What is the best way to allocate a nonprofit's budget and resources?

1 Assess your current situation

Before you can allocate your budget and resources, you need to have a clear picture of your current situation. This means reviewing your financial statements, your program outcomes, your donor relations, your staff performance, and your external environment. You want to identify your strengths, weaknesses, opportunities, and threats, as well as your gaps and needs. You also want to evaluate how well you are aligning your budget and resources with your strategic plan and your mission.

2 Set your priorities and goals

Based on your assessment, you can set your priorities and goals for the next period. You want to focus on the most critical and urgent issues, as well as the most promising and innovative opportunities. You want to align your priorities and goals with your mission, vision, and values, as well as with your stakeholder expectations and feedback. You also want to make sure your priorities and goals are SMART: specific, measurable, achievable, relevant, and time-bound.

3 Create your budget and resource plan

Once you have your priorities and goals, you can create your budget and resource plan. This is where you decide how much money and time you will allocate to each priority and goal, and how you will measure and monitor your progress and results. You want to balance your income and expenses, as well as your fixed and variable costs. You also want to consider different scenarios and contingencies, and plan for potential risks and opportunities. You want to involve your staff, board, donors, and partners in creating and approving your budget and resource plan.

4 Implement and track your budget and resource plan

After you have your budget and resource plan, you need to implement and track it. This means communicating it clearly and consistently to your staff, board, donors, and partners, and ensuring they understand their roles and responsibilities. It also means using tools and systems to track your income and expenses, your activities and outputs, and your outcomes and impacts. You want to compare your actual performance with your planned performance, and identify any variances and deviations.

5 Review and adjust your budget and resource plan

Finally, you need to review and adjust your budget and resource plan regularly. This means analyzing your data and feedback, and assessing your achievements and challenges. It also means celebrating your successes and learning from your failures. You want to recognize and reward your staff, board, donors, and partners for their contributions and support. You also want to make any necessary changes and improvements to your budget and resource plan, based on your findings and insights.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?