The budget of an organization, department, or program is a moral document that speaks to our values. But a scarcity mindset paired with budget constraints can create a shortsightedness that we should all make an effort to address.
Sure, you might save $2,000 by printing, mail merging, and stuffing those annual appeal envelopes in-house—and for $40 worth of pizza, you could have eight volunteers write notes on and seal each one. But at what cost?
How long did it take you to fix the printing jam the second and third time? How many staff hours went into giving instructions and stewarding those volunteers so they felt valued? And how did you fix it when a volunteer put a letter for Chris in the envelope addressed to Barb and didn’t catch the cascading misalignment until 40 letters later ... if at all?
The phrase “penny wise and pound foolish” was created for just such an occasion. When you see the invoice total from your mailhouse, that $2,000 bill might feel like an awful lot, especially if you’re a small nonprofit. But remember: just because the costs aren’t printed in black and white on your credit card statement doesn’t mean they aren’t there.
There are consequences to bringing a scrappy, do-it-yourself approach to every project. When your program staff are required to fill roles outside of their expertise, or your executive director has to step in to spend time on a mail merge, that’s time they are not spending doing the work that they are best at. That’s time that they are not spending on tasks that only they can do, given their particular skills and relationships within the organization. The opportunity costs—the benefits you could have gained if you had applied those resources to something else—can be downright expensive.
When staff must consistently fill gaps in person-power to keep the organization afloat, it puts everyone on the fast-track to burnout. There are certainly times where we all roll up our sleeves and pitch in on a project that’s outside our usual wheelhouse. But that should be the exception, not the norm. One of the most expensive invisible costs in the nonprofit sector is staff turnover, so it behooves us to allocate resources in ways that help prevent attrition.
What’s the cost when work-around systems held together with duct tape become visible to service recipients, donors, and the broader community? Your organizational reputation is something you can’t buy back, and while a corporate-grade level of professionalization isn’t necessary, it’s important to remember that public perception affects our work, and errors can have a significantly negative impact on our relationships.
Unrealistic (and inequitable) expectations
Nonprofit people want to do good, and it’s not often that we do things intentionally to harm other folks in the sector. However, one area of frequent oversight in budgeting is how we compensate community partners and community members who we want to collaborate with.
What message does it send when we seek a grant and fail to meaningfully include funds for other organizations who we expect to help move a project forward? This is especially important for majority-white-led organizations to take into account when they are asking less-resourced organizations with less power and privilege to help with their work.
Do less with less.
Since time immemorial we have heard stories about “doing more with less”, sometimes quasi-triumphantly. The reality is, there comes a point where we can only do less with less, and it is a leadership imperative to draw that line.
We put our money where our values are
Ultimately, how we allocate financial resources in our budget tells a true story about our organizational values. This is true not only for nonprofits, but any institution that spends money, from governments to corporations. If we say we value staff retention, but we have no money allocated for professional development or sick leave, is our espoused value aligned with our investments?
When you look at your budget, what’s the story? Have you made any major budget adjustments to better align with organizational values? Tell us about it on social media.
Ashley Fontaine is a writer, mental health professional, and former nonprofit executive director. She’s on a mission to eliminate “we’ve always done it that way” from our collective vocabulary by helping leaders focus on possibilities rather than limitations. She believes organizational culture is the key to productivity and staff retention.