What's Your Number

I can’t tell you how many times I’ve asked a nonprofit leader, “What’s your annual budget?”

Instead of an answer, I get a weather forecast, “Well, if this happens then that happens… or it could be this, but that was promised and sometimes this happens, but also we could . . . ”

Your annual budget isn’t a projection. It’s not a “maybe.”

Once it’s approved by your board, it’s finite. It’s the cost of doing your mission.

That’s it. That’s the number.

Why This Matters More Than You Think

The nonprofit world loves to blur lines between budgets, goals, and dreams. And to be fair, it’s easy to do — especially when so much of what we do depends on other people’s generosity and unpredictable timing.

But this one distinction matters more than almost any other:

Your budget is what it costs to do your work.

Your fundraising goal is how much of that total you expect to raise from donors.

They are not the same thing.

Your budget is your commitment to what the mission will cost. Your organization was granted nonprofit status by the state in which your incorporated and then validated by the IRS for tax exemption. These are benefits - in exchange for those benefits, we're required - legally and ethically - to be transparent. Your budget is the statement "Yes, we promised this community we would do xyz and it's going to cost us $xxxx to do that."

Yet, over and over again, I see organizations confusing organizational budget with fundraising revenue. Or leaving the fundraiser out of the organizational budget since "they only have to worry about the fundraising line item."

The result? Fundraisers who don’t know what “success” actually means. Boards who think “balancing the budget” is the same as “meeting the goal.” Staff who feel like they’re chasing an ever-shifting target.

Confusing your budget with your fundraising goal is like confusing the gas tank with the entire car. They’re connected, but one doesn’t exist to replace the other.

The Budget: Your Mission’s Price Tag

Let’s start with the basics.

The budget is the financial blueprint for your organization. It’s not just a spreadsheet or a legal requirement — it’s a declaration of what it costs to do what you’ve said you’ll do.

Once the board votes to approve it, that document becomes your operational compass. It tells you:

• What your mission costs.

• Where your revenue will come from.

• How your resources will be allocated.

• What level of investment your organization has committed to sustaining.

It’s not an estimate of what might happen. It’s a commitment to what will happen — and to the resources it takes to make that happen.

That’s why “the number” — your total annual operating budget — is so important. It’s the foundation of every plan you make. If you don’t know it, you can’t measure anything else.

The Fundraising Goal: Your Contribution to the Whole

Once you know what it costs to run your organization, you can ask the next question: how much of that total will come from fundraising?

This is where the fun begins — but also where the confusion starts. Because too often, organizations work backward.

They start with what they think they can raise and then build a budget around it. Or worse, they build a budget that depends on everything going right — grants renewed, events sold out, donors upgraded — and then panic when reality sets in.

The result is a budget that looks good on paper but collapses under the weight of uncertainty.

Here’s a better order of operations:

1. Know your total operating budget.

2. Identify all expected revenue streams (earned, contributed, grant, investment, etc.).

3. From there, set your fundraising goal — the portion of the total that will come from philanthropy.

4. Then (and only then) build your fundraising plan.

This order matters because it defines reality before it defines ambition. Your budget tells you what it costs. Your fundraising goal tells you what you have to do about it.

When You Don’t Know the Number

When I ask “What’s your annual budget?” and a nonprofit can’t answer, I know we have a deeper problem — not with math, but with clarity.

Here’s what it usually means:

• The organization hasn’t connected strategy to operations.

• Fundraisers are working in the dark.

• Leaders are managing uncertainty instead of leading through it.

That uncertainty trickles down through the whole system. Staff start guessing what success looks like. Donors get mixed messages. Boards lose confidence in the plan.

It’s not about control — it’s about coordination. If everyone knows the number, everyone knows where they stand.

How to Find (and Own) Your Number

If you’re reading this and thinking, “I’m not sure we have that level of clarity,” here’s where to start.

1. Start with last year’s audited financials.

2. Confirm your current, board-approved budget.

3. Find your total operating expenses.

4. Break down the revenue mix.

5. Identify the fundraising gap.

Once you have these five numbers, you have a foundation. You can build a fundraising plan with confidence, communicate needs clearly, and even start to forecast growth.

What This Number Is — and Isn’t

It’s important to note: your annual operating budget isn’t necessarily the number you share with donors.

What you communicate externally depends on context — donors don’t need to see every line item or internal cost allocation. But you need to know it, because it frames how you think about and approach the work.

If you’re not clear on what it truly costs to deliver your mission, it’s easy to under-ask, under-plan, or overpromise. Your internal clarity defines your external credibility.

And that clarity isn’t a once-a-year exercise. Every month, you should be reconciling with your finance team — reviewing what’s come in, what’s gone out, and where you stand against your budget.

That rhythm reduces guesswork and replaces panic with strategy. Instead of “Do we have enough to make payroll?” you’re asking “Are we on track to deliver on the commitments we made?”

That’s what healthy fundraising looks like: less scrambling, more steering.

What Happens When You Do Know Your Number

When you know your number — really know it — everything gets easier.

Your communications get clearer. (“It costs $1.2 million a year to do our work, and we raise about half of that from the community.”)

Your case for support gets stronger. (“Your gift helps close the $600,000 gap between what we earn and what it costs to serve.”)

Your planning gets smarter. (“If our earned revenue drops 5%, we know exactly what fundraising needs to adjust.”)

And your team gets calmer. Because clarity breeds confidence.Uncertainty is exhausting. Clarity, even about hard truths, gives everyone a sense of control.

Start Here

If you can’t answer, in one sentence, “What is our annual operating budget?” — start there.

Not to make you feel bad. Not to add one more thing to your to-do list. But because everything else depends on it.

Strategy, systems, and story all flow from that one number.

Know your budget first. Set your fundraising goal second. Build your plan third.That’s how you move from guessing to growing.

Answer These Questions and You Have Your Roadmap

1. What's your annual operating budget?

2. How much of that is earned vs. contributed income?

3. What's your fundraising goal for this fiscal year?

   1. Bonus Points if you can delineate by "and $x of that is fundraising, while $y is grant income"

   2. Extra Special Bonus Points if you know your fundraising goal broken out by key budget/General Ledger categories: Individuals, Foundations, Corporations (Events may be a separate line item or a subcategory of one of those.)

These should be simple, roll-off-the-tongue, specific answers. One number. Resist the urge to narrate or explain or provide context - hopefully they're stand alone.

If you found this useful, subscribe to the Generosity Matters newsletter for more practical, data-informed fundraising insights — or explore tools like The Fundraiser’s Planner and Annual Fund Out of the Box to make your strategy, systems, and story work together.

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💌 Want more like this? Subscribe to Generosity Matters, my twice-monthly newsletter for fundraisers who want clarity, confidence, and flow. [Subscribe here »]

📘 Need better tools? Check out The Fundraiser’s Planner — designed by fundraisers for fundraisers to make your work easier and more effective. [Explore digital and print planners »]

Check out the Annual Fund Operating System - adaptable, custom tools for planning your most successful year ever.  [Download here »]

🎓 Ready to go deeper? Join Annual Fund Out of the Box — a course and community built to turn your annual fund into an engine of generosity. [Learn more »]

About Next River Fundraising Strategies

We help nonprofits raise more money with less stress by aligning strategy, systems, and story. It’s where the science and heart of fundraising converge.