“This week’s Ask Manny question comes from Charlie.”


Do I really need a budget?  I’ve been told repeatedly that non-profits must have a budget. But I don’t understand why. I have so many things on my plate and I’d rather not have another to-do added to my list unless it’s truly important. 


Yes you really need an annual budget!!

Let me explain why:

A budget is basically a plan for the immediate future of your organization.  It explains (using numbers) what goals you want to accomplish in the upcoming year and the resources that you will need to accomplish these goals.  For example, you may want to roll out a new mission-based program and increase the impact of your current programs by 50%. In order to accomplish this, you will need to seek an additional grant, hire two more team members, and hold a fundraising event.

Without a budget, you are flying blind, and potentially making decisions on-the-fly instead of with intent toward your goals. 

To better illustrate this:  Imagine you are taking a trip from New York to San Francisco. You could just get in your car and start driving, and maybe you would get there. But you would also run the risk of running out of gas, taking the wrong freeway, getting stressed about where to eat and sleep, etc. If, instead, you planned the trip beforehand, you would have many of these questions answered and your trip would be so much smoother. And the odds of you successfully completing the trip increase dramatically. 

Does it take time to pre-plan?  Sure. Is it worth it?  Absolutely!

By the way, once your budget is drafted, make sure that your Board of Directors approves the budget. This ensures that everyone is on the same page and rowing towards the same direction (and that the board doesn’t change direction on you mid-trip).  This also helps to create more buy-in from your team, as they better understand why they are doing the work that they are and how it fits into the bigger picture of what you are creating. Super important. 

Now, once you have an approved budget, you want to have your bookkeeping team enter it into your accounting software so actual performance can be tracked against the plan.  This is the importance of reviewing budget-to-actual reports on a regular basis. You may need to course-correct if you find that your actual results are deviating too far from the plan.  Just like taking a trip, if you take a wrong turn and end up on a wrong freeway, you gotta quickly find your way back to the correct one. 

Here’s the good news:  You don’t have to create a budget on your own.  A professional CFO can help you and do a lot of the heavy lifting for you. Simply reach out to us at Free Consultation | CFO Services Group and let’s discuss. 

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