You’ve likely developed your nonprofit organization’s budget for this fiscal year, but what comes next? How are you tracking it and transforming it into a powerful management tool rather than letting it collect dust on a shelf?
Here’s how to turn your budget into a proactive tool that drives your nonprofit’s success throughout the year.
1. Set Clear Objectives for Budget Utilization
While your budget was created with specific goals in mind, it’s time to focus on how to leverage it throughout the year. Regularly review how well your budget aligns with these goals and adjust as needed to ensure every expense continues to contribute to your mission.
2. Implement Regular and Realistic Tracking
Move beyond the initial creation of the budget by establishing a regular review process, such as monthly or quarterly check-ins. Track your actual performance against expectations, identifying any variances early and adjusting your plans accordingly. This regular tracking will keep your budget aligned with your organization’s evolving needs.
3. Actively Use Budget Categories
With expenses and revenues already categorized, the next step is to actively monitor these categories throughout the year. Make sure these categories are reviewed by relevant teams and ensure that spending aligns with the budgeted amounts. This ongoing vigilance will help prevent overspending and identify areas where funds can be reallocated.
4. Build in Flexibility and Define Roles
As part of maintaining flexibility, define who is responsible for reviewing the budget and reporting variances. Establish a clear process for surfacing these variances across the organization.
Ensure that any unexpected changes are communicated to the appropriate stakeholders, allowing for timely adjustments and maintaining the organization’s financial health.
5. Regularly Update Projections and Report to Leadership
Don’t just update your financial projections—ensure these updates are reported to your board or leadership team. Discuss the best ways to address variances, whether through budget adjustments or strategic shifts. This proactive communication keeps everyone informed and aligned with the organization’s financial status.
6. Link Budget to Strategic Plan and Set Up Regular Monitoring
To keep your budget aligned with your strategic plan, consider setting up a system that matches budget allocations to specific initiatives from the start. Regularly update these numbers directly from your accounting software, such as QuickBooks, to keep your budget responsive to real-time changes.
7. Provide Comprehensive Training for Staff and Volunteers
Don’t assume everyone understands their role in managing the budget. Outline and review the budget process annually with both new and existing staff and volunteers.
Training should be in-depth, covering key aspects like financial management, tracking, and variance reporting, ensuring everyone is equipped to contribute to your financial goals.
8. Optimize Communication Between Fundraising and Finance
Regular communication between your fundraising and finance teams is crucial. Make sure your financial reporting anticipates major fundraising campaigns and coordinate with your fundraising colleagues to get the data you need in advance. This proactive approach ensures that fundraising efforts are effectively supported and that financial decisions are well-informed.
By following these steps, you can turn your budget into a dynamic tool that not only tracks your nonprofit’s financial health but also actively drives your mission forward throughout the year.
