Received a query about how a Transformational Giving approach to development impacts the nonprofit budgeting process.
It’s a great question, since it recognizes that how and what a nonprofit budgets largely determines how and why it will relate to its partners and champions.
Think about it like this:
Nonprofit A is working on its budget for the coming year. It says, ‘We really need that new vehicle this year. Plus new computers. Plus we need to give our executive team a raise now that the feds raised the minimum wage. Dang! We’re going to have to increase our budget 25% over last year. Where are we going to get the money?’
Note in this process that neither the services provided nor the income anticipated is connected to the growth of the nonprofit’s champions and partners in relation to the cause. Rather, the nonprofit simply determines how much it ‘must’ have to provide the service it ‘must’ do, and the part of the equation that ‘must’ flex…is the champion/partner apparatus, otherwise known as the Income line on the budget.
But is there an alternative?
Consider Voice of The Martyrs (especially if you are thinking that Transformational Giving-type approaches can only work with small ministries).
VOM automatically sets next year’s budget equal to the previous year’s actuals.
In other words, if in 2008 VOM partners and champions gave $25 million, it automatically sets 2009’s budget at $25 million. Everything it raises above and beyond $25 million in 2009 it allocates to reserves, which it then uses for capital projects and/or unanticipated expenses.
What makes such an approach a TG approach?
The fact that the one piece that doesn’t flex is the champion/partner allocation. VOM works according to the assumption that the most accurate predictor of the maturity level of its champions and partners is their present level of giving.
Now, they could of course budget an increased amount of giving predicated on the idea that their champions and partners will grow in maturity from the previous year, and that certainly wouldn’t be counter to a Transformational Giving mindset. But by budgeting the same amount as last year’s actuals, VOM ensures that the motivation for champions and partners to grow will be intrinsic to the cause rather than extrinsic (i.e., VOM’s organizational budget needs).
That way, should this year’s giving exceeds last year (and, praise God, it typically always has for VOM, because they do a tremendous job coaching their champions and partners), the fruit of that is resources available for new initiatives that reflect the fact that the new resources are the fruit of new understanding and growth on the part of champions…which will likely take the organization into new areas of endeavor.
Ergo, what drives VOM into new areas is not perceived organizational need, but rather actual champion/partner maturity, reflected in increased giving.
The organization, in other words, is nothing other than its network of champions and partners. Champions and partners are coached in service purely to the cause, not the budget. And when you act in such a way that income needed and services provided are a function of the maturity of your champions and partners, you’ll look at the importance of fostering that maturity in a whole new light.