Nonprofit organizations are given ‘Hot Tips’ to improve their budgeting processes in 2024, emphasizing principles of inclusivity, evidence-based decision-making, and proactive planning, with our guest, Justine Townsend, Manager at Your Part Time Controller.

Justine begins with the critical importance of laying the groundwork for success before embarking on the budgeting process, ensuring that the budget remains usable and effective throughout its entire lifecycle. She directs us on the need for inclusivity by involving all relevant stakeholders in the budgeting discussions, including program managers and those responsible for smaller financial decisions. Justine humorously shares “A budget should be like a camel, created by committee,” highlighting the collaborative nature of the process and the importance of leveraging diverse perspectives to create a good financial plan.

She explores the significance of basing budgets on historical data, especially during uncertain times such as post-COVID recovery, suggesting using comparable years to inform budgeting decisions, which may yield a more accurate foundation for financial planning. Justine’s advice to “dig into historical data” reflects her resolve for evidence-based budgeting practices, which enhance the accuracy and reliability of any financial projections.

Documenting assumptions and pre-planning pivots emerge as crucial strategies advocated by Justine to navigate budgetary challenges more effectively. By transparently communicating assumptions and contingency plans, organizations can create a framework for adaptive decision-making. Justine’s shares, “When you plan your pivots, you create a permission structure where you’re allowed to not make budget,” which fosters a culture where deviations from the budget are viewed as “opportunities for problem-solving” rather than failures.

Justine spends time on the reasoning behind converting budgets to accrual-based financial statements to facilitate more accurate assessments of financial performance, which in turn will aid scenario planning and forecasting, enabling organizations to proactively anticipate and respond to changing circumstances.