Budget Season is Upon Us—Read This First

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It’s that time of year!  The annual finance dance, where we reconcile the year at its closing, and plan for the one ahead.  For many nonprofit leaders, this is a whirlwind experience that we ‘make work’ as best we can with a patchwork of information and more time and effort than we can usually afford.  For the last 10 years, when anyone has asked if I have ‘fun plans for the summer’, I laugh, thinking of myself in a hot, stuffy office doing a mind-meld with an excel spread sheet.  But, yes, I have grown to find this time of year exciting and inspiring, even fun, if rather exhausting. 

At its best, an annual budget process has the potential to focus the work, unite the agency voice, and strategically target resources towards sustainable outcomes.  Far too often, however, the process falls far short of that ideal, and is a stressful scramble that takes our leaders away from their already overflowing workload.  With a bit more intentionality, a well-crafted budget process can enhance the best of an organization’s internal culture in a way that propels its mission forward.

Money Talks

As financially constrained as many nonprofit organizations are, real talk about the money is not all that common.  Nonprofit budgets are often mysterious processes, reflecting the pressured way they are often created.  Staff may have wide-ranging levels of interest in the financial side of their organization, but the values of transparency and fairness are universal, and processes built with those values in mind go a long way toward establishing agency trust.

Being informed helps staff feel a sense of trust in the organization and is a way for leaders to demonstrate respect for their workers.  What’s more, it really is in an organization’s best interest to make sure their staff have a good grasp of their program and agency budget.  Our staff are our ambassadors in the community and hold great power over the agency’s reputation.  Employees who deeply believe in an agency’s mission, and trust that it delivers that mission effectively, are likely to authentically share when asked.  And people ask!  Nonprofit workers get questions frequently, ‘who funds your work?’, ‘are these my tax dollars?’, ‘how do you know you make a difference?’  Too often these key ambassadors have been underprepared for this part of their work.  Every team member is a representative, and they often take on this role enthusiastically (they believe in the work!) but too often they are not supplied with the tools and information to embrace the role effectively.

Unlocking the Mystery

I was fortunate to get a deep grasp of program budgeting early in my career, through exceptional support and mentoring, and found they were a helpful, tangible lens with which to view the work.  This hasn’t been the experience of many nonprofit leaders, who were drawn to the more relational nature of service and often keep the finance office at an arm’s length.  With such tight margins, budget acumen is a vital skill for nonprofit leaders to cultivate.  The best leaders are also skilled budget communicators and use the process to exhibit a commitment to the organizational values and focus teams toward sustainable outcomes. 

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I’ve made it a practice over the last dozen years to hold an annual State of the Finances forum in every system I’ve managed.  This is the meeting each year into which I put the most dedicated prep work.  I deliver a formal presentation to my team on our current and potential funding sources, expenses, and program outcome requirements.  That leads to a conversation, and then a follow up conversation in the next staff meeting.  I’d provide documents to the team for further reflection and we’d discuss more in supervision.  This was a time-consuming process, but I always found that it was quite impactful.  I’d always gain new insights I could use to better shape program effectiveness and target staff support and resources.  The team often seemed more grounded after better understanding our full constraints.  Removing the mystery alleviated a lot of potential frustration.  But mostly, a potentially dry process gave way to a creative conversation about how this team, with these resources, could best support our organizational mission.  The effort behind this process resulted in higher morale, better team cohesion and focus, and ultimately better service to our community. 

Making the Magic

These conversations are an ideal starting point to engage and plan for the next year’s annual budget from a holistic agency level.  An ideal budget process is a symphony bringing together the perspectives and skill from every side of the agency, from the leadership, finance, HR, board, direct service staff, and often other important community stakeholders.  Ultimately, when these factions work in harmony, agencies can make extraordinary inroads towards their mission goals.  An annual budget process has the potential to be a powerful tool that impacts organizational dynamics in ways that make our work soar. 

It is common that the various parts of an agency don’t speak the same industry language or have the same perspective on the work.  Far too often we remain in our silos, focused on our strengths, without quite connecting how vital each of these roles are to overall mission success.  Intentional development and communication practices around organizational finances take a complicated, murky process and transform it to maximize organizational success.  This practice cultivates strong, informed teams and effective, efficient service delivery.  It’s worth the time and investment to turn budget season from a tiresome task into a powerful tool to help us do good, better. 

Rachel Del Rossi


We can help.

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