Integrating planning and budgeting

A master plan can be quite simple; just a sheet of A4 paper with the months of the year across the top, the list of planned fundraising activities down the left-hand side, and a series of crosses in the squares under the months where you plan these activities..


A simple plan of the year’s fundraising

It is very useful to indicate on the plan any other activities scheduled by the rest of your organisation that may affect your plans. For example, the dates when any newsletters are issued are important, because you will schedule your appeals to members at suitable intervals between them in such a way as to avoid members feeling that you could have placed your appeal in the newsletter and saved the postage. (The popular press has trained the public to be eagle-eyed about unnecessary expenditure by charities, and to retain their confidence you should be one step ahead.) Incidetntally, if you were to place your appeal in the newsletter the sharp fall in response would far outweigh the saving in postage. Or would it? If you are not sure, test!
Naturally, you will also need to work out exactly who is going to undertake each of these, activities, when they should start, and the key stages at which you will need to monitor progress. Don’t try to do everything yourself.
For the purposes of budgeting you need to be certain that each of these activities really will take place. This is not a wish list. The organisation is about to set out how it will spend the profit from these activities, and it will be your responsibility to see that they occur at the level of profit you say will be generated. Be conservative, but do not simply underestimate to give yourself an easy time. Be prudent, but not pessimistic. Your treasurer should rein in your natural optimism.

Income projections

For each activity you plan, calculate the expenditure and the income:
– each category, e.g. advertising, loose-leaf inserts, trading , will probably form a separate budget line.
– each event will have its own line.
Before you begin work on the budget, the organisations’s financial advisers (usually the treasurer, head of finance and director) will set the basic budget parameters with you. These include the organisation’s estimate for inflation next year, the cost of borrowing, etc. The parameters should be conservative, and may give one rate for the increase in prices you will face and another for the percentage increase in donations (the estimated increase in costs possibly being higher than that in income).
A view should be taken on the effect of any increase in membership or subscription fees. Unless this is dramatic it will have no effect on the overall numbers recruited by any particular means, as the membership fees of most organisations are far less than the average donation – which is a clear indication they are too low. Many organisations receive, on average, a donation of one third of the fee on top of their membership income. This shows that members themselves recognise that their fee is too low to be properly effective. You may, of course, experience difficulty in convincing your board or council of this.
The next three years and beyond

International budgeting

Many charities or not-for-profit organisations have a loose international network of sister organisations. Occasionally, these contribute to the centre a percentage of their income, or even all their profits. Often they receive money from the centre to fund their charitable or campaigning activities. Equally often the centre does very little to assist the oversear divisions, though the more dynamic multinationals are beginning to invest heavily in the former second and third world countries. This investment is yielding rich rewards as tried and tested techniques are used on their large, affluent caring classes with little or no competition.
Budgeting for this is difficult the first time around, and it is best to set up an investment fund to be spent in each country whose market you wish to penetrate, rather than budgeting for an early return. The usual careful monitoring will reveal what has gone right and where improvements are needed, which will lead to proper estimates in subsequent years. The returns can be so large that it is tempting to keep ploughing back the profits and go for growth while you are alone in the market – but do not forget that your organisation’s public profile and respect for your work are vital factors in fundraising and need to keep pace with your financial investment.
Overseas stragegy A common error is for large charities to consider their overseas operations and overseas branches as financially distinct from each other. This is sometimes to the extent that, although they would like, say, the hospice side of their programme to grow much more rapidly, they will simply not consider using funds available in another secor as seedcorn to accelerate the process. This is particularly noticeable in the case of overseas branches. It may have taken say, the American parent charity forty years to reach its current size but they will puzzle over why the Brazilian branch is taking so long to grow, without giving it any of the experience or funds it needs to improve its income.
Even more serious and prevalent is the mind-set that sees any overseas operation in terms of ‘that’s where we spend the money we raise over here’. Having invested a large amount of time in ensuring that 85% of all the funds raised go to projects overseas, it is hard to realise that this involves a false distinction:if a reasonable investment of both experience and money were made in fundraising in any country in the world, some funds could be efficiently raised to supplement or replace the grants currently made. It may be more effective in the long term to spend a higher proportion of available funds on fundraising overseas to give greater growth. Multi-national companies are beginning to operate in this way, and are becoming multi-domestics (manufacturing and selling in several differnet countries) with a much greater international spread of all their operations, or are becoming global companies having the head office in one country, manufacturing in several and sales in still more. For those organisaitons that would like their overseas branches to expand, the current pattern is often as if Henry Ford, having decided Spain was a good place to make and sell Ford cars, had set up a bicycle works there and waited for it to grow into a fully integrated factory.