Some Thoughts on Budgeting for A New Nonprofit

Sections of this topic

    This is a follow up to last week’s post on “special event income.”

    The person who asked the question that engendered that posting didn’t provide enough information for me to be able to address her specific circumstances.

    So, I got another note, expressing disappointment … and maybe a little annoyance.

    This time my correspondent wrote: “I was asked to develop a budget for a small project ($30,000 a year). We have designed and embarked upon a campaign of grant writing and solicitation of yearly pledges (from individuals and organizations) to fund the program. I believed that part of our campaign should also include fundraisers and special events because our clients are teenagers and we hope to involve them in such endeavors to teach them leadership skills, and to help them become materially involved in the maintenance of the project.”

    I’ve already responded to that additional information – an edited version follows.

    I do and will always object to “fundraisers,” but I’ll come back to that later.

    The most important issue/concept noted above is that the purpose of the activities that will involve teenagers is to involve teenagers. If you call those activities “fundraisers” or “special events,” that’s of little importance.

    Getting the kids involved in an activity supporting the organization’s mission is major. If the activity raises money, all the better, but that shouldn’t be the main objective … and you shouldn’t count on the income from that activity.

    If you budget for the activity, you budget it as an expense, with no anticipated income … ’cause you haven’t done it before and you cannot put guesswork into a budget.

    You cannot, in fact, include anything in a budget for which you don’t have firm evidence … specifically, income figures. And, before you can develop a budget that lists specific expenses and a total expense figure, you have to know if you’re going to have the money to engage in those activities that you’ve listed in the budget.

    Reliance on “fundraisers” is dangerous, as there is rarely any assurance they will generate the same (or more, or any) income every year.

    If a nonprofit organization is to survive beyond the first few years, there must be a solid plan — what you want to do and how you’re (actually) going to get the money to do that, but not wishful thinking.

    A published budget (and everything a nonprofit does, except for client information) is or will become public knowledge. You can’t put a budget out there, then fail to do what you said you were going to do and/or fail to raise the funds needed to do it.

    If that happens, the NPO loses all credibility and a great percentage of their supporters/donors, especially from foundations and wealthy individuals.

    So, I have to add, again, there is no percentage of a nonprofit’s budget that should be based on income from “fundraisers” and/or untested “special events.”

    And, if you are thinking about grants, I suggest you take a look at Lynn deLearie’s ebook on Grants & Grantsmanship. It’ll save you much time and effort, and probably some money.

    Have a comment or a question about starting, evaluating or expanding your fundraising program? AskHank
    Want to learn more about the basics of Special Events?
    Take a look at the ebook, Special Events
    Looking for some fundraising Guidance for the New Nonprofit
    take a look at that ebook.
    They are part of
    The Fundraising Series of ebooks.

    If you’re reading this on-line and you would like to comment/expand on the above, or would just like to offer your thoughts on the subject of this posting, we encourage you to “Leave a Reply” at the bottom of this page, click on the feedback link at the top of the page, or send an email to the author of this posting. If you’ve received this posting as an email, click on the email link (above) to communicate with the author.