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nonprofit growth planning

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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The Risk of Small Thinking

Nonprofit leaders sometimes suffer from small, or short-term, thinking. It makes sense that they would. The sector’s funding, structures and standards are set up to encourage, if not reward, small, risk-averse thinking. But small thinking can actually be a bigger risk to an organization and ultimately to the solution it exists to achieve. To really reach solutions, at the scale that we increasingly need, nonprofit leaders must break free from short-term thinking and lead by example into the world of big, long-term, game-changing approaches.

Here are few ways that small thinking actually jeopardizes a nonprofit and the solution it is working towards:

  • Not creating a growth plan when there is obvious need for the solution. Someone started a nonprofit for a reason–a need existed. Either the nonprofit is working to significantly get rid of that need, or they are just getting by. I understand that we are in the midst of a recession, but if you don’t have a big vision and big, bold plans to get there, who will be inspired to invest in a big way?

  • Not pushing your donors to give much, much more. Connected to creating bigger plans is stretching your donors further. Nonprofits at times seem afraid to upgrade donors. They are happy if a donor simply returns for another year. But with a little research into the capacity of a donor, and a compelling plan for what you would do with an increased investment, the money is sure to follow.

  • Not adequately investing in an earned income stream with a demonstrated market. A nonprofit may have done the research and made an attempt at selling a new product or service, but they are afraid of taking the plunge and significantly going after that market. The end result is that a competitor finds the market the nonprofit identified and the opportunity is gone.

  • Not hiring, and paying for, the best and brightest staff available. Sometimes nonprofit organizations pay salaries well below the going rate, even within the nonprofit sector. It is no surprise, then, that the staff they do recruit lack the experience, vision or skills to take the organization to the next level. If you want big results, you need to recruit people who have the ability to plan and execute in a big way.

  • Not investing in next generation tools for doing your work. So many nonprofit organizations exist on a shoe string, but the advent of free-ware and social media has leveled the playing field immensely. Now you can have a state of the art sales team for very little upfront cost. You can spread your message, garner support, find advocates, track them and customize your communication with them all for the investment of some staff time. Climb on board this new train, experiment and see where it leads.

These are challenging times, to be sure. But the worst thing to do is to lock yourself in a box of your own making. Challenge your donors, your board, your staff, your volunteers to do more, to be more, to achieve more. Paint the big picture, instead of the small one, and see where it leads.

Photo Credit: ilovememphis

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