Event budgeting, especially for nonprofits with tight financial restrictions, is a tough business. There are so many various elements that you must keep in mind, from restricted funds to event fundraising, to software solutions.
On top of those elements to keep in mind, your nonprofit must also focus on avoiding some of the most commonly experienced event budgeting mistakes.
These mistakes are frequently committed by organizations with tight financials, which can make a massive impact on their already modest budget. Therefore, nonprofits and other organizations should be careful to avoid the following mistakes:
- Not Building a Financial Cushion
- Failing to Consider Taxes
- Forgetting About Marketing
- Limiting Flexibility
We’ve created this guide to not only point out the mistakes that organizations frequently encounter, but to also explain the best methods of avoiding these mistakes in your own plans. Let’s jump in to learn more!
When organizations create their budgets, they often do so based on “guestimates,” meaning they consider line item prices that are somewhere between a guess and an estimate.
Generally, budgets created based on these guestimates provide too much wiggle room when it comes to the actual price of the line items in the plan. For instance, an organization may think the food for their event will cost $300. However, when they get the bill, it’s actually $350.
This may not seem like a huge difference. But if every item on the budget is $50-$100 off of the guestimated price, your organization will be in the hole financially before you know it.
How to Avoid This Mistake
Avoiding this mistake simply requires additional research from your organization.
Instead of falling into the temptation of thinking “research takes too long” or “how different could the actual price be, really?”, take the time to really dig into each item on your budget. Look for information about each item from sources such as:
- Past budgets. If this isn’t your first time hosting a similar event, it’s likely you’ve bought similar items for previous events. Your fund accounting software should make it easy to look up previous event budgets and compare the actual cost of the line items to what you had previously estimated.
- Potential sellers. Contact potential sellers or look up prices online for each of the items on your nonprofit’s “needs” and “wants” lists. This is also a great opportunity for your nonprofit to start comparing the costs for various vendors in case you need to cut costs somewhere down the line.
The more research your nonprofit conducts, the more accurate your budget will become. And accurate budgets will help keep you in line with your overarching financial goals.
2. Not Building a Financial Cushion
Building a cushion in your nonprofit’s budget is key for an effective financial plan. When you don’t have an effective cushion for your budget, you may find yourself trapped or stuck in a major mistake when something does go wrong.
Let’s take the example from earlier, but expand on it a little bit. Let’s say after conducting extensive research, your organization plans to spend $300 on food for your event. However, at the event, an unexpected number of vegetarians and vegans show up and this leads to an up-charge for food. This brings your food budget to $350.
If you don’t have a cushion to soften this blow, it could take money away from your other important event activities or cause your organization to go over budget.
How to Avoid This Mistake
Expect the unexpected.
The only way to prepare for things to go wrong is to anticipate it early. While conducting research about each line item in your budget, create a small cushion to accompany that item. This allows your nonprofit to be prepared when anything might go a bit over the estimated amount.
The amount of your cushion depends a lot on the type of organization you’re a part of. If you work with a large for-profit organization with an ample budget, you may decide to create a large cushion for yourself. However, smaller nonprofit or organizations with strict budgets like local government organizations might have less to work with to create the cushion.
Even if you don’t use your cushion, it’s a good idea to always have one. It’s better to be under budget than over.
When your organization is creating the cushion for your budget, keep in mind how your accounting software will help you prepare depending on your type of organization. Check out MIP Fund Accounting solutions for different types of organizations to see how different types of software will help various organizations achieve their financial goals.
3. Failing to Consider Taxes
For-profit organizations are much more likely to consider taxes when they start planning their events. However, nonprofits rarely think about taxes throughout the year. 501(c)(3) organizations are exempt from paying.
Therefore, nonprofits tend to only consider taxes while filing their Form 990, no matter if it’s the postcard, EZ, or regular 990. Sales taxes are a completely different entity for these types of organizations to take on.
If your organization forgets about the sales tax associated with the biggest costs of your event, you’ll find yourself dipping into your budgetary cushion more frequently than desired.
How to Avoid This Mistake
The easy answer to this question is: Be sure you consider taxes. But it goes deeper than that. When you plan your budget, you’ll want to make sure you include tax in the researched estimate for each of the line items.
When you talk to event vendors, be sure to ask for full, upfront costs. And always double check to make sure tax is included in the quotes you’re given.
If your organization plans to make revenue throughout the event, you will need to keep effective and accurate records of all revenue sources and amounts for tax form data (yes, nonprofits must do this too). Accurate records will make end-of-year filing and future budgeting that much easier.
One of the biggest downfalls any organization may see when it comes to planning an event is a lack of communication. Not communicating with the right people may result in chaotic events, and no one wants to deal with the stress of chaos.
There are two main groups your organization should be concerned about communicating with for your event:
- Internal team members. If you experience miscommunication with the internal team, those handling the most important organizational elements of the event will be left in the dark and confused as to their roles.
- Guests and attendees. If your attendees aren’t given all the information up front, they may be unaware of some of the wonderful opportunities offered at your event. This means they won’t get to maximize their experience.
That’s why it’s important to have the right resources, such as specialized event websites and apps, to keep everyone on the same page.
How to Avoid This Mistake
It’s almost impossible to host an effective, well-organized event if your organization itself is not organized. This is because your staff members should have clearly defined roles as to what part they’ll play in the planning and execution of the event.
Therefore, before planning your event, be sure to check in on the management of your organization as a whole.
This process usually starts by asking your human resources department to conduct an analysis. If your organization’s HR department needs a little help, don’t hesitate to ask for it. Human resources consultants can help get your organization back on track. This Astron Solutions guide to hiring an HR consultant can help get you started.
Once your organization’s internal operations are in check, you’ll have a much easier time preparing for your event and managing the communications between staff and with your supporters.
We recommend using mobile event app software like Pathable to share the event’s agenda, exhibitors, speakers, attendees, map, discussions, and microsite with the proper audiences.
Using a comprehensive software solution like this ensures that a single location holds all the relevant information. It promotes transparency within your organization and makes it easy for staff and attendees to find the answers to their questions.
5. Forgetting About Marketing
One of the worst possible scenarios for your organization would be to put a ton of time and energy planning an awesome event, and then have no one show up.
That scenario is generally only possible when you let your event marketing strategy slack.
How to Avoid This Mistake
Create a well-rounded event marketing strategy that promotes all the important aspects of your event. For instance, promote the event registration, the opportunities for volunteering or other involvement, and the event mobile app.
A well-rounded event strategy helps organizations spread the word about various aspects of their events. Different aspects may appeal to different audiences, ensuring a diverse interest group of attendees.
Set a healthy marketing budget and don’t skimp on it. Of course, you may try to incorporate money-saving strategies into this budget, but be sure these strategies won’t force your organization to sacrifice quality.
One of the analytics you should collect after the event should answer the question, “How did you hear about this event?” This will help you understand what marketing platforms were most successful in spreading the word.
6. Limiting Flexibility
Organizations often get stuck with a very specific vision about what their ideal event will look like. While having goals and a drive to succeed is a good thing, it’s also important to maintain an element of flexibility in your event vision.
If your organization is too rigid in your ideas for your upcoming event, you may actually miss out on some incredible ideas.
This includes ideas about your budget, as well as ideas about your event itself. You don’t want to miss out on potential savings or event improvement opportunities.
How to avoid this mistake
The best advice to maintain flexibility for your event is to keep an open mind. Be sure to have your vision, but be open to changing that vision slightly to better accommodate your audience or better accomplish your mission.
Set and manage the deadlines for your event, but also take those checkpoints to reevaluate your strategy and see if there are obvious opportunities for improvement.
Ask your staff members and others involved in the event planning process to pitch in on ideas and listen to their responses. You never know what great ideas are sitting right in front of you!
Whenever you reach a checkpoint, you should also check back in with your budget to make sure you’re still on track. If you’re not, you may be forced to rework parts of the planning process to get yourself back to a place of financial stability. Or you may find that you have more money available than you believed, creating opportunities to expand event activities.
Make sure it’s quick and easy to check in with your financials during these benchmarks. A comprehensive accounting software dashboard can make all the difference. Click here to see what other features you should look for in your accounting software solution.
Your organization’s event budget is incredibly important for maintaining a well-organized and advantageous program. And every organization is different, so plan according to your organization’s needs. Avoiding these common mistakes is a great way to get started with a successful event.