Budgeting specialist with over with 20 years experience helping all types of organizations with budgeting and forecasting, strategic planning and management reporting challenges.
Deep expertise in budgeting and planning for nonprofit organizations, delivering projects across international and cultural boundaries.
For large nonprofits that give out grants, puts in place reporting systems to ensure that funds are aligned with strategic objectives and can be accurately measured and assessed.
Founder of Rapid Performance with operations in the U.S. and Africa, implementing enterprise performance management (EPM) solutions for some of the largest nonprofits in the U.S., including Catholic Relief Services, The Red Cross and Lutheran World Relief.
Nonprofits rely too much on Excel for internal budgeting and reporting.
The biggest problem for nonprofits over a certain size is that they run into what we call Excel hell. They're often working with 20 or 30 different Excel workbooks for their budgeting.
But sophisticated budgeting that includes personnel planning, FTE budgeting, capital planning, grant planning, expense planning, planning by programs, and so on falls apart if it's done in Excel because Excel limits collaboration and flexibility. If you think about a nonprofit or large foundation that has 100 different budget holders across the world or across the U.S., then there are 100 different workbooks. If one person fiddles with the spreadsheet and breaks it, that invalidates the whole budgeting process. Excel just isn't an industrial-strength budgeting and reporting tool.
Nonprofits also rely too much on Excel for external budgeting and reporting.
The same is true when you're tracking where the money is going in terms of grants and activities, which is crucial for the external reporting process. You can't have 1,000 different workbooks tracking the expenditures of 1,000 different grant recipients. It's just too unwieldy.
Then think for a moment how you track effectiveness in Excel, again for 1,000 different grant recipients. In the case of, say, a malaria reduction grant, you need to track how many mosquito nets were acquired and distributed, whether or not education had an impact on reducing the infection rate, if hospital visits declined, etc. You just can't do that efficiently in Excel.
Nonprofits fail to link strategy to operational activities.
This happens all the time: Strategy is done on one side of an organization in one department, designing goals, objectives, initiatives and the like, while operational planning people are doing the day-to-day planning and accounting are in another department. They rarely talk to each other.
That means that there are often many activities that happen that have no alignment with strategy. People are working like mad but can't drive their work or their activities toward the organization's strategy, mission, or initiatives. It's a fundamental mismatch between strategy and actual day-to-day operational work.
Nonprofits measure success by operational metrics rather than by outcome-driven metrics.
Even if a nonprofit has implemented a sophisticated evaluation solution with performance management dashboards, all too often it falls back on measuring the wrong things. It measures operational metrics, like how many mosquito nets were distributed, or how many trips were made, or how many meetings were held, which actually don't have much to do with whether or not they're actually meeting their mission. They could have 20 meetings – just like they said they would – but accomplish nothing.
Dashboards and scorecards need to measure your objectives, and thereby evaluate how successful you are in truly meeting your mission.
Nonprofits often have poor forecasting capabilities.
All too often, nonprofit forecasting is incredibly vague – managers will say, "Well, we had grant revenues of $10 million last year, so let's add 5 percent to that this coming year," and that's pretty much where it stops. No one drills down into how exactly they're going to make that extra 5 percent.
Instead they could make the process driver-based; forecast by the drivers that enable desired outcomes, whether it is marketing campaigns, seminars or trade shows. By assigning precise numbers to these variables (should we do 10 seminars, or 12?) and applying historical trends, they might realize that they could actually increase revenues by 6 percent. The same thing goes for expenses. Assigning real drivers of costs (number of trips, headcount, etc.) ensures more accurate forecasting.
Finally, most nonprofits don't do rolling or event-based forecasts that effectively anticipate what might happen 12-18 months down the line. A rolling forecast will tell you what to expect for the next four quarters, and an event-based forecast will tell you what to expect if, say, specific regulations introduce new costs or political unrest develops in the area that you're working in.