Your Budget is a Fundraising Tool - Part 1

If budget season  is your least favorite time at your organization, you’re in good company. Many of us who are called to our nonprofit’s mission tend to squirm and cringe when we have to participate in the budgeting process. While there are some fiscal geeks and number crunchers among us, many development professionals are far more excited about the revenue side of our nonprofit’s “math” than any expense spreadsheets.

But for the development officer who reframes the expenses through the lens of a donor, your budget can be a tremendous fundraising tool. In this two-part blog series, we’ll unpack this concept and share how transparency with your budget can create new ways for friends and donors to help support the needs and mission of your nonprofit.

We’ll start with the foundation of your organization’s budget. It’s critical that we as fundraisers understand the basics of how our nonprofit allocates and funds our programs and organizational mission, what the key budget areas are and how donor dollars are used. 

Secondly, our givers should have a clear understanding of the impact of their giving.  There are proven ways to make your budget work as a fundraising tool. But this will take intentional effort - it’s not something most of us are comfortable with, so we have to get used to the notion of sharing appropriate information with context more broadly, especially with our key donors.

First, build a narrative version of your nonprofit’s budget. This is a high-level look at your budget areas with key graphics or narrative text. It should describe the investment in each area along with planned and actual revenue/expenses. Aim to make it easy to understand and easy on the eyes - less spreadsheet and more dashboard. Many organizations then update this narrative dashboard each quarter - or at least annually - to share the updated financial position with their key donors. While this specific narrative budget piece may not be appropriate to share with every giver, you’ll see how this exercise for key donors with the posture of transparency then creates unique giving opportunities.

The more you can educate your board members, key donors, and volunteers about your actual costs and missional needs, the more excited they will get in helping to fund and meet those goals. Don’t dread budget season next time around: turn it into a great stewardship opportunity! In the companion blog of this series, we’ll share some tips on how to make that actionable.

- Tim Smith