I recently had the pleasure of debating with fellow students at the School of Philanthropy about the relative advantages and disadvantages of zero-based budgeting for nonprofit organizations. Over the last few years, zero-based budgeting has become very much in vogue again in the nonprofit and philanthropic sector. Like so many good things, however, is sometimes overused, misused, or extolled as having ridiculous magical properties. While I acknowledge the extraordinary value zero-based budgeting can have, it can also be a colossal waste of time for many nonprofits.
A tremendous benefit of zero-based budgeting for nonprofits is that it forces planners, leaders and managers to ask the tough questions about “business as usual.” When we’re honest, we all know that organizations tend to default toward self-perpetuation. That’s the silent plague in our sector. Zero-based budgeting forces us to question assumptions and tie spending to desired outcomes and anticipated program accomplishments. That’s a good thing!
But zero-based budgeting can also cause planners who think they know better to ignore valuable lessons learned from the trenches of program execution. I have seen zero-based budgeting introduced by a CFO who was completely out of touch with the rank and file within the program side of the organization. It became an exercise in his ego and candidly it was more of a gimmick to impress the board then anything that was practical or useful. So yes, I agree that it’s important to rethink the way we do things periodically, and to make sure the desired outcomes indicated by our vision and mission find their way directly into the anticipated outputs of our programs.
My favorite comment from our debate was the suggestion that perhaps zero-based budgeting could be institutionalized, but not every year – perhaps once every two, three or five years, depending on the organization’s size and culture. Such a balanced approach would make for more healthy, self-evaluating, ethical, impactful nonprofit organizations. That’s an idea I can get behind! And for you zero-based budgeting zealots out there – hey, it’s better than nothing.
I’ve been reading lately about an anticipated shortage of leaders to serve in executive roles in the philanthropic and nonprofit sector in the coming years. Bridgespan’s Thomas Tierney published a compelling article on this in Stanford Social Innovation Review (SSIR) back in 2006. “Today, many nonprofit organizations struggle to attract and retain the talented senior executives they need to convert dollars into social impact,” Tierney wrote powerfully.
Despite the 2008/2009 recession’s jarring impact on our sector, we seem to have recovered okay and are back on track now, complacently whistling our way down the primrose path, paying little regard to this potentially derailing issue. The nonprofit organizations we fund, operate or are employed by need to be impactful vehicles for good. Without well trained, well-motivated, skilled leaders, our sector’s reason for existence is at risk. Read More
Today we held the final review session for Letters of Inquiry to the Jewish Education Innovation Challenge (JEIC). In this, our third, year of the Challenge we saw a collection of applicants that was the very best yet. Those advancing to Round Two will be notified this weekend. Congratulations to all applicants — this year’s was the best group of LOIs we’ve seen yet — you made our job very difficult. I wish we could fund and work with all of you. Please check your email in the coming days to see whether your LOI has been accepted to the next round. For those advancing, we look forward to seeing your full proposals and meeting you in your interviews. To those who did not, please keep trying. You are on the right track and we see you all as our partners in building a bright future for our children and our children’s children. Yasher Koach and Shabbat Shalom to all.
Bridgespan’s Thomas Tierney
This month I have the privilege of addressing Jewish outreach professionals about fundraising at the Association for Jewish Outreach Programs’ (AJOP) annual convention in Baltimore. Though I’ve spoken about my experiences as a fundraiser, conducted trainings and mentored young fundraisers many times over, this one feels different.