A Zero-Sum Approach to Not-for-Profit Strategic Oversight: A practical, uncomplicated solution

Abstract

Many not-for-profits lack an integrated budgeting process. Too often it is ad hoc, top down, and unrelated to an organization’s strategic mission. Despite improvements in the economy, the future remains uncertain, and competition for donor funding continues to increase. Organizations that are strategic and financially responsible will have a competitive edge with funders. Zero-Sum Budgeting is a decision-support tool which helps not-for-profits remain on budget without compromising their mission. It is a straightforward approach conceptually based on zero-sum game theory and flows organically from an organization’s strategic planning process. Using Zero-Sum Budgeting, a not-for-profit can deliver its most important commitments without having to overburden staff or make unplanned dips into cash reserves. At its core, this approach requires an organization to make strategic trade-offs when revenues fall short or unplanned actions occur that impact a pre-agreed cash position. This cash position is established at the start of the budget year and remains unchanged, acting as a fulcrum, which drives management action throughout the year. The article is written for senior not-for-profit executives who are in need of a fresh approach to strategic planning and budgeting. It provides a good overview of the process and benefits. It is jargon free, contains a step-by-step implementation guide as well as useful charts and templates that are professionally designed.