Fundamentals for Nonprofits

Equitable Budgeting for Nonprofits

A thoughtful budget can serve as a roadmap for an organization’s finances, a tool for communicating mission goals and resource needs, and a compass for becoming a more equitable organization.

When preparing a budget that reflects your organization’s commitment to equity, there are a number of considerations for how to create an equitable budgeting process and what to include. The lists below compile ideas and practices that NFF has explored and learned about through our consulting work with nonprofit leaders. We recognize that many nonprofits don’t have the luxury of implementing an ideal budget due to limited funding options and the power dynamics that exist in the nonprofit sector, including access to funders and adequate funds to cover costs. However, we offer these lists as a starting point for conversations about how to build the budget that best serves your mission.

Ten tips for creating an equitable budgeting process

An equitable budgeting process draws from many of the same organizing and advocacy approaches that nonprofits already use to engage their communities – such as making sure people are informed, able to participate, and valued for their unique perspectives.  

Building on these approaches, an equitable budgeting process might include the following actions and activities:  

  • Laying out a timeline that gives people plenty of time to ask questions and unpack issues along the way 
  • Being inclusive of staff at every level of the organization as well as community members and other stakeholders who will be impacted by budget priorities  
  • Offering training and informational sessions so that people can participate with an informed lens about what a budget is and what’s involved in creating one 
  • Creating opportunities for staff and community members to name organizational needs and collectively prioritize them 
  • Bringing different parts of the organization together to share knowledge and decision-making power while clarifying who the ultimate decision-makers are (e.g., the Board and Executive Director) 
  • Committing to ongoing feedback loops and sharing the “why” behind decisions so that people feel heard and valued for their contributions  
  • Making financial data readily accessible to staff and others involved in the budgeting process  
  • Allowing for conversations about budgeting process to intersect with strategic planning and goal setting 
  • Providing as much transparency as possible to help destigmatize conversations about finance, particularly when it comes to salaries and equitable pay 
  • Building in review and feedback opportunities throughout the year that will allow for any adjustments needed to the original budget – this may be needed if more funding or less funding is received than anticipated 

What to include in an equitable budget

A useful starting point is to look at your organization’s full costs to parse out total expenses (here’s a workbook to help calculate full cost expenses). Full cost budgeting is synonymous with equitable budgeting because it helps define what an organization needs to deliver its mission goals with a workforce that is fairly compensated and fully supported to do their work. 

One category to pay close attention to is unfunded (or underfunded) expenses that are not currently covered, but – if funding was available – would allow your organization to work at its current level of programming in a way that better honors and supports the emotional and physical labor of staff, creates access to much-needed technology, and covers expenses that align with the organization’s mission. A common example of an unfunded expense is not having enough hands to do the work (i.e., underfunded staff capacity), which can result in existing staff, including the Executive Director and other leadership roles, being overworked and underpaid. Other examples include making do with outdated software, slow internet, or sub-par supplies.  

Consider the following elements when creating an equitable budget for your organization:  

  • Adequate staffing so that workloads are reasonable and distributed fairly  
  • Salaries that are competitive and pay a living wage 
    • Organizations can use websites such as Glassdoor, SalaryExpert, Indeed, and the Bureau of Labor Statistics (BLS) for market research on current pay scales 
  • Childcare support 
  • Comprehensive benefits 
  • Paid time for coalition building, networking, and advocacy work 
  • Resources to invest in upgrades, supplies, or other improvements for the day-to-day functioning of an organization (e.g., What do you need that you’ve been functioning without? What would make your job easier to do so you can focus on what really matters?) 

Your budget might include some of these items as well as others not on this list. The goal is to prioritize investments that can make the biggest difference while striving to address others as more resources become available.  

While every organization will have its own unique budgeting process, bringing equity to the foreground can help connect organizational finances and practices to an anti-racist journey.  

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Thank you for exploring our fundamentals. We strive to provide nonprofit leaders with useful resources, tips, and tools that you can use at your organization. We'd love to hear your feedback about this content and anything else you would like to see more of from NFF.

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