Every budget planning season nonprofit leaders have a choice to make.
Do we spend what we need on overhead expenses? Or, do we spend what looks good?
Many choose the latter, but that is neither a wise choice nor a necessary choice.
The IRS breaks down a nonprofit’s expenses into three categories: program expenses, administrative expenses, and fundraising expenses. Program expenses are all the expenses related to carrying out your nonprofit’s core mission or the services you deliver. Administrative expenses cover your nonprofit’s overall management and operations, such as accounting, legal services, and human resources. Fundraising expenses are all the expenses related to raising money for the nonprofit, such as conducting fundraising campaigns, maintaining donor lists and other related donor activities, and organizing and hosting fundraising events.
What expenses are included in a Nonprofit’s Overhead Budget?
The administrative and fundraising expenses are combined to make up a nonprofit’s operating expenses or otherwise called ‘overhead.’ Your overhead expenses are what particularly draw attention from donors and funders because they want to see if you are financially responsible. In addition, charity rating organizations grade nonprofits on how much of their budget is used for program delivery and how much is used for overhead. Nonprofits that allocate a higher percentage of the budget to programs (75% or more) receive higher grades and thus look more responsible and appealing to donors and funders. Because of these factors, many nonprofit leaders find themselves trying to cut administrative and fundraising expenses. But is cutting your operational resources down to the bare minimum (or worse, less than the bare minimum) really good for your business?
We can survive if we just keep doing things the way we always have.
If you’ve gotten to this point by doing things the same way year after year, there may be little incentive to consider changing. Unless you are expecting different results. Is surviving your goal or should thriving be your goal?
Do you want to improve or expand the programs your nonprofit offers?
Do you want to improve your outcomes?
Do you want more donors and businesses to support your nonprofit?
None of the above will happen if you keep doing things the way you always have. To grow, we must change. We must look at all the ways we conduct business and find opportunities for improvement, whether with technology, employee training, strategic partnerships, or other opportunities.
Use Technology to add infrastructure and improve operational efficiencies.
Never before has Software as a Service (Saas) been more prevalent, more economical, or more important for business operations. Software technology is changing the way all businesses do business and it’s one of the fastest ways to streamline operations and improve operational efficiencies. Technology can actually add to a nonprofit’s infrastructure by freeing up the time employees spend manually completing tasks. Here are a few examples.
GiveBox **Featured Favorite App**GiveBox has worked with hundreds of nonprofits to build the GiveBox platform in an effort to give nonprofits everything they need for fundraising, event hosting, donation processing, and more. And all for FREE! If you are not already using this platform and its apps for the activities listed below, you are throwing away money.
Here is a list of things you can do with GiveBox:
- Create professional-looking donation campaign pages – create as many pages as you want for as many different campaigns. This feature is a great way to target specific audiences for each campaign. You do this even if you don’t have a nonprofit website yet.
- Peer-to-peer fundraising – Get board members, volunteers, and other groups competing against each other to raise money for your nonprofit.
- Event registration and ticket sales – Most event registration platforms like Event Brite charge you a fee for the registration process in addition to the fee for processing payments. GiveBox doesn’t!
- Credit card scanning – Scan a donation right into your smartphone for no extra fee! Just go to the scanning app and process the payment. No scanners to plugin or keep track of.
- Payment processing – Selling goods to raise money? GiveBox will process your payments. You pay the same fee as with Stripe, PayPal or others, and no extra processing fees.
- Invoicing – Need to invoice a sponsor or vendor? You can do that right from your GiveBox platform for free.
- Membership – Does your nonprofit have a membership base? Manage membership and member payments from GiveBox.
- Donor Database Management – Keep track of donors and donor activities so that you can build better relationships with donors. Target your campaigns to donors who have donated to similar campaigns in the past.
How it helps: It helps with all the ways outlined above and then some. There aren’t many companies that add features and functionality every time they are asked by a client. But that is what GiveBox has done in an effort to offer the best. The founder, Joshua Rowley, and his team also serve as board members on nonprofits and speak internationally about how to consolidate fundraising activities to free up resources, funds, and time.
Pricing: FREE, nonprofits only pay the merchant fee to accept online donations just as you would for Paypal and others.
- Little Green Light – Little Green Light is a customer relationship management system (CRM) for nonprofits. The platform is an all-in-one fundraising and donor database management system, and a whole lot more. The system almost serves as a fundraising coach as it uses data to make recommendations for next steps with donors. Additionally, the platform uses data to measure the performance of fundraising activities, so nonprofits spend more time on the right activities. The platform can be used to manage the relationships with all of your nonprofit’s important contacts including donors and sponsors, volunteers, and media contacts.
How it helps: A CRM keeps all of your data organized and in one place, and because it’s cloud-based you have easy access from the office as well as when you are on the road. Platforms that allow multiple users and offer extensive reporting capabilities enable the nonprofit’s team of staff, board members and volunteers to stay on the same page with marketing efforts and next steps with donors and sponsors. Reporting can also be used to prove marketing ROI and accountability to donors, funders, and grantors. Because a CRM can be used to evaluate fundraising activities, more revenue can be raised because no time or money is wasted on poor performing fundraising. Finally, a CRM system is necessary for nonprofit sustainability. If your key fundraising staff member leaves the nonprofit, you need to be able to seamlessly continue the fundraising efforts.
Pricing: Little Green Light starts at just $39/month with unlimited users. Click here to save $75 with the Nonprofit Marketing Academy affiliate link.
– Canva is a free graphic design tool you can use to create virtually any piece of nonprofit marketing content. The free subscription is sufficient for nonprofit uses. The platform also offers a nonprofit rate for access to advanced features like file management, advanced file editing, and team collaboration. Use Canva to create mission-focused nonprofit marketing content that engages donors and supporters on a deeper level and helps improve fundraising results.
How it Helps: Use Canva to create branded marketing templates that can be used by volunteers, board members and others. Improve marketing efforts by using visuals designs that capture attention and fuel content sharing. The platform is cloud-based.
– Asana is a project management system that offers sufficient features with the free version. Use Asana to build a collaborative fundraising team of staff, volunteers and board members and keep everyone aligned and meeting deadlines. The platform allows for assigning tasks, reporting on progress, collaborating on content, and much more.
How it Helps: Asana is also a cloud-based system and even allows users to assign tasks via an email to the system. It is extremely beneficial for project management – whether marketing or for another department or the nonprofit as a whole – team management, and time management.
Use Employee Development for improving operations, revenue-generation, and nonprofit sustainability.
How relevant are your team’s skills today?
One of the fastest ways to determine if your staff has the skills necessary to do their job most effectively is to search for current job descriptions for each of your employees using a simple job search on Google. Compare each of your team member’s skills with that of a recent job description from a larger nonprofit. Do you see alignment? If not, then your team is in dire need of professional development. And, the good news is it doesn’t have to be expensive.
- A modern job description becomes your training to-do list for an employee. Search for free or low-cost online training options to get your employee the skills they need. Create a development plan with each employee and monitor their progress.
- When employees complete a skill’s training have them report to other departments about how the skill will affect or aid other departments and the nonprofit as a whole. Doing this builds a more collaborative team.
- Evaluate the strength of your nonprofit’s leadership. Where do you need help? Is there an opportunity to turn to board members and other business leaders for mentoring? (A mentoring program is an ideal in-kind sponsorship program for the right business partner.)
Next, identify your nonprofit’s greatest needs. Who are the people who can help meet those needs? Consider staff, board members and volunteers. Don’t fall into the trap of assigning all your nonprofit needs to the shoulders of the fundraising staff. Create a team responsible for helping meet the need and identify training and technology that will help them do so.
Every department within a nonprofit should search for free technology resources to streamline and organize operations, and then use the extra time to focus on what will immediately impact the Nonprofit’ performance. Research ways to diversify nonprofit revenue. Find free training to learn new ways to increase nonprofit revenue. Take the training as a team or individually.
Now that you’ve optimized your overhead budget use data to increase the budget.
How have your operations improved?
Once you implement new technology and training, measure and evaluate how your operations have improved. Were you able to dedicate more time to new fundraising efforts? Have you seen an increase in donations? Are you gaining a bigger return on marketing efforts? How did you use the extra funds to improve your services?
Report these results you see by creating mission-focused content for your constituents. Use this information in your grant applications, sponsorship packages, and fundraising campaigns as a demonstration of your nonprofit’s commitment to financial sustainability.
Want to learn more about this strategy? Sign up for Integrated Nonprofit Marketing. Receive step-by-step instructions, high-level coaching, and access to more than 100 free tools and technology.