Armanino Blog

Democratize the Budget Process

by Amy Morgan
May 08, 2018

What if the CFO was not the gatekeeper of all things financial? What if the entire leadership team—or (gasp!) even the entire workforce—could easily pull up data that illustrates where money is coming from and where it is going?

Leaders in nonprofits that have this kind of transparent and collaborative budgeting and forecasting process know their businesses at the most fundamental level. Even better, the ability to easily access financial data gives them visibility into the financial repercussions of their decisions, such as the cash-flow impact of adding new staff members.

Make Budgeting a Year-Round Endeavor
How can you put such a robust budget planning process in place? It all starts with figuring out who should be at the table. You want to include all the stakeholders who influence the financial performance of the nonprofit. At a minimum, invite representatives from finance, fundraising/development and human resources, as well as operational leaders such as program managers.

Then schedule a time to sit down on a regular basis to assess the company’s financial picture and review your progress against the budget. The idea is to make budgeting and forecasting an ongoing process—not just a once-a-year event. Meet once a quarter at minimum, and consider monthly meetings. An added bonus is that more frequent budget review sessions make the annual process significantly easier.

Quarterly or monthly budget planning meetings force management to analyze financial assumptions in real time (or as close to it as possible) rather than at the end or beginning of the year. They also allow leaders the space and time to compare the budget forecast with what is actually happening in the market. If unexpected expenses or shortfalls in funding threaten to throw the budget out of whack, leaders can act quickly to bring spending back in line with revenue.

At each meeting, spend some time discussing market trends and fluctuations. This market scan can help stakeholders understand the true drivers of the organization’s success and gain a better sense of the impacts different strategic decisions can have on the direction of the organization.

Technology Puts Financials at Everyone’s Fingertips
While people and process are two critical components of budget planning, there is no denying the importance of using the right technology to facilitate planning and forecasting.

An array of cloud-based budgeting and forecasting solutions enable nonprofits to leave behind inefficient, error-prone spreadsheets in favor of on-demand cash flow planning, comprehensive forecasting and other advanced functionality.

When implemented properly, these software tools can make budgeting and forecasting much more efficient. This frees up the financial team for higher value activities, such as reporting the financial insights that leaders need to steer the ship in the right direction.

Because many of these budget planning solutions are cloud-based and enable customized access rights, nonprofits can provide anytime, anywhere access to anyone from the CFO to program managers. This transparency and ease of access allows stakeholders to arm themselves with the most up-to-date and accurate information about the financial state of the organization, enabling them to make decisions that help fulfill their mission.

Budgeting can become a more democratic, inclusive process. By providing greater visibility and instituting regular planning meetings, you will start to engender a culture where individuals across the organization can take responsibility for meeting financial goals.

May 08, 2018

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Managing Director
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