3 Budget Best Practices for 2021
Whether your nonprofit organization operates on a calendar-year or fiscal-year budget, odds are your 2020 numbers did not meet your pre-pandemic expectations. In 2021, you can expect more of the same, as uncertainty over the pandemic, the government response, and numerous other local and national issues continues.
Here are three best practices to help you get the most out of your 2021 financial budget, even in these uncertain times.
- Embrace the unknown
There’s simply no getting around the fact that budgeting in 2021 will require an unusual amount of flexibility. Government programs may or may not offer relief. A vaccine and other public health efforts may or may not reduce the impact of the pandemic. Furloughed staff may or may not return. All of these issues—and many others—will greatly affect your budget throughout 2021.
Once your organization accepts and embraces the uncertainty, you can look for ways to deal with it. You might, for example, want to create multiple budget scenarios to review with your board before and during 2021. You could also develop a plan to monitor your cash position throughout the year, and establish the point at which you will dip into unrestricted reserves to cover operating expenses.
- Invest in tools that can help
Modern accounting software can give you the tools and flexibility you need to reforecast your budget throughout the year, so you and your board can react quickly to any sudden changes in revenue and expenses.
Sage Intacct nonprofit accounting software offers helpful features to make financial budgeting and planning more collaborative and strategic, including the ability to:
- Manage monies by grants/donors, programs, geographies, and other dimensions
- Set budgets for each event, campaign, program, and funder
- Track actuals to create tighter controls and prevent unexpected outcomes
- Model calculations—such as projected cash, sales, revenue recognition options, or headcount expenses—without spreadsheet errors.
- Create any number of scenarios to perform “what-if” analyses – without impacting the current budget
- Emphasize collaboration
Nonprofit budgets are always built on collaboration, but in 2021, it will be more important than ever to continually seek out information, answers, and expert advice. For example, you’ll want to have ongoing conversations with your fundraising team about grants, large donations, event revenue, and other sources of income. With the help of Sage Intacct software, you can look at each source of income separately to identify any restrictions and easily add any new opportunities that may arise during 2021.
Get the support you need
Insero & Co. is a public accounting firm with decades of experience working with nonprofits of all sizes. Our experts are available to provide consulting and other remote services to help you sustain your mission through 2021 and beyond.