No matter your chapter’s size or focus, a crucial part of achieving your chapter’s goals is having an effective budget. That being said, your budget’s contents and structure will be different than other sororities’ and fraternities’ budgets. In fact, it might even differ from chapters of your organization at other schools with similar fundraising programs.
As the foundation of the chapter’s activities and the indicator of your performance, your budget is one of the most important documents in your chapter. Thus, there’s very little room for error when creating and using it. Drafting your budget can feel daunting and confusing, but as long as you understand the essentials, you’ll be set up for success. Let’s review the qualities of a winning budget, the components you should include, and how to leverage your budget to seamlessly manage your fraternity or sorority.
What are the qualities of an effective nonprofit budget?
As a 501(c)(7) social club, your fraternity or sorority is exempt from federal taxation, similar to a 501(c)(3) nonprofit organization. Therefore, your budget should loosely mimic the traits of a nonprofit budget. Your fraternity or sorority’s budget should be:
- Practical. It’s much more preferable to be under budget than over budget. Always be conservative with your financial estimates to counteract unforeseen challenges before they happen.
- Time-bound. Most fraternities or sororities budget on a yearly cycle. While the fiscal year technically starts on July 1, you might choose to budget based on the school year, as you likely won’t be as active during the summer. You might also choose to budget per semester.
- Specific. The more specific your budget is, the less work you have to do down the line to segment funds. For instance, simply allocating money for all of your social events is vaguer and less useful than proactively splitting your funding per event.
- Measurable. Establishing your key performance indicators (KPIs) based on your budget and campaign/event objectives is imperative to achieve your goals. Lay out your KPIs and confirm that your budget can accurately report on them.
- Adjustable. Your budgets should be living documents that you can tweak over time. You can’t predict the future, and unexpected circumstances happen all the time. For example, if your fundraising event had to be canceled, you can increase your overall event budget for future activities by the amount you saved from not hosting the event. Host regular meetings with your leadership team to make any necessary adjustments to your budget.
Above all, your budget is meant to support your goals and your chapter’s members. So, be as detailed and careful as you can to streamline the management process.
Components of a nonprofit budget
Here’s the part that makes the nonprofit budgeting process intimidating: establishing its contents. If you don’t have financial training or knowledge, it can be difficult to know what to include and what to omit. Let’s explore the critical components of your fraternity or sorority’s budget:
Your chapter should determine your program and overhead expenses breakdown. Jitasa recommends that 35% of your budget should be allocated to overhead expenses, which are essentially operating costs such as rent and house manager salaries. Roughly 65% of your budget should account for program expenses, which are all of your other costs. This is likely easier to predict than your revenue, as you already have a good idea of how much your bills will cost you.
Your expected revenue is harder to account for, but you still have some of the information you need to begin, such as dues, one-time fees, and incoming grants. The data you don’t know yet, such as your fundraising campaign revenue, will require more estimation.
To start on the right track, analyze data from previous fundraising ideas and see how it’s changed over time. Then, apply your findings to shape your predictions. Though this isn’t a perfect solution, it will at least be a good starting point for you to forecast your revenue.
How to successfully leverage your budget
Now that you know what to include in your budget, it’s time to get to work! Your budget is a powerful tool that you can take advantage of to reach your goals. But, if you don’t use it correctly, it can cause problems for you and your members. Here are some budget implementation tips:
- Stick to your budget. Use your budget as the guiding document for your planning and activity execution. Try not to deviate from it. If you need to adjust it, meet with your leadership team first so everyone’s on the same page.
- Build in room for unexpected expenses. Include a section in your budget for emergency funds.
- Budget far in advance. The budgeting process shouldn’t start right before recruitment or even the first day of school. In fact, you should start months in advance so you have ample time to edit it before the school year gets busy.
- Ask for help when you need it. This can be an overwhelming process, so don’t be afraid to reach out to your faculty advisor or house manager to help out. Also, don’t hesitate to point out any flaws with the budget so you and your team can address any issues as they happen.
- Diversify your revenue streams. If there’s ever a time to not put your proverbial eggs in one basket, it’s when budgeting for your chapter. Ensure that you and your team include diverse revenue streams in your budget. For instance, you might include your endowment’s estimated investment returns along with your fundraising revenue.
- Use a fraternity and sorority management solution. According to OmegaFi, fraternity and sorority management software can help streamline the budgeting process by keeping track of funds flowing in and out of your chapter. It can automatically pull reports from your dues database, making it a breeze to gauge your chapter’s financial position.
You might not have the same financial savviness as an accountant, but that doesn’t mean your budget has to be bare-bones and unhelpful. Sync with your leadership team and start crunching some numbers! No matter your financial situation, optimizing your budget helps you provide a smooth, memorable, and valuable experience for your members.
About the Author
With extensive experience serving the Greek life community, Mathew is dedicated to providing value to clients and fraternity and sorority members alike. Mathew’s expertise is in sales forecasting, goal setting, client growth initiatives and business development and analytics. When he is not laser focused on moving organizations forward, you can find him spending time with his wife, Lauren, and two dogs, Reagan and Teddy, running marathons and watching the Atlanta Braves and Auburn sports.