power Steering: Next Year's Piggy Bank
November 2008
- The Right Budget for your Nonprofit
- 12 (Low-Cost) Ways to Keep Staff Morale Up When the Economy’s Down
- Past Economic Downturns and the Outlook for Foundation Giving, Copyright (c) 2008 The Foundation Center. Used by permission.
- Nonprofit of the Month: KUT
The Right Budget for your Nonprofit
By Angie Adams, Greenlights
Even though the most common budget adopted by non-profits is the break-even budget, there are no regulations requiring nonprofits to adopt balanced budgets. Perhaps because grants budgets require the non-profit to spend exactly what is granted, many non-profits think they are supposed to develop break-even budgets. This is false for the simple reason that in some years giving will decrease, and a healthy organization must have cash reserves to fund their programs in those years. If the non-profit has operated at break-even or deficit every year, the cash reserves will not be there and the organization may not be able to continue at their current level when difficult economic times are experienced. In the current economic climate, a break-even budget may be the most ambitious plan a non-profit can achieve.
Lately there is a huge push within the nonprofit community to build cash reserves, which is certainly a great idea and typically means that the organization must plan a surplus budget in order to build those reserves. Since many potential funders will likely ask to see your board-approved budget, assure that the budget document indicates operating revenues, operating expenses and a net result, then outline how that net result will be used – i.e. to begin funding a cash reserve fund for organizational stability.
While everyone on staff is immersed in the budget process, go ahead and develop contingency plans, so if your organization’s revenue streams begin falling short of budget projections, there is already a set of pre-determined action steps in place for reducing expenses. Of course, it is critical that these contingency items have clearly defined drop dead dates so everyone is clear on the date by which a decision must be made or else the expense can no longer be reduced or eliminated.
Likewise, it is feasible to prepare a deficit budget and then simply indicate that an amount of cash reserves will be used to fund the deficit. If cash reserves are sufficient, adopting a deficit budget in one fiscal year may be a sound financial decision, especially if the reason for the deficit budget is to invest in something which will reap financial gains in the future. (One example might be investing in fundraising software.)
There are also nonprofit organizations lucky enough to have had profitable years in the past and who already have a cash reserve fund built. Those organizations may decide that the upcoming fiscal year is the time to use a portion of that cash reserve fund in order to assure their programs can continue to operate or even grow at a time when contributed income may be shrinking.
Keep in mind, however, that adopting a deficit budget when your organization does not have the cash reserves to fund a deficit could seriously jeopardize your organization’s financial health and stability. As always, budgeting conservatively and exceeding your expectations is always the most desirable outcome.
12 (Low-Cost) Ways to Keep Staff Morale Up When the Economy’s Down
1. Treat your nonprofit staff to Tiff’s Treats (or any other goodie to indulge their sweet tooth) for no good reason. Even better, have your kids deliver Halloween treats to them à la Greenlights ED Matt Kouri.
2. Institute a half-day on Fridays. Encourage staff not to schedule meetings on Fridays and to leave once they have completed their immediate assignments.
3. Organize a White Elephant re-gift exchange. Have everyone bring the worst gifts they’ve received and let them unload them on their coworkers! Note that this activity should not be limited strictly to the holiday season.
4. Do an arts & crafts project together. You can even turn this into a team-building exercise. One example of this would be to break into groups and, using only items found in your recycling bin and aids from your supply closet, see which team could build the tallest and most supportive structure.
5. Have an office competition based around something current going on. For example, in an election year people could guess the number of electoral votes each candidate will get, or during March Madness you could do a basketball bracket (just no gambling, please!). Award prizes, such as chair massages or an afternoon off, to the top finishers.
6. Ask trivia questions at staff meetings (related to your work or not), and give out small prizes to the first person who answers each correctly. Pick up some little goodies at the Dollar Store or Walgreens (hint: edible treats are always popular).
7. Once a month, schedule an office lunch out together where everyone goes.
8. Purchase a subscription to a daily newspaper, such as the Austin-American Statesman or the New York Times (or anything with a crossword puzzle) for staff to read during lunch or on their breaks. This also encourages everyone to stay current on the news, which is never a bad thing.
9. Put up a corkboard in your breakroom or kitchen where people can put up pictures of their families or announce special occasions (such as weddings or new babies). It’s a good way to show people’s personal lives and commitments are important and valued.
10. Do like Greenlights does, and have everyone offer Joys & Kudos at the beginning of each staff meeting. You could even go a step further and have a “trophy” (think a spray-painted shoe or old t-ball trophy) that gets passed around and is given by the staff member who last won it.
11. Implement an Employee of the Month Award, but make sure some concrete value is associated with it. This may differ for each work place – for example, if your organization is in a building with limited parking, award that employee with a good parking spot. If a half-day off work would be highly valued at your nonprofit, make that the reward.
12. You know how you’ve been meaning to clean up your desk or finally put away those files, but it just keeps getting pushed to the bottom of your to-do list? Encourage seasonal fall and spring cleanings. On those days, no one is allowed to schedule meetings or check e-mail; instead, take the day to organize your workspace and files. Oh, and order lunch for everyone to share!
Share your own ideas with us by commenting on this blog post.
Nonprofit of the Month: KUT
This November, Greenlights is pleased to honor KUT 90.5 as our Nonprofit of the Month. We talked to Program Director Jody Evans about their recent successful fund drive and their 50th anniversary celebrations.
What were your biggest concerns about embarking on a fund drive this fall?
The challenge for any non-profit organization in these times is how to project future revenue. At KUT, we commit to most of our service investments in advance of receiving the revenue that supports them (e.g., NPR programming, renewing current personnel positions, equipment purchases). Our revenue projections are driven by three basic variables: historical performance, current audience (growing, stable or shrinking), and an educated assessment for the outcome of new activities.
Was there any consideration of postponement due to the worsening economic situation?
No.
How did this fund drive compare to others?
KUT listeners turned out in record numbers to support the station and we exceeded our goal of $780,000. It might be counterintuitive but with uncertain economic times and an historic election, public radio’s audience and listening increases. We work every day to be the most trusted source for news and information in Central Texas. The success of the membership drive and the growth in our audience tells us we’re providing an essential resource for the Austin community.
What surprised you about listeners’ reactions? What didn’t?
I am always humbled by the comments our listeners make when they voluntarily pledge their financial support to KUT. We heard from listeners over and over that KUT is their lifeline to what’s happening in Austin and around the world. I heard from people who didn’t care for a program, or disagreed with an NPR commentary, but they still rely on the program as a whole and made a pledge of support. KUT has one of the most loyal audiences in the entire public radio system.
What did you learn from this experience that you will take with you to the next fund drive? That other people could learn from?
There are always so many variables when you’re asking for financial support. I think it is easy to second guess yourself and come up with all of the reasons why you may not succeed, but I always try to focus on the service – on our listeners. Each day we work hard to provide the most trustworthy news and quality music programs– and trust that the community will support this important community institution.
If you had it to do over, what, if anything, would you approach differently?
At KUT we’re always looking for ways to take less time on the air to raise the dollars needed to pay for the programming. It’s a delicate balance that we’re always trying to tweak.
What was the most fun about the experience? The most tedious/un-fun?
I may be one of the only people who love public radio pledge drives. Getting up a 4 a.m. isn’t great, but there is always a hot pot of coffee waiting to take the edge off. There is also a room full of volunteers who get up at the crack of dawn to answer the phones. Membership drives are a time for me to reflect on the good work we do each day, the essential service KUT provides for the Central Texas Community, and the incredibly talented people I work with every day. I’ve worked in public and commercial television and radio, so I know how it feels to work for a corporate media outlet. I truly believe in the mission and the cause of public broadcasting. While most of our listeners hear me on the air, I always try to carve out some time to answer the phones and talk with listeners to hear their reasons why they choose to support KUT.
What is next for KUT?
KUT is celebrating its 50th anniversary this year. We’re planning a lot of celebrations both on and off the air. Just this week, the BBC’s live global interactive program World Have Your Say is broadcasting live from Austin. Wait Wait… Don’t Tell Me will come to Austin in May, and we’re planning a special concert late next summer. Throughout the year you’ll heard some special voices and stories on the air reflecting on the past 50 years and celebrating the future of KUT.