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creating a budget

Reader Question: How to Create a Budget for Nonprofit Growth

I announced last week that I’m launching a new series on the Social Velocity Blog. At least once a month I will answer a reader’s question on the blog. You can send me questions about social innovation, philanthropy, financing, fundraising, nonprofit management, strategic planning, you name it. This first time around I received so many great questions it took me a long time to choose. But I finally settled on a great one from Kelley Nicoloff.

I love getting your questions, so if you have a question you’d like to see answered on the blog, send it to me at, post it on the Social Velocity Facebook page, or send it to me via Twitter @nedgington.

Here’s Kelley’s question and my response.

Hi Nell,

How do you determine a good budget for your non-profit when you are just starting out and have no funding? Right now, I am writing a grant and the grant is requesting statistics on the capital necessary to reach growth goals for the next three years. This is in reference to scalability and opening new sites across the country. Thanks!

Kelley Nicoloff, Uteam4u, Inc.


Whether you are just starting a new organization or you are 20 years into it you always need a plan for the future with an integrated financial plan. Creating a budget is really step 2, so don’t skip the most important step 1, which is to create the overall strategy. If you are writing a grant that requires growth goals over the next 3 years you need an overall plan for the next 3 years of the organization. So before you write that grant request you need to develop a 3-year strategic plan, which will detail your growth goals as part of an overall organizational strategy.

The strategic plan should include:

  • Long-Term Goals. A handful of broad goals you want to accomplish over the next 3 years. Typically, the goals break down into:
    • 1-2 program, or mission-related, goals. This is where you determine how you want to grow, where and over what period.
    • 1 funding goal that describes how much money it will take to make this growth a reality, this is directly related to your budget described below.
    • 1-2 infrastructure-related goals that describe the marketing, technology, staffing, board necessary, this is where you will start to outline what capital improvements you will need for growth to happen.
  • Objectives for Each Goal. You need to break each goal down into the steps required to get there.

  • An Operational Plan. It’s not enough to have a general sense of the direction you want to go in, you need to make the plan completely operational: include activities, deliverables, people responsible, and timeline.

  • A Budget. You need to figure out the costs for all of these goals (expenses) and how will you raise the money to meet those costs (revenue and capital). As part of this you need to create a capital budget for the one-time costs of building an organization ready for growth. Your final budget must be directly tied to the goals and objectives of your 3-year strategic plan.

If you follow these steps and come up with a 3-year strategic plan, not only will you have the “good budget” that you need for the grant proposal, but more importantly,  your nonprofit will have put together a measurable, actionable plan for the future. It won’t be just a hoop you had to jump through for this particular funder. You will have a real growth plan that you can feel confident you can actually bring to fruition.

If you want to learn more about creating a financing plan for your organization, check our Creating a Financing Plan webinar.

Photo Credit: Cellular Immunity

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