A Proper Budget CAN Drive Your Small Nonprofit’s Revenue Growth

By Sherry Quam Taylor

Besides accuracy, one of the most important things about financial management is using those numbers to discover trends that will inform the business decisions that lead to growth. Your numbers tell a story about the health of your nonprofit organization – and when you understand how to read your numbers you can strategically use it to grow your funding.

Your approach to budgeting every year is a crucial part of propelling your organization and your fundraising forward.

Really! The budget you set and the number you’re raising toward has a HUGE impact on your success. Here’s what I mean:

One of the first things I ask of my clients when we start my 90-Day Fundraising Accelerator is their financial need for the year. More often than not, I get answers like, “Well, last year we raised $750,000, so I really hope this year we can raise $800,000.”

This makes complete sense – all nonprofits want to raise as much money as possible year after year.

But that’s not the question I’m asking.

I’m really trying to understand what the organization needs to raise this year so that it can be fully funded – program, admin, AND fundraising. Secondly, I’m trying to determine if there’s enough growth factored into the budget so that the organization can truly flourish and move to becoming a sustainable mission.

So often, budgets are set with a very reactive approach – rooted in more of a “squeak-by” number vs. a thoughtfully determined financial need of the organization. Most times I find that organizations are simply not setting their budget to a number that will help them grow. When a nonprofit does this, it can move out of scarcity mode and create a true, step-by-step development plan to balance the budget.

This principle is why some nonprofits seem to grow quickly while others fight for every single $10 donation. Successful nonprofits design need-based budgets.

Let me ask you this: Are you unconsciously hesitating to invest in things that would allow you to grow your organization? I’m not suggesting any organization haphazardly turn their budget into a wish list of frivolous expenses.

What I’m saying is you must invest in your growth – it costs money to grow your funding. I know, it’s counterintuitive. There are several investments I see organizations try to avoid for too long. Directly stated, these hesitations are preventing growth.

Look at the tools and processes that create a strong framework to streamline your development processes and bring in more money – things like:

  • truly integrated and segmented donor management software
  • a (paid) financial partner or bookkeeper who can truly help you understand your numbers
  • upto-date online technology for an easy giving experience
  • missionfocused photography from a professional that sets you apart
  • graphic design services to create stronger communication templates
  • specific collateral for mid and major-level gift solicitations
  • majorgifts training for a founder who has never needed to know how ‘to ask’ (until now!)

Sure, sometimes volunteers can do these things, but not for the long-haul.

Let’s look at the bottom line. What impact could this mindset have on your donors?

Donors need to hear you passionately share your plan to grow your organization AND your programs. They need to learn how their giving can propel the organization forward, thus changing a life. You must educate the donor on what this looks like for your organization.

A donor wants to invest in a forward moving mission – not one that hopes to just squeak by with just a slightly better impact than they had last year.

It’s so important to create a real and true annual need every year that inspires donors to give generously – and then celebrate reaching it with them. This proactive or forward moving approach builds your donors’ confidence that you have a plan and are executing it with great passion and precision.

Then it’s up to you to know your numbers – own them and present them with confidence. Tell them how you’re going to use their gift to grow.

Your key take-away? March strongly toward establishing a needs-based budget so that you can do great things this year. Believe that need. Pray your donors would understand and see that need. Establish a fundraising plan focused on mid- and major-level gifts to meet that need. Your confidence and passion will come across to your donors and they will respond accordingly.

 

Sherry Quam Taylor teaches nonprofit leaders how to pivot from small-dollar donations to securing larger, investment-level donations so they can finally fund their missions. The leaders she works with are experts in their field, but when it comes to individual donor fundraising, they’ve simply never been trained on how to do it, so it feels uncomfortable and frustrating. She helps them learn the exact steps to launch a mid- and major-level gift program that feels comfortable, involves less dread, and fully funds their mission for the long-haul. She does this nationally through her private coaching and her 90-day LET’S GROW fundraising accelerator.


This text is provided with the understanding that ECFA is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.

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