Some people think it’s only high powered, Fortune 500 companies that need to concern themselves with budgeting and planning. Yet from my experience, nonprofit organizations are just sophisticated and thoughtful about budgeting – maybe more so.
Why is that?
Partly out of necessity. If a nonprofit is sloppy about budgeting they run out of cash. That’s what I call incentive to get it right. But managing their resources well is also very important for fund raising. People want to know that when they give to a nonprofit, the money is going to a good cause, and not to a lot of overhead.
For those reasons and others, there is a degree of sophistication and rigor when it comes to budgeting in nonprofits that would surprise a lot of MBAs in corporate America.
Case in point, we did an interview recently with Jill Larsen, the CFO of The Baptist General Convention of Texas. They have a budget process that’s just as well designed and executed as what I saw when I was a FP&A Manager at Pepsi. They have 100 people involved in the process, and most of them “program people”. That might sound like a lot, and it is, but they budget for 2,000+ programs each year. Yes, I said a couple of thousand. And who better to budget those programs than the people running them?
And given that BCGT is a religious organization, they are held to a higher standard. “Given who we are,” Jill told us, “We need to be above reproach.”
