How Does the Money Flow?
Posted by Ellen on October 23, 2011
As we noted in our summary of the aLearning Survey results, we were surprised by the number of respondents who didn’t know what percentage of the organization’s overall budget is dedicated to education.
Perhaps the organization is so small that there’s just one pool of money from which everything is dispersed.Or some organizations have an education budget but the education staffers don’t have eyes on the organization’s overall budget, so they don’t know what their portion of it is.
This seems supported by the fact that the respondents most in the dark about this percentage are those from the 10,000+ members served category. The bigger the budget, the more departments involved, the more people = the harder it is to get eyes on the big picture.
Why is aLearning so fixated on these particular “don’t know” answers? Why is it so important to know how much of the pie your education function is apportioned?
Because you can’t advocate for an increase in your budget unless you know how the money flows in your organization. And the data in this survey support this. Of those responding they don’t know what the percentage of their education budget is within the overall budget, only 40% report that they will be experiencing an increase in the next year.
Here’s a fictional example of how knowing what the overall budget is, and how education fits into it, can help.
Without Percentage Information
Let’s say your organization serves 8000 individuals and you have an education budget of $180,000. You have only a vague idea of how other departments are funded, but no information on the organization’s overall budget.
You have been providing educational events for many years, as education is a key benefit of membership. You’d like to add an LMS but the price — $50,000 upfront and $15,000/year afterwards is being met with resistance. You’d like these amounts to be funded through an increase in your education budget.
You’ve taken the numbers to the executive director and board: you serve 35% of the membership through your education events, with an additional 20% as a result of your online offerings. You’d like a more robust system for tracking and scores so you can transition into a certification program sometime in the future (this, the board supports). So, overall, you’re serving about 4400 individuals with your elearning.
The board responds by saying they need to devote their financial attention to other needs — including upping their marketing and increasing their research offerings.
What can you say to that? “Don’t do it?” “You’re making a mistake”?
You have no leverage. You don’t have a way of weighing the costs or comparing apples to apples.
With Percentage Information
Now let’s say you know that your $180,000 budget is 10% of the overall budget. Even if they don’t tell you or show you the numbers, you can calculate that the overall budget is $1.8 million.
This tells you that the $50,000 will increase your education budget to just over 12.7% of the overall budget. You also know you’re serving 55% of the membership, a number that could increase with the addition of the new LMS, given the feature set you’ve got your eye on.
Let’s say that your organization has these general departments:
Education (including national conference) (10%)
You now know that 90% ($1.62 million) of the overall budget is distributed across these general areas.
When you look at the picture this way, you can begin to see that your request for $50,000 isn’t a huge one, not in the broader scope of the organization’s money flow — just under 3%.
You can put all of this into context by saying that a 3% “cost of living” increase for your department is well spent.
Even without knowing how much money the organization is planning to invest in marketing and research, you can now make the argument that even if you increase your membership participation by only 5% with the additional infrastructure, the investment will have proven itself to be more affordable than it might seem upfront.
Finally, if your organization has education or training as a key component of its mission, strategy, purpose, or goals, you should be making the case that adding 3% to the expense line is a small investment for supporting your overall mission/strategy/etc.
Furthermore, if research (in particular) isn’t part of the organization’s mission/strategy/etc., then you have even more evidence that the investment you’re requesting has perceived value.
Don’t Put the Competition Down
So, to review:
- Find out what percentage of the organization’s budget you have. (If you can, find out what the percentages other departments have as well.)
- Determine the percentage of members served (and number of individuals, whenever possible, even for trade associations).
- Compare that number to your budget percentage. Although they might never become equal (and it might not be desirable that they do), be alert to any huge discrepancies.
- Review your organization’s mission, strategy, purpose, vision, goals, etc. for every piece of evidence that education and training are important and valued.
- Create your case. Use current or recent registration numbers, feedback, surveys, polls — whatever you can provide.
Most of all, don’t put the competition down. In our example, we focused on how to make your case — not how to attack the other areas the board is considering funding. Those could very well be critical areas — more marketing, for example, could bring you more members and more registrations. More research could lead to more areas for educational development. Avoid trying to position your education needs above other needs. It’s a hard argument to make, will alienate possible allies who are tied to those causes, and — in the end — could cut you out of the conversation entirely, rather than perhaps give you at least a partial victory.
Sure, some executive leaders prefer to keep financial information from their staffers (I’d wonder about that leadership… but then… maybe that’s just me).
- Tell your boss you’re just looking for the percentage of total dollars allocated to your function — just one number, and a percentage (rather than a hard number) at that! You’re not asking for full access to all of the organization’s financial records or accounting data.
- Remind the boss that you’re responsible for the healthy financial status of the education department, and this can help. (If you’re really good at being passive-aggressive, you might be able to make the boss feel as though he/she isn’t doing his/her job by keeping you from doing your job well.)
- Find out if your organization must make its financial information public; if so, there are a number of Web sites that can provide that information to you.
You might be surprised that the boss hands over the information without much of a squeak. Perhaps you don’t have it because it never really occurred to anyone that you might need it — or want it. So if you do get the percentage number without much trouble, wait awhile, then go back and ask for more info.
You’ll never know what you might be given unless you ask.