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Create my own invoice for Nonprofit

what is it girl does somebody need help creating a budget an annual budget is a must have for your non-profit whether you are starting a non-profit or growing one designing your programs recruiting board members writing grants or other types of fundraising basically all the things so in this video i'm going to talk about some budgeting basics how to use one and how to start from scratch to plan out your year ahead in your budget welcome back to my channel if we haven't met before my name is amber melanie smith and i make these videos here on youtube to help aspiring change makers with tips and strategies to help you change the world and live a life of impact and purpose many years ago i started a non-profit organization that is now my full-time career and i love sharing all of the things i've learned all the mistakes i've made and some of the things that worked for me in the hopes of helping you in your own social impact journey so a couple years before i actually started my own nonprofit organization i worked part-time for another non-profit organization and that gave me my first exposure to budgets and some basic fundraising practices i was able to then use that information to create a budget when i first started the nonprofit that i run today and with a little bit of luck we also were able to secure our first little bit of seed funding with the help of that budget getting started all that is to say i credit learning some basic budgeting skills with helping us get things rolling so creating a budget is not one of those nice to have skills when you're starting a non-profit it's required even if you are planning on not having very many expenses or not having any staff or being 100 volunteer run it's really important to have a budget when you first begin an organization and every year afterward here are the reasons why the majority of funders grant foundations donors etc will want to know that you have a budget and generally will want to also see that budget having a budget also helps you stay on track to your fundraising goals and temper spending if things are getting bigger than you expected this is really important if you're a founder of the organization who is also investing some of your own personal money into the organization because you want to be able to track your progress your fundraising success etc to plan for eventually breaking free of relying on your personal funding to get the organization going your nonprofit's board of directors needs to be able to see and refer to a budget to be able to monitor its success and financial progress as well your board should be helping you develop and make any tweaks as needed to your budget every year a budget also helps you stay accountable and track against your accounting practices any non-profit in the united states can be randomly selected by the irs for an audit so having a budget combined with sound accounting practices for your nonprofit is kind of required to come out of an audit clean so how do you use a budget you want to use your budget to submit with funding applications to stay accountable to the public to help with your business planning and more so let's talk about how do you start building a budget from scratch so budgets include two sections expenses and income and you can start building a budget with either expenses or income it depends on what your goals are and how you generally operate as a person and as an organization if you start with expenses it might help you understand how much money you're going to need to raise in the income column as a non-profit throughout the year and conversely if you start with income it might help you kind of flesh out what you can afford to spend on your expenses for the year i personally prefer to start with expenses because i'm of the mindset that i'd rather plan for what we want to do and try to raise the money to get there than plan for the money that we think we're going to have and potentially in my mind anyway limit what we're going to spend the money on one thing i want to point out is that a budget is not a set in stone plan you want to be flexible and monitor and adjust your budget uh regularly um unless you are a large well-established non-profit with revenue that you generally know you can rely on chances are when you're first starting out as an organization you're going to have to adjust some things as you go so plan on checking your fundraising progress and your expenditures well you should be tracking your expenditures all the time but check on the status of your budget at least every couple of months to make adjustments as you need with your board of directors okay so let's start talking about how you create a budget from scratch to plan out your year ahead in this walkthrough i'm going to start with expenses step one is to choose your tool for actually creating the budget you can use excel spreadsheets or my favorite alternative google spreadsheets that will allow you to use all the cool features and formulas to help you plan out the budget and do math right there on the spreadsheet you can also write it on any kind of document or i'm sure there's some great budgeting software out there too if that's what you prefer to do okay so in order to create an effective and as close to accurate of a budget as possible you need to do the next step of planning out your programs and projects for the year before you even start to think about money if you're starting out as a non-profit and you already have a strategic plan or business plan then hopefully you already have some of this figured out but if not we need to do a little bit of that groundwork before you can actually start thinking through the actual line items in a budget so if you don't have a formal strategic plan you want to start by sitting down and writing down your specific concrete goals for the next 12 months of your organization and this should include both your internal and capacity building goals and your external public serving programmatic goals internal and capacity building goals being like well uh you need a website in order to run your nonprofits so the website costs money that is a capacity building or internal goal that you might have to budget for in the year on the program side you want to think with the end in mind you want to ask yourself by the end of the year how many people or animals or parts of the earth will i have wanted to serve realistically in the first year of operating or any given year of operating the organization you can of course have as many goals as you want but if you're just starting out i highly recommend starting with a single concrete realistic goal that you know you can accomplish in the first year of the organization then you can add more goals and scale up and grow after that an example goals for how you're going to help the community in the year might be something like i'm going to tutor 20 kids in the first year or i'm going to help 50 puppies find their forever home so step three is once you've established that goal is to work backwards from that goal and when i say work backwards i mean you want to think about what services staff equipment supplies you are going to need to actually accomplish that goal that you stated okay so as an example and this example i will be using throughout this video let's say your goal is to provide a thousand meals to people experiencing homelessness in your city this coming year okay so you want to ask yourself what are the tools the services the items the physical space what are all the things you're gonna need that could potentially cost money what are the things you're going to need to accomplish that goal of serving a thousand meals to people experiencing homelessness in your city next year just off the top of my head a couple things to accomplish that particular goal might include a physical space to serve the meals from it might include the meals or ingredients for the meals themselves containers to give the meals out silverware um let's see do the meals need to be kept hot or cold then you might need some kind of heating a refrigeration system well you need to store the equipment that you've bought throughout the year and you don't have room in your house well then you might need to pay for storage do you need to recruit volunteers or do some kind of fundraising throughout the year in order to accomplish this stuff well then you might need a little bit of a budget for marketing or outreach or website basically you get the idea now step four is to research the market costs of all the items and services you just figured out you're going to need to accomplish the goal that you stated in the correct quantities that you know you're going to need to accomplish that goal something common i hear from people is well i'll just get everything donated but we know that that's not realistic it is highly unlikely that you'll be able to get everything that you need donated and while it would be amazing and you should always definitely try and not be afraid to ask people within reason to support your cause and to donate items or services or whatever you need you have to understand not everyone is in a position to do so so you should always plan to pay the market cost for the items and then if you're able to get something donated awesome you've saved the nonprofit money but if you can't get it donated you've at least planned to cover that cost so we're going to keep using that example i gave earlier a goal of feeding a thousand people experiencing homelessness and then we have our list of items or potential services that we're going to need as examples to meet that specific goal so this is setting the foundation for the expenses section of your budget what i do is i have a list of everything i think i'm going to need and i try to really think outside the box and make sure i'm not missing anything from you know website to insurance to protect us from volunteer issues or you know heating plates if we're doing a meal that might need to be hot etc so you've got your list of items that match up to your goal and now you want to take some time to research the costs of those items on popular websites amazon various department stores etc so you can compare prices and just find what's a reasonable approximation of what you think that cost will be and you're going to write that down next to each item and remember to be thinking in terms of the quantities you're going to need so using the example if you're going to provide a thousand meals then you need a thousand forks and let's say that you find um a great deal for a hundred compostable forks for nine dollars you multiply that out to get the right number of forks to feed a thousand people and your item on your budget is ninety dollars and just in case you didn't follow that that's because it will take ninety dollars to get a thousand forks pretty simple now if your items are reusable items like let's say food warmers then you can just account for the cost of buying it once and then whatever storing you need to do or maintenance you need to do for that item instead of having to buy it multiple times of course also and this is really important because i've been burned before you want to make sure you account for any taxes fees shipping etc that will go with the item now here's something cool in many states in the united states nonprofits can actually request sales tax refunds after they purchased an item to get some of that money back that's part of being tax exempt keep in mind this might vary by state and also keep in mind that not every item that you buy you can get the sales tax refund on it depends on what the item is and the rules of your particular state step five is okay now that you've gotten your list of the item services equipment etc you think you're going to need to accomplish that goal that you stated for the year go back and make sure that you haven't forgotten any other things that might be required for the proper management or administration of your organization for the year some of these things are common sense and other things you might not have thought of for example depending on where you bank you might have monthly banking fees and that's just part of the cost of being able to run the nonprofit as some of these things for example in many cases starting or running a nonprofit organization for a year you're going to need things like a website and the costs associated with that you might need accounting software or to actually hire an accountant to do your annual taxes you might need a liability insurance especially if you're working with volunteers if they get injured you've got to have that coverage you might need volunteer management or fundraising software and more i talk about a lot of these types of expenses and other things you might consider in another video that i did called starting a non-profit startup things to budget for or something like that step six is to clean up your expenses section of your budget because now you actually have one at this point you should have your full list of items services additional management costs etc that you think you're going to need to run the organization to meet the goal that you set for the year you've researched your costs you've accounted for any additional fees or shipping or taxes and you've got a pretty good list of what it's going to cost you to run the organization for the year congrats that's your expenses section of your budget so you can see this example budget that i have put together based on this goal and all the things we just talked about and you can see that for this example nonprofit with this pretend goal we have expenses totaling just under eight thousand dollars for the year in this example budget and i sometimes recommend this i've even overestimated the costs of some items just a teensy bit in case something changes in the market price throughout the year before i buy it or i've underestimated something this gives me a little bit of a buffer now keep in mind this example budget is for a really small organization perhaps one that's just starting up and it's only for one program goal so your budget could vary widely from this or it might look similar it all depends on the size and scope of your organization and the goal that you set when you're starting out this particular example budget also does not include staff depending on your organization you might need staff in the first year you might not but once again disclaimer this budget is just a very simple example okay so now we get into the fun stuff in this next section of the video i'm going to talk about how to shape your revenue and income around the expenses section that you just designed for your budget so once you know about what it's going to cost you based on that expenses section of the budget to run the organization to meet the specific goal that you set for the year you can start thinking about some of the fundraising that you're going to need to do in order to raise that amount of money to cover your expenses and now in this section i'll continue to use the example of a non-profit with a goal of serving a thousand meals to people experiencing homelessness in the next year and all of the associated expenses with it and i'll talk through how i would approach raising money for a goal like that so just a quick recap i've talked about this extensively in some of my other videos but in general there's no one-size-fits-all solution for how to raise money for a non-profit different methods work best for different non-profits it depends on a lot of factors but in general there are about five ways to raise money for a non-profit organization actually i'll include a six semi fundraising method that will help you save costs for your organization too so we've got individual donations this is donations of course from individuals in the community it could be donations of any size from a dollar to a million dollars it could be anything you've got corporate donations this could be corporate grants corporate sponsorships you've got foundation grants so typical probably what you think of when you think of applying for a grant this is a foundation could be community or private foundation that is giving away uh sums of money towards a specific purpose you've got fundraising events which is your typical you know you've got 5ks gala events etc fundraising events you've got earned income and this is something i will actually um i've been talking about in some other videos as well the earned income is the sale of goods or services to raise money for the organization that align with your organization's myth mission and then the sixth thing that i want to talk about is in-kind donations and all that means is someone has saved your organization money by giving you a donation of an item or service or even a discount so in kind is a donation that is not a financial donation think of things like a store giving you a gift card instead of cash or a lawyer donating pro bono legal services so i explain all that because when you are designing the income revenue section of the budget to complement your expenses section you want to think through which of these methods is going to make the most sense for your specific organization and your specific programs and projects and if you're a brand new organization just starting out i generally recommend trying to diversify your funding stream and have multiple ways you're bringing in money not just one you also want to be thinking through how well your organization is positioned for specific types of fundraising for example if you want to put on a fundraising event sometimes throwing an event uh costs money to actually put on and it can take a lot of time to plan coordinate invite people etc so you might be hosting an event and if you don't raise a lot of money then you just put in that investment of your time and money for very little results so just something to think about if you've got money to spend and you've got a wide audience that might attend an event a fundraising event could work for you if you don't have any sort of audience or network and you don't have a lot of capital to invest in a fundraising event it might not be the best option it might actually be a better return on investment to simply ask a hundred people to donate five dollars than it would to take all the time to plan an event out so let's go back to the example i gave a non-profit with a goal of serving a thousand people experiencing homelessness a meal in the next year now for this particular example there are three types of revenue generating activities i would recommend and i will share what they are and explain why the three ways are in-kind donations once again those are not financial donations but donations of goods or services individual donations from everyday people in your community and corporate donations now here's why i would pick those three specific things for this specific example now first with in-kind donations the reason i would target this as a way to meet the expense needs of the nonprofit is because if i when i look at my budget i see several lower cost items that i think would probably be fairly easy to get donated but if i fail to get them donated they're not so expensive that i probably can't make up for that cost in one of the other ways now i think that they will be easier to get donated because of their lower costs but also because they're pretty tangible items like forks for example everyone knows what a fork is it's a tangible simple easy to understand item that a donor might be able to see very clearly the impact of them giving you that item so if a store wants to give you a box of forks it doesn't feel like that big of a deal to them feels like they can make a big difference by just giving you a simple box of forks so with individual donations i'm compelled to choose this as a fundraising strategy because when i look at my total expenses for the year i know i'm going to be able to feed about a thousand people for just under eight thousand dollars that gives me a really clear way to illustrate the need and the impact to potential individual donors i will be able to say what the unit cost is the unit cost is how much it costs to create one of those outcomes so one meal about eight dollars and if i can say to my friend hey you know if you just donate eight dollars i can feed someone that's a pretty compelling simple easy to understand fundraising pitch and those are the types of fundraising pitches that tend to work best on individual donors now the final way i would target for raising money for this specific example is corporate sponsorships and the reason is that because that this example tackles hunger is highly visual and tangible and a company knows that they can get some good visibility around such a an issue so the other thing to keep in mind is that companies also like to support financially the causes where they can send their employees to go volunteer with something like serving meals it's very easy to build a volunteer activity around the act of preparing and serving meals so i know that i can invite company x to send eight of their employees to help serve this month's meals and ask for a sponsorship to help cover the cost of those meals at the same time the company gets a fun volunteer team building activity they get some visibility and you get some financial support and in theory everyone wins so you can see these three revenue strategies in my example income section of the budget here and you also see i did something different here i actually showed the organization raising slightly more than it needed the actual expenses for this project i had hundred and as 7 dollars i show here that the organization raised eight thousand dollars and i did this because i want to demonstrate that it is highly unlikely that at the end of the year you're going to have a perfectly down to the penny balanced budget you're either probably going to be slightly under in the negatives or you're going to have a slight surplus or if you did a really good job fundraising perhaps even a large surplus now if you have a surplus at the end of the year that is a good thing because then you have a couple of decisions you can make you can either a choose to invest the surplus in growing your goal for that year serving even more meals in this example we've been using or b use that money as an investment to grow your impacts even bigger for the next year for example let's say throughout the process of learning and the experience of running the nonprofit and meeting your goal of serving all these meals in year one you learned that if you just had a different type of food warmer or different type of food container you could serve 10 extra meals per month so then you can use that surplus to invest in whatever that thing is to grow your impact for the next year and at a certain point as your organization grows it's a smart idea to create a savings account or a reserve for your any extra funder funding that you were able to bring in because sometimes emergencies happen pandemic and you want to make sure that you have enough money to protect your organization if the fundraising wells dry up okay so those are the budgeting basics for a non-profit organization just starting out or growing i hope that this video helped you out don't forget to like comment subscribe ring the bell so that you can get alerts next time my next video comes out and i'd love to hear from you what are some of the budget challenges or breakthroughs that you've been having share in the comments below with our community of change makers and let's help each other out one more thing if you happen to be on facebook don't forget to check out my group change the world or bust where myself and other change makers are having some great conversations helping each other out encouraging each other answering each other's burning questions and generally making it easier for us to collectively make an impact on the world so come join us and thank you again my name is amber melanie smith see you next time