small business

Small Businesses, Charitable Contributions, and the IRS

No one really likes to think about paying taxes, but everyone likes to think about tax deductions. And for you small business owners who want to give back, but still need to mind your budget, my friend, Deb Meyer, has some great advice for you.

As you know, I’m a big fan of small businesses partnering with nonprofits and the for-profit social enterprise model. Each is a terrific way to make money and do good. So, if you fall into one of those two categories, Deb will give you the low-down on what charitable contributions look like for businesses, including examples to make it clear.

And for the nonprofits reading this post, she’ll also give you some tips for working with donors to keep them happy and informed.

Tax time doesn’t have to be your favorite time, but this will certainly make it easier. And if you can get a little reward for being kind, why not?

Small Businesses, Charitable Contributions, and the IRS

As a CPA financial planner, I’m well-versed in charitable giving strategies for individuals. If you give personally to a charitable cause and itemize deductions, there’s an added benefit of your generosity: a tax deduction! 

But what if you’re a social enterprise or small business owner who wants to use the business to give back? The rules aren’t quite as straightforward as they are for individuals. Even nonprofits can benefit from learning these rules and share them with potential donors.

Definition of Business Expense

From a tax standpoint, your business expense must be ordinary and necessary. Ordinary means the expense is common and widely accepted in your business. On a related note, a necessary expense is one that is helpful and appropriate for your business.

Let’s dive further into IRS Publication 535 for guidance on whether charitable contributions are deductible business expenses. Cash payments to an organization, charitable or otherwise, may be deductible as business expenses if the payments aren’t charitable contributions or gifts and are directly related to your business. It is a bit counterintuitive, don’t you agree?

As an individual, you make a charitable contribution out of the kindness of your heart and may receive an additional tax benefit as a bonus. Within a corporate environment, generosity is not the name of the game.  Rather, there should be a business motive behind the transaction.

3 Examples of Deductible Business Expenses

EXAMPLE #1:

Your roofing business wants to run an advertisement in your church’s bulletin and the cost is $1,000 for the year. You pursue the ad because your business is looking to grow its customer base. The business is eligible for a $1,000 tax deduction, just like any other marketing expense.

EXAMPLE #2:

One of your clients runs an annual golf tournament to honor the life of her deceased son. You, a small business owner, are invited to attend the golf tournament. You buy a single ticket to play in a foursome. Is your ticket cost tax deductible on the business return?

Probably not, unless you can provide a reason for the business purpose behind the event. 

Rather, take your “business” hat off for a moment and see if this qualifies for a personal charitable contribution. Look at the value received from your ticket. The tax-deductible amount is the portion in excess of the value received (i.e. if the ticket cost is $80 and value received is $50, you could claim $30 of charitable contribution on Schedule A of your personal tax return).

The better option in this scenario? Your company could sponsor a hole or provide an item for the silent auction. That cost is fully tax deductible for the business because sponsorship is a marketing tool. 

EXAMPLE #3:

Your brick-and-mortar store is suffering due to lack of foot traffic. The local Chamber of Commerce unleashes a solid plan to increase the number of visitors within a one-mile radius of your business. Your business gives $5,000 to support this excellent initiative. There is a marketing purpose behind this expense, so it is considered tax deductible.

Commonalities Among Deductible Business Expenses

In each of the examples above, there is a common thread for the small business owner to claim a tax deduction: advertising. For-profit businesses are in business to make money.

Advertising or marketing expenses are deductible because they increase brand awareness. Sales increase as more people learn of your business service or product. 

Just because you own a for-profit business does not mean you need to leave your philanthropic heart at the door. In fact, profitable small business owners can give at even greater levels than traditional employees. Your business has unlimited earnings potential! 

Additionally, as demonstrated in the second example, a charitable contribution with no business purpose may be tax-deductible personally. 


Claiming Personal Charitable Deductions

Unless your business is classified as a C Corporation, the underlying business profit eventually flows to your personal U.S. income tax return. Sole proprietors file Schedule C of the federal form 1040, while business partners in a partnership generate Schedule K-1s from their business tax return.

One of my clients runs a pizza franchise, and they periodically donate old inventory to a nonprofit organization. The business doesn’t receive any publicity from these donations, so we do not deduct the cost of donated inventory on the business tax return. Nonetheless, we take the value of the charitable contribution and report it on Schedule A of the business owner’s personal tax return.


How the TCJA Impacts Charitable Contributions

Sweeping U.S. tax reform, known as the Tax Cuts and Jobs Act, passed late in December 2017 and took effect for the 2018 tax year. This groundbreaking law welcomed a host of tax-related changes, most notably the increase of the standard deduction on personal tax returns to $12,000 for individuals and $24,000 for married couples filing jointly. 

Although actual figures are not yet in, the Joint Committee on Taxation estimates that only 12% of U.S. taxpayers will itemize deductions for the 2018 tax year.

This is especially concerning to nonprofits who rely on financial support from individuals and businesses alike. You no longer receive a personal tax break for charitable contributions if you take the standard deduction. While that won’t deter all families from giving, it may result in lower overall contributions.

Thus, BIGGER IS BETTER. There are smart ways for individuals to stack their charitable contributions in one tax year (to get the deduction) and then decrease their giving in the subsequent tax year.

Alternatively, donor advised funds are great tools for families who want to give substantially to one or more charities over several years and ensure they receive a tax deduction. Consult this article for additional strategies to maximize personal charitable contributions.


Action Items for Nonprofits

What is a nonprofit organization supposed to do with this information?

First and foremost, educate. 

Help current and potential donors understand the rules around charitable giving—both personally and within a for-profit business structure. Provide concrete examples for them, specifying when it may be OK to claim a tax deduction.

If you’d rather not provide examples for liability reasons, point donors to this article or to a qualified tax or financial professional. This professional should be carefully vetted in advance to provide deeper guidance on the nuances of charitable contributions.  


You Can Be Kind and Still Get a Tax Break

Knowledge is power. It pains me to tell a new client that his or her business charitable contribution does not qualify as a tax deduction. There are ways to give back and legitimately claim the tax break, but you must know the rules. 

Having read this article in its entirety, you now understand the basics. Now go and share them! 


Deb Meyer

Deborah L. Meyer, CPA/PFS and CFP®, is a fee-only financial planner and the author of Redefining Family Wealth: A Parent’s Guide to Purposeful Living. Deborah is also the owner of WorthyNest®, an independent advisory firm dedicated to helping parents build wealth. She is a recipient of the 2018 AICPA Standing Ovation Award for Personal Financial Planning. Deborah has been featured in The Wall Street JournalForbes, Yahoo! Finance and CNN Business and is a regular contributor to Kiplinger. Outside of work, Deborah spends time with her husband, Bryan, and three sons.

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No one really likes to think about paying taxes, but everyone likes to think about tax deductions. And for you small business owners who want to give back, but still need to mind your budget, my friend, Deb Meyer, has some great advice for you.

Kristi Porter, founder of Signify

I’m Kristi Porter, and I help cause-focused organizations understand and execute effective marketing campaigns so they can move from stressed to strategic. Your resources may be limited, but your potential isn’t. Whether you’re a nonprofit, social enterprise, or small business who wants to give back, I’ll show you how to have a bigger impact.


How To Lower Your Stress At Work

When I met Kelli Clay a few months ago at a conference and she said she helps people train their brains to stress less, I and everyone at our table sat up and said, “Yes, please!”

And after hearing her talk about her process over lunch, I knew she’d make a great guest blogger. As I’ve mentioned here before, I think there is a different kind of stress that results from social impact work. There’s all the “usual” stress that comes with running a business—or heck, even working at one—but the stakes are higher when you not only have your customers sand donors to think about, but those who benefit from your work as well. It can be a lot of pressure to juggle that triple bottom line.

If your chest got a little tighter at that thought, keep reading. Give Kelli’s exercise below a try and see if you can lower your stress at work to thrive in what you do.

How to Lower Your Stress at Work

Would you like to have a stress-free life?

When I ask this question during a presentation or workshop, everyone nods an emphatic yes. Today, I’d like to challenge that desire.

Benefits of Stress

Yes, you read that right. Stress has more to offer us than we might imagine.

First, stress saves lives. That is the purpose of the stress response in our bodies. If a rabid dog is chasing me, I want to be able to run fast, and if the dog catches me, I want my immune system to kick in, and my blood to clot so that I don’t bleed to death. The stress response provides those results.

“Okay,” you say, “but how often am I chased by a rabid dog? How is stress helpful in my everyday life?”

That question leads to the second benefit which is motivation. When I was teaching college classes I would ask my students, “Would you study this material if you didn’t have the stress of an exam looming?” Even my best students said they would not study without that motivator.

The third benefit is the energy that the stress response delivers. In addition to motivation, my students experienced a spike in energy that could be applied to learning when they felt tired.

Now you might say, “That is all well and good, but there is no way those benefits outweigh the detriments of stress, especially its impact on my health.” This is where the best news of all comes in: Recent research shows us that stress comes in different forms.

Different Types of Stress

In her book, The Upside of Stress, Kelly McGonigal writes about two different types of stress response: the “threat response” and the “challenge response.” Dr. McGonigal teaches us that when we perceive stress as a challenge instead of a threat, our bodies respond in a healthy fashion, similar to the way our bodies respond to exercise.

For example, in a threat response, our blood vessels become narrower, but in a challenge response they stay wide open, allowing lots of oxygen to reach cells for a boost in energy.

The key to moving our bodies from a threat response to a challenge response is to use our brains differently.

The more “primitive” parts of our brain (such as the limbic system) are wired to initiate the threat response to keep us safe. In order to initiate a challenge response, we have to use the parts of our brain more developed in humans (such as the prefrontal cortex). To do that, we need to change the way we perceive what is triggering the stress.

Consider the way a skillful athlete uses her stress response to improve her performance. Before she starts her tennis match you can see her breathing deeply, moving about, and focusing her mind. She is not thinking about how stressed she is. She is using the energy surging through her body by thinking about how she will rise to the challenge, hit the ball hard, and make the best shots.


Action Steps

We can use that same process in everyday life.

For example, when I am preparing for a presentation, I acknowledge that my body is having a stress response, but instead of fretting about being stressed I tell myself that my body is gearing up, and I am capable and can handle the challenge. I build on my past success and tell myself I’ve done this before with great results. Then, I tell myself that I am excited, and this will be fun. Last, I notice that excited feeling in my body.

My exact words may not work for you, so it is beneficial to come up with your own mantras to create a new perception.

Here are the steps I recommend to retrain your brain when it comes to stress:

  1. Acknowledge the response your body is having such as:

    1. the faster heart rate,

    2. the sweaty palms, or

    3. the butterflies in your belly.

  2. Reassure yourself that this is normal. Examples statements are:

    1. This is my primitive brain trying to protect me, but I’m not in danger.

    2. I am fine. This is just my body’s natural response to the challenge ahead.

  3. Encourage yourself. For example:

    1. Think about a success you’ve had and recognize that if you could do that, you can accomplish the task ahead of you.

    2. You might repeat something like, “I know I can handle this.”

  4. Choose a new positive, high-energy emotion such as:

    1. excited,

    2. enthusiastic, or

    3. thrilled.

  5. Invoke the new emotion you chose by:

    1. creating and repeating sentences that support the new emotion, or

    2. visualizing yourself responding to the situation with the new emotion.

  6. Notice your body’s response to the new emotion. If your heart is pumping fast now, it is because you are thrilled, not because you are scared.

Jack’s Success with the Challenge Response

I worked with a man in his mid-50’s that we will call Jack, whose company was being sold. He was a manager, had been with the company for 20 years, and his family depended on his salary. Jack was having trouble sleeping and he faced each day with a tight chest. He was concerned about his future and the future of his employees.

At first, Jack was skeptical. He thought this method was too simple and wouldn’t make a difference, but he agreed to try it. Every time he felt his heart racing and his chest getting tight, he would stop for a moment and notice those sensations in his body.

When he did, the symptoms decreased.

Then he reassured himself that his response was normal because he cared about what happened to his family and employees. He reviewed the problems he had overcome in his lifetime and decided he could handle this new situation.

Next, Jack decided he wanted to feel courageous and enthused for whatever came. To invoke those emotions, he stood up straighter and visualized himself walking into the office tall and strong. He repeated to himself, “The reason a company might want to buy us is because we made this company great. I have strong skills, and if we are bought, I will use those skills to support the new company, or possibly in a new position somewhere else.” He encouraged his employees in the same way.

A few weeks later, Jack was surprised to realize that he felt a calm excitement for whatever came next.

Jack’s situation has not changed. His company is still up for sale and he does not know what will happen, but he goes to work each day with enthusiasm and a sense of adventure.


You Can Do It

As simple as this sounds, it is not always easy. You have to practice it until you develop the new, neural pathways in your brain that make it easier, just like learning to ride a bike.

Don’t give up, thinking that this will never work.

There is solid science to back this exercise. Watch Kelly McGonigal’s TED talk to learn more. It has worked for me, my students, and clients—and I know it will work for you!

Instead of “stress-free,” embrace the challenge response and you can “stress less!”


Kelli Clay

Kelli Clay teaches people how to deal with stress through her signature program, "Train Your Brain to Stress Less and Thrive." It is more efficient and less time-consuming than traditional stress management, so if you need help managing the stress in your life, she offers a free telephone discovery session. And if you want quick, practical tips for stressing less, subscribe to her twice-a-month newsletter.

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How to Lower Your Stress as a Social Impact Business Owner

Kristi Porter, founder of Signify

I’m Kristi Porter, and I help cause-focused organizations understand and execute effective marketing campaigns so they can move from stressed to strategic. Your resources may be limited, but your potential isn’t. Whether you’re a nonprofit, social enterprise, or small business who wants to give back, I’ll show you how to have a bigger impact.


Heart For Impact, But No Head For Finances?

Quick note: During the summer, we'll only be publishing one blog post per month as we focus on some new activities and allow you some down time without falling behind on content.

Last month I celebrated three years as a small business owner. That’s right, Signify turned three!

It’s been quite the ride! Lots of highs and lots of lows. And lots of lessons learned—many of them the hard way.

In fact, the past year in particular has been a real doozy.

I’ve heard it said that entrepreneurship is a great way to magnify both your strengths and weaknesses as an individual. I’d say that’s pretty accurate.

For me, it’s had a lot to do with money.

The Many Sides of Money

What I’m discovering is that it’s not just about making, managing, or saving money, but the mental game of money (though the other things are super important, too). But in the category of “you don’t know what you don’t know,” I don’t think I understood how I actually interacted with money on all levels, and how that influenced the daily running of Signify.

My emotions, notions, preconceived ideas, and subconscious thinking have all played out in ways that I never imagined.

You see, I’ve always been very clear with my friends, clients, and tribe that I am someone who took a skill I had and monetized it. I wasn't someone that had a head for business and numbers, and decided what to do from there.

Signify has always been a way for me to professionally support the people and causes I already supported personally.

So, in a lot of ways, I’ve been playing catchup with the mental hangups about money that I’ve had all my life. And it’s cost me both literally and figuratively. It’s also made me less confident as a small business owner. In fact, I’ve wondered many times if I’m actually cut out to do this.

The self-doubt, negative self-talk, and anxiety make it hard to serve others. It’s difficult to make an impact when you’re worried about making rent.

To quote Kanye West, “Having money’s not everything, but not having it is.”

The truth is, we need money to keep the doors open, the lights on, and to further our causes. And if you don’t develop a better relationship with money, you’ll never make the kind of progress you’d like.

By the way, that goes for whether you have a bunch of cash in the bank or not. A scarcity mindset can do just as much damage as the lack of ability to mange money. Either way you slice it, that puts your nonprofit, social enterprise, or small business in a bind that can be hard to get out of.

These are the kinds of things I’ve been wrestling with over the past year. And, though I’m still learning, I’m getting better.

Enter Shanna Skidmore

I watched her webinar in January of this year, and just knew I needed to learn from her. Why? She actually made me feel like I could learn the business and finance side of running my business.

That, my friends, is empowering.

Feeling completely unqualified to run a business is no way to run a business at all.

And, like me, many nonprofit and social enterprise founders launched their organizations because they want to make an impact. It’s not that they necessarily want to run a business. Sure, that can also have its perks, but mostly, we just want to do our good work.

However, running a business means asking for money, whether that’s through a sale or a donation. So, it’s important to not only learn to manage the money well, but truly understand its value to your organization and cause. When you can do both of those things, you can more effectively grow and scale.

This is just some of the hard and necessary work I’ve been doing this year.

If this sounds like something you need to work on as well, then join me for Shanna’s last ever masterclass this Thursday, August 8th, at 1:30 p.m. EST.

That’s right, this will be the final time she gives her behind-the-scenes peek at how she built a multi six-figure business. I’ve learned so much from her this year, so I’ll be there, and hope you’ll join me.

We are now in the latter half of 2019. Don’t let another six months or year pass before you start dealing with your own money mindset and business finances. Your cause is too important for that.

A note from Shanna

“It is possible for women to make money doing what they love, create flexible schedules so they can be present mamas and friends, decrease the clutter and chaos that comes with building a business, and trade all that in for a life-enriching business!

For the past 13 years, I’ve been helping business owners understand their finances and build profitable and sustainable businesses. It’s what I do! My journey began as a Fortune 100 Financial Advisor and morphed into starting my own management consulting firm seven years ago.

And for the last time, I’ll be teaching my free masterclass, “How I Built a Six-Figure Business.”

Wondering if I’m the right teacher for you? I am if you’re dealing with problems like:

- Hustle with no results

- Client stress (pricing, always wanting more)

- Talking to customers and donors about money

- Overwhelm!!!!!

- Inability to financially plan well

- The feeling of being poor

- Fear about what to do next

- Living paycheck to paycheck

- Stress (with money and time)

I’m not going to share some complicated MBA program, but instead, what I believe are business fundamentals. Financial principles you don’t have to be a CPA to understand. Marketing concepts you don’t have to have a degree or tech wizard to implement, and success psychology you don’t have to pay a therapist to study. 

This is all something you, me, and our entrepreneur friends are all capable of doing—with a roadmap, of course! 

Let’s do this!”


Sounds good, right? Please consider joining Shanna for her final (and free) masterclass, “How To Build a Six-Figure Business With Less Than 5,000 Followers,” on August 8th. I’ll be there, too!

Don’t get me wrong, there are plenty of great business and financial coaches out there. And it’s important to find the people from you can learn from. However, if you've always struggled with numbers and finances, then I’d encourage you to tune in.

I’ve learned bits and pieces from other gurus in-person and online, but Shanna is one of the only people to break business and financial principles down in a way that actually makes sense to me. And that’s a huge benefit because gaining understanding gives you the confidence that you need to make bigger breakthroughs you business.

Quick Note For Nonprofits

While Shanna’s content is mostly geared for female entrepreneurs of for-profit businesses, nonprofit founders have also found success with Shanna’s methods. In fact, here’s a testimonial from Signify community member and nonprofit founder, Chantel Adams.

"Shanna’s Blueprint Model gave me clarity on not only why I’m doing the work I’m doing, but also how I'm going to move forward to make it successful.

For years, I thought my core motivator was IMPACT, but she helped me discover that my real motivator is CREATIVE EXPRESSION. All that time I wasted trying to prove that the work I did mattered, when the reality is that work that flows from your identity IS the work that truly matters.

I have more energy, ideas, and focus than ever before!”

So, you may have to do some creative thinking with some of her principles in how they relate to your nonprofit, but it can be done. And if you struggle with some of the problems above, I guarantee you’ll still find value in Shanna’s teaching.

Shanna’s a smart cookie, and has helped me in my business tremendously, so I hope you’ll give her a chance. And, really, what have you got to lose?

NOTE: Shanna’s webinar has passed, but you can watch the reply here, or if you’d like to learn from her like I have, check out The Blueprint Model. Registration is open through August 14th. NOW has never been a better time to improve your relationship with money.



Kristi Porter, founder of Signify

I’m Kristi Porter, and I help cause-focused organizations understand and execute effective marketing campaigns so they can move from stressed to strategic. Your resources may be limited, but your potential isn’t. Whether you’re a nonprofit, social enterprise, or small business who wants to give back, I’ll show you how to have a bigger impact.


Your Budget: Go From Cursing to Championing

One of the reasons I love inviting guests to post on this blog is so that they can talk about topics that I probably wouldn’t address myself. And right at the top of that list is budgets! Numbers are something I always struggled with in school (while I excelled in English), so it’s better for both of us that I stick to what I’m good at.

Enter Steve Fredlund. He and I met several months ago in a Facebook Group, and when I saw that one of his areas of focus was budgeting and money management for nonprofits and small businesses, I jumped at the chance to feature his expertise.

I really loved the way Steve talks about “transformational” budgeting in this post, and think it will not only shed some light, but challenge your social impact organization to value money differently in the process.

Your Budget: Go From Cursing to Championing

BUDGET. A 6-letter swear word to many nonprofit leaders and small business owners. It’s about penny-pinching and the restricting of ability to get things done. It’s the mechanism by which a number-crunching, introverted analytic hinders team creativity. Right? 

Yes. Because most of us see it this way, this is precisely what it becomes. Consider how budget discussions and approval are communicated in your organization. For many, it sounds something like, “Well, it’s that exciting time to set the budget again,” or “Sorry, guys and gals, we have to work on the budget,” or “Let’s get the budget stuff done so we can get on to the real stuff we need to talk about.” 

Why You Need to Rethink Budgets

Budget communication both reflects AND creates culture. It gives insight into leadership perspectives on budget, which gives insight into how leaders think about budgeting as a potential tool to move the organization forward. And usually, budget communication is extremely negative or, at minimum, apathetic. But your cash flow is an asset and it is your responsibility to leverage that asset as effectively as possible in support of the overall mission and strategic priorities of your organization. Anything short of that is a suboptimal use of one of your biggest assets, and is a gap in your overall leadership. 

Your finances carry vast amounts of potential energy, just waiting to get released. Your job as a leader is to recognize the full potential energy and release it to maximize achievement of the vision and strategic priorities. I want to encourage you to shift your paradigm about finances—to recognize that great organizations are able to fully release their power and leverage it for success.


3 Budgeting Exercises for Social Impact Organizations

Here are three things you can do to increase the value of your budgeting process, while also changing your perspective about the role of finances in your nonprofit or social enterprise:

  1. Strategy-based budget.  List out all of your major strategies, goals, or initiatives. Then assign each a percentage (totaling 100%) indicating how you WISH all of your available funds were allocated. Do this without regard to your knowledge of the current budget and only consider non-fixed costs. Basically, you are saying, “This is how I wish all of our discretionary spending was allocated.” Then, take this to your finance team and ask them to complete this exercise with the actual spending; have them include a bucket somewhere for the “fixed costs,” and with all remaining expenses, have them allocate out to the same categories you defined. Compare what you find. Eventually, I encourage organizations to create budgets starting first with developing a desired allocation of resources and then building the budget; but for now, this exercise will provide insight into any major disjoints in spending. It will also help you realize how many of your expenses are fixed, to see if there is any way to move spending into discretionary.

  2. Gain outsider perspectives.  An interesting exercise is to give your current budget (or actual spending) to several people unfamiliar with your organization and ask them what they think your vision and priorities based on your budget. You can get tremendous insight from this exercise. This is similar to having new people to come into your building or office and ask what they think your priorities are based on your environment; it creates fascinating discussions.

  3. External research. It’s amazing to me that very few nonprofits and social enterprises have an understanding of how similar organizations are allocating their budgets. I ask, “How does this compare to your competitors?” or “How does this compare to similar nonprofits?” and rarely do they know. Comparing to others can provide great insights, not only for competitive advantage, but to start the conversations about how you could become more effective in your spending.

 There are many more considerations in maximizing your financial investments, and improving the perception of the role of budgeting, but these three are a good start. How you spend your money is more than just a necessary evil. It is as important as the staff you hire, connections you make, and products or services you provide. Every dollar of your revenue is an asset; are you investing it in a way that maximizes your impact or helps you best reach your goals?

Avoid the 5% Rule

When the next budget cycle comes up, consider avoiding the typical process that simply adds 5% to every budget item from last year. This is the central mistake in budgeting for impact; to start with what has been done in the past and making minor tweaks. Using the prior budget to determine the next budget is akin to starting with current policies and procedures to set next year’s strategies.

If you want a transformational budget, then realize that the budget is an “output” and not an “input.”  The budget process starts with what you are ultimately trying to do (your vision, mission, or purpose). From there, you determine your key focus areas for the next one to three years, which leads to your key strategies and, ultimately, to the execution of those strategies. It is from these decisions that the transformational budget emerges. 

Imagine running a nonprofit helping to alleviate the issue of clean water in which 20% of last year’s budget supported efforts in Rwanda and 10% supported Nepal. There are some significant political and world relief changes resulting in far less need for the organization to continue working in Rwanda. Strategically, the organization decides it needs to move staff and facilities to Nepal, but the budget setting is based on last year and the funding to both Rwanda and Nepal is increased slightly, creating a huge disjoint in strategy and funding.

This may be a ridiculous example that would not actually happen in practice, but it’s only ridiculous because of the dramatic nature of the shift. How many smaller shifts are happening every year without the budget reallocation to support it? Many cause-focused organizations know the areas they need to move focus toward, but most use a “last year plus” method for budgeting. The end result will always be a disjoint between impact and financial support.

As a social impact organization, take time to celebrate every dollar coming in. These funds are more than just “money;” they represent the opportunity to have impact. But the ball is now in your court. What are you going to do with that opportunity? The more impact you can have, the more opportunity you will attract; and conversely, the poorer you manage your opportunity, the less opportunity you will have. 


Get Excited About Budgeting

Get excited about strategizing how those funds can be used to maximize impact or profitability. Have leadership discussions that start first with your vision, mission, priorities, and strategies, considering how to optimize movement toward their achievement using your finances. Think less about budget constraints and think more about budget opportunities.

When you have a budget that is lined up with your overall strategies, it generates creativity among each budget manager to truly optimize those funds to carry out their strategies. Further, having a budget aligned with strategies creates peace of mind for leadership (and all stakeholders), knowing that all assets are working together to carry out the desired impact of the organization.

Start seeing budget and finances differently, and you will be on your way to leveraging it most effectively—to maximizing your impact; to achieving your vision.

If I can be of any assistance, feel free to give me a shout at steve@stevefredlund.com or 651.587.5435. You can find out more about me at stevefredlund.com. 


Steve Fredlund

Steve Fredlund, FSA, MBA, SWP has 30 years of experience in Fortune 500 companies in primarily financial and analytical roles, with another 10 years in nonprofit roles including staff, board, founder, executive, and volunteer. He currently does independent consulting, coaching, and speaking focusing on small businesses and nonprofits. Steve helps individuals and organizations clearly define what success means to them, and then figure out how to get there. More information is available at stevefredlund.com.

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Here are three exercises to increase the value of your budgeting process, while also changing your perspective about the role of finances in your nonprofit or social enterprise.

Kristi Porter, founder of Signify

I’m Kristi Porter, and I help cause-focused organizations understand and execute effective marketing campaigns so they can move from stressed to strategic. Your resources may be limited, but your potential isn’t. Whether you’re a nonprofit, social enterprise, or small business who wants to give back, I’ll show you how to have a bigger impact.