Nonprofit Budgeting II: Building Better Budgets Shannon Ellis - PowerPoint PPT Presentation

Nonprofit Budgeting II: Building Better Budgets Shannon Ellis Project Director CompassPoint Nonprofit Services

CompassPoint intensifies the impact of fellow nonprofit leaders, organizations, and networks as we achieve social justice together.

Welcome • 9:30am – 4:30pm. 1 hour lunch around noon. A break in the morning and afternoon. • Please sign in • Silence mobile phones • Wifi = CPGuest / Password = CPwelcome • Return from breaks on time • Questions are encouraged • Confidentiality

Introductions Name Organization Role

Learning Objectives By the end of this workshop, you will: • Be inspired to develop impactful budgeting process, tools, and reporting; • Increase your skill in communicating about the budget in order to build a culture of learning and shared leadership throughout the organization; • Use the budget to spark new thinking for powerful conversations with funders and donors; • Explore new ways of thinking about nonprofit budgeting and resource management.

Intentions What brings you here today? What do you want to walk away with by the end of our time together?

Agenda • Values and Context • Budget Assessment – Expense Planning – Revenue Modeling – Structural Decisions • Designing the Process • Action Planning

Budgeting Overview: 7 Stage Process Design the process Clarify context and articulate goals Decide on budget structure Estimate costs Forecast income Draft budget Adopt and implement

Values Reflection • What does this value mean to you? How is it expressed at your organization? • How does this value connect to how we generate and distribute our resources?

Values Mixer • Write your organizational values on a large post‐it. • Find 1‐2 others who have a Racial Justice value in common with you. Integrity • Share with your small Learning group how this value connects to how you think about resource generation or distribution at your org.

Clarify context and articulate goals Identify… and reflect on… How did this success contribute to our intended impact as an Past successes organization? What factors contributed to the success of this effort? What might we need to do more or less of to fuel more opportunities like this? What went wrong? What did we not anticipate? What can we Past failures learn from this? What specific changes will we make to our programs or operations to ensure it doesn’t repeat? What changes for next year have we already committed to Known factors implement? Are we launching or sunsetting any programs, partnerships, or initiatives? How will this affect the resources needed and/or how they will be distributed? Thinking about the community/field/movement that we work Emerging within, where is the momentum that we can leverage to trends extend our impact? Is our current approach on the leading edge of our field or becoming stagnant? What new initiatives or funding trends in our field will affect our work?

Clarify context and articulate goals Goal: what do we Objective: how will doing this plan to do next year? influence our budget for the year? • Increased average grant amount for programs Continue to develop that include emergent design an “emergent design” • Opportunities for staff to share experiences and approach in our cohort learning with each other on new approaches • Professional development opportunities for staff leadership programs • Temporary decrease in earned revenue to allow Develop common staff time for internal process work and program stance on racial justice re‐design where needed to guide internal and • Hard costs for consulting team • Change compensation and supervision structures external work • Investment in upgrading finance systems to Improve financial better align to current organizational needs reporting process • Reduction in staff time spent navigating current and structures systems by year end

Impact‐Based Budgeting Domestic Violence Intervention & Prevention Agency 2016-17 Final Budget for Finance Committee As of June 5, 2016 Core New Costs/ Variable/ Total Work Change Capital Pass-Through 2016-17 Contributions 80,000 - - 80,000 Fundraising events - net 135,000 - - 135,000 Presents an annual budget that Foundation grants 90,000 35,000 - 125,000 Total support 305,000 35,000 - 340,000 distinguishes between an Government contracts 565,009 - 250,000 815,009 Interest and dividends 10,000 - - 10,000 organization’s “core” work and Total earned revenue 575,009 - 250,000 825,009 specific projects that may be Net assets released from restriction 408,000 - 42,000 450,000 Total income 1,288,009 35,000 292,000 1,615,009 temporal or require particular Salaries 778,910 21,920 - 800,830 focus, including capital Payroll taxes 79,849 2,236 - 82,085 Employee benefits 80,083 - - 80,083 investments, one‐time events, Training 5,600 - - 5,600 Personnel expenses 944,442 24,156 - 968,598 and pass‐through funds such as Accounting 17,500 - - 17,500 subcontracts or direct program Bank charges 5,000 - - 5,000 Building expenses 27,500 - - 27,500 expenses that would not be Clients, direct assistance to - - 250,000 250,000 Conferences and meeting 7,500 - 10,000 17,500 incurred without a specific Depreciation 29,634 9,263 - 38,897 Dues and subscriptions 3,650 - 3,650 source of funding. Equipment rental/maint. 3,200 - - 3,200 Insurance 29,000 - - 29,000 Interest 8,016 - - 8,016 Other professional fees 7,500 - 32,000 39,500 Postage and delivery 12,000 - - 12,000 Printing and copying 16,000 - - 16,000 Supplies 51,500 - - 51,500 Telephone 36,000 - - 36,000 Travel 20,250 - - 20,250 Utilities 42,500 - - 42,500 Non-personnel expenses 316,750 9,263 292,000 618,013 Total expenses 1,261,192 33,419 292,000 1,586,611 Change in net assets 26,817 1,581 - 28,398

Impact‐Based Budgeting “Why Funding Overhead is Not the Real Issue: The Case to Cover Full Costs” by Claire Knowlton, Nonprofit Finance Fund ‐ Nonprofit Quarterly, January 26, 2016

Impact‐Based Budgeting Domestic Violence Intervention & Prevention Agency 2016-17 Final Budget for Finance Committee As of June 5, 2016 Core New Costs/ Variable/ Total Work Change Capital Pass-Through 2016-17 Fixed Costs: Expenses that have to Contributions 80,000 - - 80,000 be paid by the organization Fundraising events - net 135,000 - - 135,000 Foundation grants 90,000 35,000 - 125,000 regardless of the revenue generated. Total support 305,000 35,000 - 340,000 These costs do not change when the Government contracts 565,009 - 250,000 815,009 Interest and dividends 10,000 - - 10,000 amount of services increase or Total earned revenue 575,009 - 250,000 825,009 decrease. For most organizations, Net assets released from restriction 408,000 - 42,000 450,000 Total income 1,288,009 35,000 292,000 1,615,009 basic operating expenses such as Salaries 778,910 21,920 - 800,830 salaries, rent, and insurance fall into Payroll taxes 79,849 2,236 - 82,085 Employee benefits 80,083 - - 80,083 this category. Training 5,600 - - 5,600 Personnel expenses 944,442 24,156 - 968,598 Accounting 17,500 - - 17,500 Variable Costs: Expenses that Bank charges 5,000 - - 5,000 Building expenses 27,500 - - 27,500 increase or decrease depending on Clients, direct assistance to - - 250,000 250,000 Conferences and meeting 7,500 - 10,000 17,500 the amount of services provided. For Depreciation 29,634 9,263 - 38,897 Dues and subscriptions 3,650 - 3,650 example, the cost of workshop Equipment rental/maint. 3,200 - - 3,200 Insurance 29,000 - - 29,000 personnel and supplies could vary Interest 8,016 - - 8,016 Other professional fees 7,500 - 32,000 39,500 with the number of sessions offered, Postage and delivery 12,000 - - 12,000 Printing and copying 16,000 - - 16,000 the cost of meals could vary with the Supplies 51,500 - - 51,500 Telephone 36,000 - - 36,000 number of participants served, or Travel 20,250 - - 20,250 Utilities 42,500 - - 42,500 Non-personnel expenses 316,750 9,263 292,000 618,013 the cost of filing fees will vary with the number of legal orders filed. Total expenses 1,261,192 33,419 292,000 1,586,611 Change in net assets 26,817 1,581 - 28,398