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Collaborative Budget Creation Made Easy

banner with RVC logo and rainbow flair. Title text in white reads Collaborative Budgeting Tool.

Collaborative Budget Creation Made Easy: Template & Process You Can Use Today

Money is power. Decisions about how we spend our money can have huge ripple effects, and often those decisions are in the hands of just a few people. As more organizations try to build transparent, accessible, and equitable ways to develop budgets, we quickly run into challenges because the tools are not built to be accessed by everyone. Complicated budget excel spreadsheets are often unintelligible to most staff, and more than one person editing a budget can result in multiple budget versions, confusing everyone and leading to even less understanding of where the money is going.

But it doesn’t have to be that way. In collaboration with the talented accountant Alicia Radford, RVC spent years developing a simple, accessible budget tool for anyone’s use, which can be used in collaborative budgeting processes with ease. By building the template in Google Sheets, everyone can access the budget and edit it in real time, making it easy for multiple people to interact with the budget in its stages of development. We’re excited to share this new tool with you to support your organization’s collaborative budgeting process! 

Before you begin budgeting

We’ve noticed there are some common sources of tension that arise during budgeting processes, and often result in delays or struggles to get the budget done. Please learn from our mistakes by doing the following before you kick off a budgeting process:

  • Gain clarity on your mission and strategic priorities. Without taking this step, you may find yourself midway through a budgeting process, struggling to make a challenging decision about what to cut, without a shared commitment to the same priorities that would make that kind of decision quite simple. So at a minimum, have a conversation with your team about where you’re headed – or if you need to, consider doing a full strategic planning process before drafting your budget. Or maybe go for something in between those two extremes, like La Piana’s Future Business Model Worksheet.
  • Assess your compensation structure. Collaborative budgeting often means being transparent about salaries. Make sure you’re not paying anyone less than a living wage, that staff are compensated equitably for the work they’re doing, and that there’s not a huge gap between the lowest and highest paid staff. Since salaries tend to be about 80% of the overall budget, it’s so important to ensure your salaries (and associated costs like payroll taxes and staff benefits) are clear and correct before you jump into budgeting. Make your salary decision-making process transparent, so everyone understands why their salaries are what they are, and consider making everyone’s salaries public internally to the organization. Sharing salaries helps shift power dynamics and allows everyone to be part of the conversation about equitable compensation, but simply sharing salaries without explaining them can be challenging. If you take this path, check that you’re squared away legally, that you have a written compensation policy, and that all staff are consenting to this policy change. If your salaries are not transparent internally, be mindful of how you’ll engage folks in the budgeting process while keeping that information confidential.
  • Clearly explain to all staff how budget decisions will be made. There’s no one right way of making budgetary decisions, but it is really important to ensure there’s transparency about the process and who holds what powers. Draft a timeline that highlights decision points, so that folks know when and how to make their voices heard. Be thoughtful about how you’re involving people, especially if you’re asking for their time and energy to make well-informed decisions. Make sure their involvement isn’t performative; if they are best equipped to provide feedback, not be a decision-maker, then openly say their role is solely one of providing feedback, and make sure they understand that they do not carry the weight of decision-making responsibility.
  • Have each program take the lead in drafting its own program budget. Ensure there’s one person in each program who’s responsible for drafting their program’s budget and engaging their team in the budget drafting process, so that each program budget is deeply informed by the folks on the front lines. Coach the program budget lead on how to build a budget, like reminding them to look at last year’s budget versus actuals for that program to make sure their estimates line up with what was actually spent last year. If they don’t line up, make sure there’s a good reason for why!

The budget template

The budget tool should be set up by your finance lead, who will create a custom version for your organization and share that with the full team. The template is powered by a Google Sheets Add-on called “NP Budgeting” that you’ll need to install in order to use it. (And no worries, this extension is removable if you don’t like it!) If you’ve never used Google Add-ons before, don’t worry, there’s step by step instructions.

If you want others in your organization to be able to edit this budget, the only unique thing to remember is to instruct them to enable the NP Budgeting extension when they first open the budget spreadsheet.

The budgeting process

You can use our Google Sheets tool in any organization, no matter how you make decisions. It can be successfully used with a variety of nonprofits, from all-volunteer organizations to organizations with over twenty staff and multiple programs. Here are some of our recommendations for engaging in a smooth collaborative budgeting process: 

  1. Start with the blue sky. Invite everyone to dream into the best-possible version of their program for the next year. You can make cuts later- but that “blue-sky budget” becomes an excellent tool for your grantwriter to use, and ensures those grant budgets are truly a reflection of what program staff are hoping to do!
  2. Allow time for feedback on budgets, however best fits the culture of your organization. Find ways to share budgets that are more accessible to non-number people, like verbal presentations or slides, but also don’t overdo this part- budgets are mostly staff salaries, so it’s not a great use of everyone’s time to painstakingly review each minuscule line item.
  3. Once everyone feels their draft budgets are solid, it’s time for the grand reveal! Wait until now to review the overall budget that pulls together all the different program/fundraising budgets. Now you can take a look at the bottom line, and see whether you’ve hit your target, or if you’re in the red and need to make some cuts. Reconciling the blue sky budget with your current limits and being mindful of fiscal responsibility is a key step, and can even further clarify what is most important in each program to fund. A few key notes for this step of the process:
    • Revenue budget numbers should be conservative, so that you don’t approve a budget that’s unrealistic. When you put all of the budgets together, it should be everyone’s blue-sky budget, except for the revenue budget numbers. And your fundraising staff should draft those revenue numbers without seeing the program budgets, so that their estimates are realistically based on past information, not biased in favor of hoping to magically meet programs’ expectations.
    • Include a budget for reserves. Take a good look at your cashflow and make sure you understand how much cash in hand you’ve rolled over from previous years. It’s good to aim for 3-6 months of cash in hand, so that if fundraising goes worse than planned, you don’t have to suddenly lay off staff. If you have that kind of money saved up from previous years, that’s great! If not, consider setting a budget surplus target so that you can set aside more funds for reserves. 
  4. If you do need to make some cuts, don’t delete those line items. Our budget template lets you mark those items as ones to not include, so that you can hold onto your blue-sky budget for future grant application opportunities, or for budget revision time if you find that magical extra money.
  5. Once your budget hits the target you’re aiming for, officially approve it, and you’re ready to go! Make sure your budget gets entered into your accounting system and that you’re getting monthly budget versus actuals reports per program, so that your program staff can track their own spending and take greater responsibility for their financial decision-making.

Your first year engaging in a more collaborative budgeting process may be challenging, as many folks are unused to interacting with spreadsheets. But hopefully this template will make it far easier for everyone to enter into the budgeting world. As your team becomes more familiar with the budgeting process, they’ll start to appreciate how much more power they have over their work when they’re actually in charge of making their own budgets. Because money is power, and putting that power in the hands of more staff  more equitably is a transformative and concrete way to ensure funds are used to best serve your communities.