![]() ![]() To learn more about forecasting, check out Financial Planning Part 1 from NFF's Nonprofit Financial Management Webinars. Making Your Budget the Backbone of Your Nonprofit So, if I shouldn’t change my budget, and I have just received upsetting news from a large funder, what should I do? Only in very rare instances would the board need to reapprove an amended budget (e.g., if the fiscal year is likely to end very differently than the predicted original budget). To use a budget effectively, it needs to be a static document - and a tool that is used to compare actual results - in order to ensure that the actual results are in line with your board-approved budget. I encouraged Jordon to calculate each as she is just starting out on this journey, and then over the years she can see which method tends to be the most accurate for HTH.Īll this talk of grant revenue and probability got Jordan thinking: What if I get significantly bad news from one of my funders? Can I change my budget in the middle of the year? She can now choose which methodology to use and the amounts she will include in her overall budget. You can see that the totals ($450,000 and $490,000) are less, and more realistic, than the $535,000 total that she started with. Let’s use HTH’s 2018 foundation grants to illustrate this concept. Jordan Johnson, Founder and Executive Director of HTH, continues to explore new ways for HTH to better support youth in actualizing their dreams. A nonprofit dedicated to providing food, clothing, mentorship, and job opportunities to young people in Philadelphia, HTH was founded on the belief that everyone deserves an equitable chance in life. ![]() And you can use these probability methodologies to arrive at a range of contributed revenue you expect to receive for the upcoming fiscal year, which can be useful in setting expectations for you and your board.Īs we explore best practices in budgeting, we’ll be using a case study to illustrate real-life numbers and scenarios: Hope Through Housing (HTH). Using either of these probability methodologies will help to refine your forecast and give you greater confidence in your contributed revenue pipeline management. In this case we use the entire amount of the grants that are expected to come in over a certain percentage probability, say 75%.
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