HOW TO IMPROVE NON PROFIT CAPITAL BUDGETING PROCESS? 

1. Diversify your income stream

As we mentioned earlier in this piece, most nonprofits rely on donors or grants to fund their operations through donor management software and frameworks. This can leave a lot of organizations in a precarious situation. If funding from donors or grant programs suddenly dries up, your cash flow can be put at risk. Diversifying your cash flow plan through other means is a good first step to take. Two ways nonprofits can find new funding opportunities are through capital campaigns and corporate partnerships.

2. Focus on where you can cut costs

Many nonprofits struggle to find places to cut their budget because so much of their funds are spent on their cause. There are a few non-conventional ways nonprofits can strategically cut costs to save money on their operating budget, but the biggest one is in-kind gifts.

3. Have a plan in the case of a funding shortage

According to Market Watch, two-thirds of financial experts now expect a U.S. recession by the end of 2020. Whether or not this will happen will only be seen when we experience it –  but that doesn’t mean your company shouldn’t prepare just in case. One key strategy nonprofits can implement now to prepare for funding shortages is creating an operating reserve.

4. Consider your fixed expenses

When you’re creating your budget, make sure that the first expenses you incorporate in the plan are those fixed costs, which are the most predictable expenses that your organization needs to plan for.

5. Examine your income sources

One side of your budget encompasses the revenue sources for your organization. This includes your fundraising campaigns, grants, and income from corporate philanthropy. Your revenue will define the amount of funding your organization has to spend on the different aspects of your strategy based on the amount of money you bring in.

6. Establish effective bookkeeping standards

 Budget requires your organization to make realistic decisions given past financial data. This means that in order to create an effective budget, you need to start with effective bookkeeping.

Written by,

Aayushi Goyal