HOW TO MAKE A FINANCIAL PLAN
Making a budget for a nonprofit, especially a new one, should be really simple. You won’t know all the details to start, and that’s why a quick sketch is the right way to go. Ask yourself how much it will cost to accomplish your plans for one year. This is not the time to hope for a miracle or to under-estimate. Be reasonable about what you’ll have to spend on your staff, your space, and your programs, and come up with an expense number.
Executive Director: $50,000 full time, all year
Program staff: $20,000 (full-time, beginning half-way through the year)
Payroll taxes & Insurance: $10,000
Rent & Utilities: $24,000
Books and other printing: $7,000
Graphic Design & Copy Editing: $2,500
Supplies, postage, etc: $6,000
This certainly doesn’t mean you must spend $120,000, but it’s a guideline for how you’ll proceed through the year. It’s also common for organizations to make such a plan and then four months later, change it drastically in one direction or another. That’s okay. But it’s better to start from somewhere.
Once you know what you’ll need, start lining up how you’ll get there. Just like above, this is not the time to count on a hope you have that a massive grant will come your way. It might but you’ll be in huge trouble if you start out by counting on that. Let’s say your four person-board has already committed to giving $5,000 each. You can write a $20,000 line item in your revenue budget in anticipation. Check with them. See if one of them might be able and willing to give twice that. See if anyone is going to back out. You will always have these adjustments. Maybe in addition to the board you have other plans or promises to raise $80,000 but nothing more. If you’re still coming up with less than $120,000, you will want to somehow reconcile that, by cutting your expenses somehow or marking some funds as TBD as you make more plans. Remember that funding partners always want to see a zero-based budget that shows a thoughtful approach and not much risk. An example:
Board giving $20,000
Pledged ABC Foundation grant: $50,000
Pledged XYZ Foundation grant: $20,000
Grants TBD: $10,000
Crowd-funding campaign: $20,000
You can start the year with a rough sketch like this and soon add columns to show where you’re falling short and where you’re ahead of your plans. Your actuals can adjust all year long. This budget should stay static. As you become established, these documents will become much more sophisticated and specific, but all you need to start is a broad look at how much you’ll need and where you’ll get it.