Budgets are important documents that outline the financial health of any organization. They provide a snapshot of the current state of affairs and serve as a guide for future planning. Unfortunately, however, many Non-Profit organizations fail to properly budget their resources. As a result, they end up spending too much time and effort trying to meet unrealistic goals.

If your Non-Profit relies heavily on its IT department for data management, collaboration, and budgeting, your IT needs as an organization are going to be at the top of your expenses as a non-profit. Your non-profit will also rely heavily on the IT department to create budgeting reports with details of your total revenue and costs.

Budgeting is one of those things everyone knows they should do, but few actually get around to doing it. As a result, many Non-Profit organizations struggle with budgeting due to a lack of time, resources, expertise, and/or experience. These challenges can lead to missed opportunities, poor financial planning, and, ultimately – failure.

1. Not Taking Enough Time

Many Non-Profits simply don’t take the time to plan their budgets. Instead, they think they know exactly how much money they need to spend each month and then just write checks accordingly. Unfortunately, this approach doesn’t work very well. A better way to approach budgeting is to start early and build up momentum over time.

By starting early, you’ll avoid having to scramble later on if you run out of funds before the end of the fiscal year. Organizations may start out with a great idea of what they want to accomplish with their budget. However, once they begin making decisions, they realize that they need to add more details to their plans.

For example, if they decide to invest more in cloud-based solutions, they might not consider whether any additional benefits would be available to them. Or, if they decide to buy a new computer system, they may not consider all of the costs associated with upgrading their current software. These types of oversights can lead to problems later on.

2. Not Having a Group Approach

Another common mistake made by many Non-Profits is not involving others in the process. While some may prefer to handle all aspects of the budget themselves, there are benefits to working together. For instance, it can be helpful to involve someone who has knowledge of accounting software or even a CPA. Additionally, having multiple perspectives helps ensure that no single person is responsible for making decisions that could negatively affect the organization.

It is very difficult to come up with a realistic budget if no one else has input into the process. When someone is involved in the decision-making process, you can get valuable insight into each option’s potential risks and rewards. Without this kind of guidance, it is hard to know exactly how much money you need to spend on certain items.

3. Not Having Enough Cash Reserve

Spending on technology can be expensive. With sporadically rising tech prices and software licensing costs, it’s important to keep setting money aside for predictable future tech expenses. It’s also important not to overestimate what your Non-Profit organization can afford.

Many Non-Profit organizations make the mistake of not putting enough money aside as cash reserves. When you’re operating on a shoestring budget, it’s important to keep track of expenses carefully.

However, setting aside a portion of your organization’s monthly income for emergencies is equally important. This allows your Non-Profit to weather unexpected costs while still keeping your long-term goals in mind.

4. Not Accounting for Each Expense

When accounting for each expense, it is crucial to keep track of everything. Some costs are more straightforward to account for than others. For example, some payments, such as on data storage, collaboration tools, and data analytics, are fixed and predictable. Other expenses vary according to the scope and scale of your Non-Profit projects and are harder to predict.

When you’re creating a budget, you’ll need to account for each expense separately. For example, if you’re planning to use a portion of your budget on cloud-based solutions, you’ll need to break down your total cost by each solution or tool. Otherwise, you won’t know how much you’re spending on paper clips versus pens.

The IT department at non-profit organizations should also account for every little low-cost expense, such as the cost of GPS tracking, remote capabilities, and theft protection.

5. Not Involving a Financial Expert or Advisor

You may already have a finance department that handles some aspects of your finances. However, you may still benefit from hiring a professional who specializes in Non-Profit and tech-related accounting. They can offer advice on how to best manage your funds, including setting up a proper budget.

6. Not Having a Tech Strategy

Many Non-Profits don’t focus on a strategy for their information technology needs. You should always be aware of new tech solutions in the market and plan for them accordingly. Especially if your non-profit is highly dependent on technology to expand your donor base, spread awareness, and store important information.

These methods may not take into account the changing market conditions, new technologies, or changes in consumer behaviour. For instance, some Non-Profits forecast tech revenues using historical data rather than actual numbers. This leads them to overestimate their income generated from tech.

7. Not Reviewing Your IT Budget Periodically

Non-Profits should review their IT budgets periodically. This helps ensure that they are meeting their objectives and staying on track. Some Non-Profits do not regularly review their budgets. This means that they miss opportunities to improve their performance and increase efficiency.

8. Not Spending On Training and Development

Training and development programs are vital to ensuring that employees are equipped with the technical skills needed to perform their jobs efficiently. Many Non-Profit organizations lack training and development resources for their IT department. As a result, they end up spending money on training and development activities that aren’t effective.

Many Non-Profits neglect to invest in training and development programs. It limits their ability to attract and retain qualified staff members, which translates to hiring more underqualified people for a job that one skilled person can do, thus resulting in more expenses.

9. Unrealistic Estimates of Your Tech Needs

Unrealistic estimates can lead to poor planning, lack of decision-making and wasted resources. Unfortunately, organizations tend to overly underestimate their IT needs. For example, organizations usually forget to account for anti-virus programs, security, and protection.

It’s better to spend money on insurance, warranties, and network security for your tech devices before anything happens to them. It will save you a lot more money than it will cost you if one of your devices gets corrupted.

10. Avoiding Rising Costs With Cutbacks

Some Non-Profit organizations try to avoid rising costs by cutting back on essentials like network security, which can put the whole organization at risk. Another example is cutting back on software updates, which can lead to lower productivity and less efficient operations.

When tech prices rise, some organizations cut back on purchases. Others raise prices. Either way, it’s important to factor in price increases into the budget. It’s also important to avoid any future expenses by remaining secure and up to date.

Avoiding Budgeting Mistakes in the Future

As you can see, there are plenty of ways in which a Non-Profit’s IT department can fall victim to common budgeting mistakes. However, by avoiding these pitfalls, the IT department at your Non-Profit organization can better manage its resources while maximizing its financial potential as well as the overall efficiency of your Non-Profit organization.