We’re at the half-year review mark of the budget lifecycle – how would you score your organization’s budget performance? Pass or fail? Do you believe best practices are being followed and milestones are being met?

Is there a way to improve the budget process at the six-month checkup point? The answer is yes! The middle of the fiscal year is a typical milestone at which nonprofits address cumulative changes or large items that have made a significant impact on the organization’s finances and mission.

For a lot of organizations, this is a good time to reflect on what has happened so far in the year, determine how the assumptions that went into writing the budget have stacked up against actual results, and then adjust annual targets. Here are a few quarterly review tasks you can implement today:

Quarterly Review Tasks

Quarterly variance reports summarize budgeted versus actual finances, based on current performance and on the projected plan for the rest of the year.

For many organizations, quarterly finance reviews go hand-in-hand with a formal presentation and distribution of a budget report to the board, executives, and other personnel who need the information. Without requiring a lot of financial expertise from their audience, these reports should provide insights on any shifts in the nonprofit’s operational or financial performance, any adjustments made in response to them, the working assumptions driving decision making, and recommendations for moving forward.

The National Council of Nonprofits puts it simply: “Budgets should not be ‘written in stone’ because the financial position of the nonprofit may change during the year.” Continuously monitoring your budget and comparing it to actual results is a vital practice for strong, responsible management of your nonprofit; that process works best when it’s tied to regular reviews and reports for executive leadership, board members, and key staff.

MONITORING AND TEAM OWNERSHIP

Whether it’s a new building you’re forecasting into next year’s budget or unexpected crisis you haven’t budgeted, good stewardship of an organization’s funds requires close cooperation among the budget stakeholders. Clear ownership and good communication between team members are key to monitoring the budget during the year. If your organization is not in line with the budget, you should look at “why,” and what factors you can control or change.

There are many professional development channels to help you and your team improve your budget process throughout the calendar year. One is reading industry trends and practices; when it comes to effectively monitoring and reviewing your budget throughout the year, use this free download: Budget Checkup: Critical Components of the Nonprofit Budget Review Process. Inside you’ll find:

  • Critical components of the budget
  • Budget review best practices
  • Routine assessments and screenings
  • Budgetary milestones at six months and end of the year

Secondly, do you feel like you have a pretty good understanding about the importance of a mid-year budget review process, but are still relying on spreadsheets or an outdated solution? We invite you to join Wes Dubay, Senior Solution Engineer, for our June live webinar about Budget Checkups and Lifecycle Management, next Thursday, June 21, for solutions to help you improve budgeting and enable you to get back to focusing on your cause.

Lastly, summer is always a great time to take advantage of the extra daylight hours! Accelerate your  learning curve with a budget management class, such as “Budget Roadmap for Financial Success Class.”  This special one-hour session will help you prepare for your next annual budget cycle. Discussion topics include a four-month budget planning calendar and tips and tricks to create and modify your budget in MIP Fund Accounting™. The best thing, too, is all attendees receive a 1 CPE credit.

When it comes to monitoring, assessing, and revising a budget in the middle of the year, your tasks will be much more efficient if you’ve been conducted monthly and/or quarterly reviews. That way, if there are substantial changes to your nonprofit’s mission, strategy, or specific programs, the staff and board can quickly re-budget effectively for the remainder of the year and avoid end-of-year stress. Now’s the time to conduct a mid-year budget checkup and ensure your organization’s budget performance passes with flying colors!