GUEST BLOG: Your Guide to a Smooth Budgeting Process This Year by Stephen Newland
Written by: Stephen Newland, CMA, Owner of MoneyPath FP&A
Creating a budget is more than filling in numbers on a spreadsheet—it can be a powerful process that helps you assess your progress, refine strategies, and set the direction for the future.
This post will walk through ways to make sure your budget process goes smoothly and results in an effective tool for your organization!
These have been tested and used while preparing over 50 different annual budgets for all types of organizations so I’m confident they’ll work for yours!
1. Start with the Big Picture
Before diving into the numbers, take time to assess where you are and where you want to go.
This is a great time to pull out that strategic plan you and your team put together.
- Which areas are ahead of schedule?
- Which areas are right on target?
- Which areas need some love?
Be honest with yourself and bring different perspectives into the conversation.
If your strategic plan is still guiding your organization, then take time to evaluate where you are and what needs to be prioritized next year to continue working towards that big vision.
It’s important to spend time on this step. Why? It makes the budget so much easier to put together once you have that conviction of what the organization needs to achieve in the next 12 months to stay on target against the long-term vision.
2. Make Budgeting a Team Effort
Budgeting isn’t just the job of the Executive Director or Finance Committee.
Bringing in team members from every department makes sure there are less blind spots in your organization’s planning process. It also creates buy in.
Ultimately the budget should represent where you and your team want to take the organization over the next year. It represents the numbers behind the vision.
It’s a great way to pause and re-center the team around the vision for the next year and how it ties into the overall mission of your organization.
Are you more or less likely to be excited about a goal if it was given to you vs. one you helped come up with?
Some of the most innovative ideas come when dreaming about the future together as a team. Don’t shut down ideas in this meeting! Some may not be practical once pen gets put to paper, but you might find that next big idea from this meeting.
Collaborative budgeting ensures that the entire organization is on the same page, making the budget a tool everyone understands and supports. Plus, team involvement fosters accountability, as everyone has a stake in managing their part of the budget effectively.
Practically speaking, this can look like a strategic planning session. It doesn’t have to be everyone staring at a spreadsheet full of numbers. In fact, that’s a sure fire way to lose people in the process!
Kick it off with a strategic planning session, have your finance person put #’s to it and then get back together as a team to review the vision and what the numbers show.
3. Focus on Realistic Projections
The more reality the budget is based on the better. Remember, this is supposed to be a roadmap on where you want to go in the next year.
Is it going to be perfect? Unless you’ve got a crystal ball then nope! Things change in growing organizations all the time!
But…there are a few tips to make it more realistic and avoid some of the obvious gaps.
Here are a few questions to ask for big line items in the budget. Start big, don’t stress the small line items.
- How much is this line item changing vs. last year? Does that seem realistic? Do I have a reasonable plan to achieve that?
- Is it based on data? For example, consider using a headcount schedule to map out current salaries + new roles you expect to hire.
- If your organization is growing, have you built in the fact that you’ll need to set more aside in reserves to maintain however many months of expenses you have on hand?
Ask your finance committee or board to review your budget draft before it’s ready for a vote. Show them how much each line item is changing vs. last year and have them ask questions trying to poke holes in it. An outside perspective goes a long way in finding issues with the budget!
4. What Story Does the Budget Tell?
Once the budget is complete, take some time to break it down into the story that it’s communicating.
This makes it so much easier to get the board, staff and even yourself convinced that this is the right plan for next year.
It’s easy to get lost in a sea of numbers, but at the end of the day everyone in the organization needs to understand the key levers that if they happen the organization will be well on its way to achieving its goal in the next year.
I remember presenting a budget to the board of an organization that did about $2.5m annually. I printed out the budget on legal sized paper and the whole thing was filled with #’s.
As you can imagine, I lost the room after about 5 minutes.
If the budget isn’t communicated in a simple manner then people ignore it.
When it is presented in a simple manner it can be a catalyst for getting the team and board marching in the same direction.
5. How to Use the Budget in the New Year
Okay, so now the budget is final. The board has signed off and it’s 2025.
Does it just sit on the shelf so we can report against it for a few months?
The organizations that are excellent at financial management use the budget as a starting point for a forecast.
The budget is a snapshot in time. It’s what we thought would happen when we sat down in November/December of the following year. This is ideally where we need the organization to go to achieve the next step on our strategic plan.
The forecast is a living document that adjusts as the organization changes.
Both of these documents are powerful when used together.
What I recommend is setting up two reports that are reviewed monthly
- Actuals vs. Budget (Year to Date)
- Actual + Forecast vs. Budget (Full Year)
For both of those reports, including variance notes are critical. They help show where the organization might be struggling or where it’s doing amazing.
Let’s say it’s April and giving is down vs. where you expected it to be in the budget. By looking at the Actuals vs. Budget report you realize marketing is way down vs. budget as well. That’s a clue that you may need to re-prioritize and focus on marketing efforts to donors.
You can also take that information and use it to update the forecast. Why does that matter? It will help give you an idea of how missing on donations earlier in the year is going to impact how much cash you have in the bank throughout the year.
These reports will help you make informed decisions, improve accountability and recognize adjustments that need to be made sooner.
All of these will make your organization more financially sustainable over the long run so you can continue driving your mission forward to help others!
Why This Matters
When you invest time in the budgeting process, it becomes a tool for assessing past performance, refining strategies, and planning for the future.
Instead of simply filling in numbers, a thoughtful budget helps you evaluate what’s working, dream about what could be, and set a clear path forward.
Taking the time to budget well empowers your organization to approach each year with clarity, purpose, and the confidence that you’re equipped to achieve your mission.
