite and re-unite people in strategic intention?
As our friend Kate Barr says, "Finance is not neutral.” It reflects our lived values and social positioning, among a host of other factors. Budgeting becomes important as a whole-body exercise and an opportunity for realignment.
In this first of three sessions on nonprofit budgeting, Steve Zimmerman, coauthor of the sustainability mindset, will reveal a deceptively simple framework of processes and concepts that do justice to the strategic opportunity budget development affords us. In so doing, he will ask you to challenge assumptions that make the process harder or less likely to succeed.
Among the questions we will consider together
- Why our financial time parameters lead us astray and what to do about it?
- When is a nonprofit dollar not worth a dollar?
- How does your business model inform the formulas and metrics you may use when developing and reporting on the budget
- Should we ideally strive for a balanced budget?
- How do consider and identify the levels of financial uncertainty we are willing to live with in a group where members of staff and board have very different risk appetites?
- What to include when budgeting for capital health and how to reflect it?
- Who should be included in the budget development and monitoring process when and why?
Subsequent sessions will build on this foundation with some deep dives into revenue projection, understanding how to work with a full cost framework, cost centers and shared costs and more on the essentials of integrating business model considerations into budgeting, and how to build budgets that promote equity.