Friday, November 6, 2015

November: Time for Work Plan and Budget, No Holiday for Nonprofit Leaders

Most nonprofits see lots of action between February and October. Whether advocating for new laws during legislative sessions or conducting important events and activities for our constituents, those nine months can wear us out and leave us longing for the lounge chair and a stack of Christmas videos.

Unfortunately, November is no time to rest. This drowsy month is our best time to set the stage for the coming year. Here are just a few reasons why:
  • Results from the year are fresh in the minds of leaders, staff, and helpers.
  • Disappointments can inspire improvements for the next year. 
  • Participants are still engaged and are likely to offer ideas for improvements.
  • Board members can still be gathered before scattering in December.
  • Having at least a draft of your work plan and budget for next year finished in November will set a strong start for the coming year.

As I respond to calls for assistance from nonprofit leaders here at One Street, I’ve found that the lack of a work plan and budget is often the core reason for a nonprofit spinning out of control. Sure, I’ve seen this happen because of improper bylaws or a vague mission statement or even a malicious leader. These are all serious and traumatic situations.

But to see an otherwise effective organization derail simply because they skipped the fundamental task of creating next year’s work plan and budget is all the more frustrating. I wonder if the lull of November is responsible for this common mistake. We need to learn from this tendency, stay energized in November, and get this important work done.

Use your November board meeting for this planning activity. Let everyone know that it is a special meeting, sometimes called the annual meeting or board retreat, and will take a bit longer than a normal board meeting. You can invite others to attend or at least reach out to your partners and constituents prior to the meeting requesting their ideas. Bring a flip chart or use a large white board to note highlights from that year and capture ideas for the next. Save at least half an hour at the end of the meeting to organize these sloppy notes into your next year’s work plan and budget.

So what is a work plan and budget? Very simply, your work plan describes your programs and expected goals for the coming year. Your budget shows your projected income and expenses for the coming year; income always on top. Use as few line items as you can while still separating them enough to show where funding is coming from and where it is expected to go. A balanced budget will have the same number in the total income and total expenses lines. I recommend trying for more income than expense to cover unexpected expenses or, even better, to go into a reserve for the following year.

I want to note the importance of combining these two. A work plan is fiction without a budget intertwined with it. And a budget is just a bunch of made-up numbers unless every line item comes from a part of the work plan.

Your work plan will describe each of your programs along with the program goals you and your team expect to achieve in the coming year, who is responsible for ensuring those goals are met, and the percentage of their time needed to achieve them. Major expenses for each program are noted in the text of the work plan. These expenses match line items in the budget. The budget also includes the overhead expenses needed to be successful in all programs and to keep the organization running. Overhead expenses can include payroll, contractor fees (such as bookkeeper, web designer, and building maintenance), phone, utilities, office supplies, and travel expenses.

Combine the work plan and budget into one text document to prevent them from being referenced separately. I like to place the budget at the top since it will take less than a page and this makes it easy to find. The entire document should fit into two or three pages so include only necessary details. This is a reference document, not a literary work of art. By keeping it short and concise you will ensure that you and your leaders understand and remember its contents.

In Cures for Ailing Organizations I warn readers to keep their programs to three. Three is plenty for diversity and ensures everyone, leaders and constituents, knows what the organization does. I also emphasize this when coaching leaders on work plan development. I often get pushback from leaders of larger organization who list off many activities, campaigns, and initiatives they tout as separate programs. But even when their list seems varied and unrelated, we always find three categories to place every activity under and these become their three overall programs. Pull out administrative tasks, partner outreach, and fundraising into a general overhead category. While they are necessary they are not programs because they do not advance the organization’s mission.

By taking care of this planning and budgeting in November, you and your team will be ready to start your programs in January. By February, you’ll be full speed ahead in all the action.

Here’s another bonus for your effort: Once you’ve captured all the details of your three programs and administrative duties into your work plan and budget you will have everything you need to create an impressive year-end fundraising letter. If your organization is large and complex enough to need an annual report, this planning effort will give you the details to make it sing.

So wrap that lounge chair with caution tape, store those holiday videos, and get back to work. If you and your team do a good job with your planning and budgeting your December break will be all the more enjoyable.

Do you have questions about work plans and budgets? Does your organization do annual planning differently? Have tips to add? Please offer them in the comments section.


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