Budgeting And Forecasting For Nonprofits Using Membership Data

KEY TAKEAWAYS

• Understand why membership data matters for non-profit forecasts 
• Discover a membership-driven forecasting framework
• Learn its benefits for accounting, leadership, and stakeholders

How often have you had to cut back on a big project or missed an opportunity because of unexpected budget issues? This happens with a lot of non-profit organizations with limited resources, even though now 67% of global NGOs accept online donations.   

Unstable findings, changing needs, and economic changes make planning difficult. Regular budgeting methods often don’t work well because they don’t fully connect to NGO’s goals, plans, and financial results. 

This is where the membership system steps in. It is like a gold mine of information for planning finance. So without any further delay, let’s dive into this article and learn more about it. 

Membership Management Platform For Nonprofits

NGOs that depend on membership fees and services often need special tools that are better than regular accounting or CRM, and what is better than membership management platforms?

These platforms help with tasks like renewals, signing up for events, processing payments, and keeping in touch with members while also keeping accurate records. They also track important information like when membership needs to be renewed, event participation, donation records, etc. 

Also, this organized data helps with daily tasks and offers useful insight for planning finances. There are many platforms available in the market for this, but WildApricot is a great all-in-one solution, and it is cloud-based, too. 

Why Membership Data Matters For Nonprofit Forecasts

If an organization wants to succeed, it needs to understand its membership data, and it is more than just collecting names and email addresses. It’s about tracking their entire journey, from prospect to loyal member, even those who leave and return.

Understanding the members and their evolution helps NGOs to know what motivates them to join, stay, or leave. This knowledge empowers NGOs to boost prospect conversion rate, extend member lifetime value, and minimize avoidable churn. Because of all these reasons, membership data really matters for non-profit forecasts. 

Establishing A Membership-Driven Forecasting Framework

Let’s understand how organizations create a strong forecast about membership numbers, using this useful framework: 

1. Clean and normalize historical membership data

• Update all records
• Remove duplicates and mistakes
• Sort members by joining date, payment history, and member type. 

2. Derive key performance indicators (KPIs)

• Number of active members 
• New membership every month
• Renewal rate
• Average renewals per month 
• Attrition rate

Tracking these helps the organization know what’s going well and what needs attention. 

3. Build scenarios (base / pessimistic / optimistic)

Organizations usually create three versions of the budget: 

• Base: What they expect would happen
• Pessimistic: If things get tough and fewer people join 
• Optimistic: If they get more people than expected

4. Integrate membership forecasts with expense and cash flow models: organizations don’t just guess income; they see what it lines up with what they spent. They make sure for times when income is lower, like holidays or off-season. 

5. Iterate and refine continuously

• Organization review forecasts every month
• They change them when needed. (Like COVID-19 hit or after a big event)

• Use driver-based (rather than purely line-item) planning: Look at KPI and check what really affects income and expenses. 
• Account For Restricted Vs Unrestricted Revenue: Some membership fees and donations might be limited to a specific purpose. Plan and budget them separately. 
• Build Multiple Cash Flow Forecasts: Don’t depend on one prediction. Make at least two or three to prepare for a surprise. 
• Involve the Program and Development Teams: Involve the program manager and fundraisers. They know about upcoming events and can improve numbers. 
• Plan For Overhead And Reserves: Always include essential costs, like rent or salaries, and set aside some money for emergencies. 
• Validate Against External Benchmarks: Compare renewal rates, ARPM, and KPI’s to similar organizations to ensure your growth rates are realistic. 

Benefits For Accounting, Leadership & Stakeholders

I have already discussed the benefits of the membership system, but now let’s talk about how it helps in accounting, leadership, and stakeholders: 

• With the help of the membership system, accountants have clear numbers for audits
• Leaders make better decisions using their previous data
• Stakeholders see a more reliable organization
• The team can spot financial risk early

Wrapping Up

Budgeting and planning for nonprofits can easily become a simple process using a membership system. Nonprofits can use this as a starting point to create different plans and use a different approach using previous data. The above steps can also help in this process. 

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