Wednesday, June 11, 2014

National Council of Nonprofits: Nonprofit Knowledge Matters

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Building a better budget (even if you are allergic to numbers)
During an interview with staff members at the New York Council of Nonprofits, Jenny Chandler, Vice President at the National Council of Nonprofits, learned how to build a better budget:
sneezingIn an effort to get over my allergy to numbers, I spoke with the terrific team of Kelly Mathews (Chief Operating Officer), Michelle Jarvais (Chief Fiscal Officer), and Elizabeth Mathews (Senior Accountant), who shared with me their “6 P’s” approach to nonprofit budgets. See if you can find the “P’s” in their advice!
Jenny: When you work with nonprofits to build a “better” budget, what are your goals?
Michelle: We’re going for a strategic process that helps you plan – not just taking last year’s numbers and updating them. We encourage nonprofits to look a few years ahead and take a multi-year approach because that will result in a better budget.
Kelly: In my work with nonprofits I often see folks not thinking through the long-term effects of short-term decisions. An example would be a simple cost-of-living adjustment. It’s great in the year it’s given – it bumps up salaries and boosts morale. But has the nonprofit projected out the impact of that adjustment for the next few years? It’s going to change the revenue requirements for many years to come. That could be huge.
Michelle: We encourage nonprofits to think of their budget as a living, breathing, guiding document. Your budget is not something that’s approved by the Board of Directors and then locked in stone for the rest of the year. It’s never going to be static. It’s going to change month-to-month. It’s normal for the actual numbers to turn out differently than you projected when you drafted the budget, so a “better budget” is one that changes with the nonprofit’s experience.  
Jenny: It sounds as if you are suggesting that the board-approved budget should be formally amended throughout the year?
Michelle: Perhaps. Many organizations approve at least one budget revision annually. But sometimes adjustments are anticipated and reflected in the budget narrative so that a formal amendment isn’t necessary. If the narrative is thoughtfully drafted it will explain potential variances and alert the board to alternate scenarios.
Jenny: Wait a minute. You just said, “narrative” – You mean budgets aren’t just numbers on an Excel spreadsheet? 
Changing the Culture on Costs, One Community at a Time
Most nonprofits know the problems caused when governments, funders, and the public incorrectly assume that only program costs are well spent and that overhead costs are undesirable. Some nonprofit leaders in Napa Valley, California are doing something about those attitudes, and providing inspiration for the rest of the nonprofit community.
Subscribe here to receive your free copies of Nonprofit Advocacy Matters (every other Monday), where this article was originally published. 
And now for something fun: A summer celebration of charitable nonprofits!
NAM motion graphicSit back in your chair, let yourself relax for two minutes to enjoy this short “Motion Graphic” about how nonprofits are essential to the quality of life in our communities. Brought to you by our member State Association, the Nonprofit Association of the Midlands
Resources to help your nonprofit develop a budget
Financial management resources (National Council of Nonprofits)
NYCON’s Budget and Cash Flow Toolkits: Comprehensive, step-by-step guided & easy to use ● Take a tourInformation & Online Order Form ● Contact your state association of nonprofits to inquire about a discount.
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Worth Reading
Author Interview: A Board Member’s Easier Than You Think Guide To Nonprofit Finances (Andy Robinson and Nancy Wasserman) 
Your Voices
Last month, we asked how often your board reviews financial reports. Here's what you said:
Quick poll results
This month's poll:
What do you think of crowdfunding as a fundraising strategy?
Tell us in this quick, one-question poll and look for the results in next month's Nonprofit Knowledge Matters.
Worth Noting
Free program: Everything you always wanted to know about (June 25, 1 pm Eastern)
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