In community work, we too often stifle innovation because we feel beholden to the budget our board approved 8 months ago. As a result, we miss opportunities that could create lasting change. When we remember to be flexible in how we balance resources, we leave room for new ideas and possibilities.
 

1. Outline a Contingency Plan

When you propose your budget for Board Approval, include a contingency plan in your budget proposal. A contingency plan outlines areas to pull back if you don’t hit your targets and also highlights opportunities to invest if the organization is exceeding goals. I recommend 3 to 5 for each.

I know what you are thinking, it feels like you have to move mountains to get the budget approved, adding more for staff to prepare and the board to approve just doesn’t seem possible. There is no doubt it will be difficult in your first year. However, soon it will become a “routine” part of your budget process and the potential upside is definitely worth the first-year investment of time and resources.

Once the contingency plan is in place and new opportunities arise, your board and staff will approach conversations to pivot within the budget with greater ease. Knowing there is a plan to address the uncertainty in everyday operations and changes that can be made to counter-program shortfalls, they are more likely to relax and even join in on the excitement as you to present new ideas.
 

2. Start an Innovation Fund

It has become standard for nonprofits to have an endowment, capital, and maintenance funds, but very few even consider the idea of an innovation fund. This is counter to the progress shown in for-profits who widely accept innovation is a key to success.

Ask the board at the being of the budget year to approve a small percentage of revenues (1 – 3%) or use a percentage of the previous year’s successful net income (under 10%) to be designated as an innovation fund (in comparison, for-profits innovation leaders invest between 5% and 10% of revenues on innovation).

Inform board members that the innovation fund will be designated for employees and clients to access creative new ideas and build new products. Track carefully the impact of the innovation fund, including KPIs such as employee satisfaction, new funding opportunities, sales/revenue, and new programs and products. And don’t forget to keep your board informed about the cost of missed opportunities as you ramp up the innovation fund. These statistics and performance indicators will make for a strong case to invest more in innovation in the future, not less.
 

3. Bring on a Partner

Whether you identify a funding partner, government partner or nonprofit partner, bringing someone else to the table to pursue new opportunities can help your board get to yes in a budget pivot. It can be as simple as a new funding partner who is willing to directly support this opportunity or more complicated agreements, such as swapping resources (people, in-kind or other options) in order to close the gap of associated costs your organization will face. Either way, bringing on a partner can often have real or perceived value in reducing the risk for your organization, and helping those risk-averse board members move to support your budget changes.