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An employee looking for the error in a broken spreadsheet.

PUBLISHED ON - 03.04.2023.

Streamlining Nonprofit Budgeting: 5 Key Ways Planning Automation Can Help

Nonprofits are the only organizations whose year-end financial goal is a perfect zero.

Getting to that perfect zero requires thoughtful planning, the right tools, and a little bit of luck. And if we listen to our friend Seneca, “Luck is what happens when preparation meets opportunity."

In this post, we’re going to cover the preparation part of the equation: the planning and the tools. Plus, we’ve put them together into one: an automation tool for nonprofit planning.

What does automation have to do with NGO budgeting?

As organizations grow, funding streams become more complex, more projects come online, and operational costs jump—making reliable budgeting nearly impossible to do manually in a spreadsheet. Done this way, the process is hardly better than a guessing game.

Many nonprofit managers think they can get by with a template downloaded off the Internet, but these one-size-fits-all sheets don’t account for all the variables your nonprofit needs to solve for—and which vary wildly from organization to organization (structure, size, field, location, projects, and so on). Even those who invest months into creating, maintaining, and updating custom spreadsheets often end up with something that still doesn’t fit the organization’s needs. Or, even worse, rows upon rows of broken formulas.

When it comes down to it, automation can handle complexity, change, and enormous amounts of data with extreme accuracy, ensuring your operating budget is free of the derailing mistakes that so often occur when done by hand.

5 essential budgeting capabilities automated planning gives your nonprofit

Let’s take a look at the 5 key budgeting tasks planning automation can streamline for your organization.

An employee looking for the error in a broken spreadsheet.
Long-hand math can’t cut it anymore.

1. Create highly granular statements of activity (SOAs)

Like an income statement for for-profit organizations, your SOA is the document that reflects incoming assets and outgoing liabilities in a given time period.

The problem:

Nonprofits don’t just have revenue and expenses, you have two kinds of each: restricted and unrestricted assets, direct (project-based) and indirect (general administration-based) expenses. To complicate matters further, your data about it all comes from all sorts of different sources, scattered about people, levels of your organization, and software like HRM and ERP.

How automation helps:

Automation pulls relevant data from different people’s accounts and an organization’s existing software, and displays all the information you need to create your SOA in one place. So instead of hounding all your project managers to give you their expenses for the quarter, each person simply inputs information into a program as part of their everyday tasks, and the data is visible immediately to the decision-makers on the other side.

Employees viewing funding allocation history on a computer screen.
Avoid spreadsheet errors and broken formulas with a custom planning automation tool.

2. Conduct what-if analysis (without using a single spreadsheet formula)

Also called scenario planning, what-if analysis helps your organization plan for the wrench in your plans. What if donor X pulls out last minute and you’re left without the chunk of money you were counting on? What if the price of gas goes up—and our operational costs with them?

The problem:

Cell-reference models (spreadsheets) fall painfully short for anything more complex than the most basic best-case worst-case scenarios. First, you have to structure the data. Then Google the appropriate formulas and input values in dozens upon dozens of individual cells. Then, if you end up with a dreaded #NUM! message, you have to waste even more time figuring out what those symbols mean before you can fix the issue. Even the most advanced users are prone to making mistakes in these finicky cell-based systems where replicating formulas is unnecessarily difficult and data is all too easy to lose.

How automation helps:

Computers are a lot better at complex math than we are–so why not leave that task to them? Automation takes care of the formulas for you, and allows you to create detailed scenarios for any level of complexity, which then gets displayed in a user-friendly interface. It also allows you to compare scenarios without the endless ctrl-c’s and ctrl-v’s. The best part is, it does it all without a single broken formula.

An employee sifting through spreadsheet data.
Automation makes for functional forecasting.

3. Forecast on the basis of complete funding allocation history

Financial forecasting is a way to see how your organization’s donations and expenses have changed over time to predict how they’ll *most likely* turn out in the future. It sounds simple, but if you’re an organization of any significant scale, you need high-powered tools if you want to get it right.

The problem:

The issues are twofold: first the organization, then the predictive analysis. First, you need visibility into past grants received (from whom, when, and how much) and how they were spent. This information is most likely scattered across your email, papers, receipts, past statements of activity, and various PMs. Then there’s the predictive analysis part, which is never as simple as “we allocated X last year to X project so this year it’ll be the same.” No. As your organization grows, so do your expenses, your ongoing projects, grant streams, and so on.

How automation helps:

Automation can do both the organizing and the math for you, using a user-friendly grant management database and an AI algorithm that analyzes your entire grant history and predicts future funding needs. It can consolidate data from all your past activity statements and create expense projections based on accurate data.

Woman resting her head on top of a heap of documents.
Lesson the organizational load of terms and conditions with a custom planning automation tool.

4. Keep track of grant terms and conditions

Not all grants come with strings attached. The ones that do are called “restricted” grants, and they have a series of strict rules you need to satisfy.

The problem:

Staying on top of your grant terms and conditions—which have a tendency to change—is a headache, especially with so much pressure to keep track of them all. And the stakes for doing so are high, as improper use of restricted funds can lead to legal action or IRS (or your country’s equivalent) involvement—and seriously jeopardize your organization's future.

How automation helps:

Organizing grant terms is made far simpler with the help of artificial intelligence. Imagine a system where you were able to receive real-time notifications about your grant lifecycles, keep track of both restricted and unrestricted donor assets, changes to grant conditions, grant spending deadlines, and more.

A calculator next to colorful cost allocation infographics.
Cost allocations are notoriously difficult to do by hand.

5. Allocate (and reallocate) direct and indirect costs

Receiving a grant is exciting, but actually distributing the funds can be a tedious, frustrating, and often mistake-addled undertaking.

The problem:

Resource allocation is a notoriously difficult task, especially for large organizations with lots of simultaneous projects and revenue streams, or operating in dynamic fields. Without being able to keep track of all the change (from grant terms to inflation to electricity costs), lots of mistakes can happen–leading to funding gaps and improperly used funds.

How automation helps:

Automation gives you both a high-level and a granular real-time view of your organization’s financial situation by project, time period, or donor. And when you have that, selecting how to distribute funds across objectives becomes a much simpler, faster, and more trustworthy process. Even in the face of sudden changes, reallocating funds becomes something you can do at the push of a button.

Better budgeting starts with custom planning automation

An airtight budget is essential for every nonprofit organization—and its implications reach far beyond just your accounting department.

So don’t leave yours to chance – invest in nonprofit planning automation so you can efficiently track assets and liabilities, monitor your high-level and project-level financial status, and make data-driven budgeting decisions to achieve your organization's goals.

In collaboration with IBM and our nonprofit partners, we created an automation solution tailored specifically to the unique needs of nonprofits. It can be customized to organizations of any size and structure, in any field, and in any country, and handle tasks like:

  • Consolidating financial data from multiple sources
  • What-if analysis
  • Predictive historical analysis
  • Organizing grant terms and conditions
  • Conducting allocations and reallocations

Curious about how implementing planning automation can help boost your nonprofit budgeting process? Contact us for an in-depth demo.

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