What Costs to Include in Your 2016 Fundraising Budget?
It’s that time of year when many nonprofit organizations are working on the annual budget. An Executive Director friend, working on his budget, asked me if I could outline for him what types of expenses belong in a combined development, marketing, and communications budget. He wants to make sure that the Development Director at his organization has all the tools he needs in the budget to succeed.
Kudos to him! The reality is that it takes money to make money and my friend is wise to realize that. It won’t do any good to put a Development Director on your payroll if you don’t also provide him or her with a budget to work with. If you want your development director to solicit major gifts, for example, you need your development officer to be able to visit your major donors, to see them face to face and, unless your donors live inside your office building, that means needing a budget for travel.
Here are some things that a Development Director is going to need funding for and a template for a development budget. A development budget needs to first take into consideration whether or not there are expenses to execute an event. Events can be very expensive and can include expenses for a venue, printing, and decorations, as well as costs for alcohol, catering, and a band. Then, there are the non-event outlays for running a development office that include things like office expenses, travel, professional development, and software needs. And if you are doing a combined budget for marketing, communications, and fundraising, there are things like newsletters, brochures, a website, social media ad buys, and more to consider.
To see the result, view our budget template. We’ve thrown some numbers in for the sake of argument, but many of the numbers are probably not realistic for your size organization. This budget is similar to (but not exactly identical to) a development budget for an organization where the budgeted revenue was about $1.4 million. If all would have gone exactly as planned, that would have made revenue about 83% of budgeted expenses. You can use this budget to scale up or down to suit your organization’s preferences.
Of course, the size of your budget will vary greatly, depending on the size of your organization, how many staff members you have, how many constituents you serve, how many donors you stay in touch with, how many volunteers contribute time, etc. There is no one perfect ratio for costs to expenses. In general, the larger an organization is, the lower its ratio can be because it takes a certain amount of expense to run, to be open to administer programs. This bottom-line, sunk cost is easier for larger organizations to bear and to spread across multiple constituents and service lines than it is for smaller organizations (hence, one reason the “Overhead Ratio” has always unfairly discriminated against smaller organizations).
The point of the template, however, is not to suggest a certain level of spending. The point is to assist you in identifying all of the costs that you might incur in running a successful development program so that you can anticipate those costs, budget for those costs, and plan for them. That way, your fundraising success will not be deterred by the barrier of unanticipated costs.
With some good budgeting, nothing will stand between you and success in 2016. Here’s wishing your organization fundraising and marketing success!
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