How to Forecast Development Income for the Next Fiscal Year
By Rhen Hoehn, Director of Marketing
Inflow must be greater than outflow.
When it comes to setting a budget, this fact is obvious.
When preparing the budget for a nonprofit organization, though, many fundraisers find that the process seems to happen backwards.
Your experience may resonate with this all-too-common process:
- The nonprofit’s leaders plan out what they would like to accomplish in the coming year.
- The leaders put a dollar amount to those items
- The leaders hand over that dollar amount to the fundraising team and say “Go raise this much,” without much consideration to whether it is a feasible income goal or not.
This can put the development team in a difficult and stressful position.
Fundraisers should have a seat at the table in the nonprofit budgeting process. To maintain that seat, we need to bring valuable and educated insight on the next steps that the fundraising program can take. This means forecasting development income as accurately as possible.
The “Secret Weapon” Income Budgeting Tool
At Petrus we provide all our clients with the income budgeting worksheet that you will find linked at the end of this post.
Nonprofits who take the time to complete and maintain this worksheet have a strong chance of progressing toward and accomplishing their fundraising goals, and they have a much easier time with the budgeting process.
The worksheet breaks down all of the different revenue-generating activities done by the fundraising team over the course of a year, and analyzes how many dollars each activity generated by month of the year.
We recommend keeping three versions of this worksheet:
- Last year’s actual income
- This year’s budgeted income
- This year’s actual income
Last Year’s Actual Income
If you have not tracked your fundraising dollars in such high-definition before, it may be a tedious process to fill the spreadsheet out for the entire fiscal year. This effort is well worth it, however.
List out each and every fundraising activity, and how much revenue each of those activities generated by month. You will find insight into which of your efforts are most fruitful and which are performing at an underwhelming level.
With this information, you are well on your way to an informed forecast of reasonable fundraising revenue for the coming year.
This Year’s Budgeted Income
Starting with a clean spreadsheet, enter in expected revenue for each fundraising activity that you plan to do in the coming year, month by month. Use the “Last Year’s Actual Income” spreadsheet to inform these numbers.
This will give you a ballpark idea of where your fundraising revenue should end up for the coming year.
Compare the total expected revenue from this exercise to the organization’s goal for dollars raised in the coming year. Are you close, or is there still a gap to close?
What if, for example, your forecasted fundraising revenue is still $60,000 short of the organization’s goals? This is where the income budgeting tool is particularly useful.
You know that your fundraising team needs to raise more money, and this spreadsheet will help show you where it is feasible to do so. Existing fundraising activities will need to be augmented, or new activities will need to be added to the calendar.
The example below shows how you might lay this out.
This Year’s Actual Income
Finally, start another clean worksheet and track your results month-by-month as the year goes by. Compare this to your Budgeted Income spreadsheet each month to see how individual fundraising activities and the fundraising program as a whole are tracking versus their budgeted income.
Taking the time to track this data each month will allow you to make adjustments as needed to keep your fundraising office heading in the right direction, and will prevent any cashflow surprises at the end of the fiscal year.
To access the Income Budget Tracker Worksheet, click HERE!
READY TO BECOME A BETTER FUNDRAISER?
Sign up below toĀ receive tools, ideas, and inspiration to take your development efforts to the next level.
We hate SPAM. We will never sell your information, for any reason.
