What Your Organization Needs to Know about Nonprofit Budgeting

By estimating your income and expenses, you can make sure that you’re using your resources in the most efficient way possible. And, by reviewing your budget often, you can make sure that you’re on track to reach your financial goals. At the end of the budgeting process, you should have a detailed financial plan outlining the organization’s revenues and expenses. 💰 This nonprofit budget will help you understand what your organization needs to run smoothly and allocate resources effectively. Editable fields enable you to overwrite example figures (including revenue and expenses) with your own.

Get your income right

That way, you’ll have additional financial flexibility in case some costs are higher than expected. It also means any extra funding you have at the end of the year can be put into a long-term savings account for your nonprofit. Travel may be necessary if staff members or volunteers attend conferences, meetings, or events related to your mission. It may also be budgeted for outreach efforts, site visits, or other programs that require travel. When including travel in your nonprofit operating budget, think about plane tickets, lodgings, car rentals, Uber fees, and/or driving mileage. While the goal is to maximize resources and achieve mission-driven objectives, nonprofits often encounter significant challenges in their financial planning.

• Donations, fundraising, grants—each revenue stream has its perks and quirks!
• At least once a quarter (but ideally bi-monthly or monthly), compare actual expenditures against the projected budget to make sure your nonprofit is on track.
• Understanding and managing both fixed and variable costs helps you make smarter spending decisions and maintain financial flexibility.
• These projects probably won’t be delivered every year, so separating your operational budget from your capital budget is the best way to go forward.
• This effort isn’t a one-and-done event but rather an ongoing process.
• If one line item makes up more than about 10-15% of the total expenses or revenue, break that item down and use sub-categories (especially helpful for items like staff and programs).

Know the Nitty-Gritty of Getting a Business Credit Card

QuickBooks Online is a small business accounting software and app that allows you to manage your business anywhere, anytime. Donations, fundraising, grants—each revenue https://greatercollinwood.org/main-benefits-of-accounting-services-for-nonprofit-organizations/ stream has its perks and quirks! Getting an idea of what these streams bring in will help you see how useful each of them are to your organization long-term.

Essentials of a Nonprofit Budget Template

One major way this figures into developing your budget is in the form of restricted funds, or revenue that has been designated for a specific purpose. Additionally, you’ll indicate whether these funds will come from program, management and general, or fundraising activities. Creating a budget for non-profit organizations requires balancing The Key Benefits of Accounting Services for Nonprofit Organizations mission impact with financial sustainability. The most successful nonprofits treat budgeting as an ongoing strategic process rather than a yearly task.

• If you’re planning on purchasing a vehicle, renovating a facility, or have some other special project in mind, create a separate budget just for that.
• In this article, we will discuss what should be included in a nonprofit budget, how to create one, and provide a template and example budget to help guide you through the process.
• Furthermore, it’s important to remember how each type serves a slightly different purpose.
• With the right tools and strategies, your nonprofit can confidently build a financial foundation for 2025 that ensures stability and amplifies your mission.
• Since it impacts every department of your nonprofit, consider all stakeholders while creating the budget.

Equitable Budgeting for Nonprofits

Next up, we’ll break down what goes into a nonprofit budget template. From there, we’ll walk you through how to put together your budget, step by step. We’ve got some great tips to help you make it as accurate and realistic as possible.

Identify Key Stakeholders

By following these five steps, you can create a nonprofit operating budget that sets you up for financial stability and growth. Including contracted services in the budget lets you plan and allocate funds for these essential services. It will cover all the expenses required to keep the organization running, from salaries and utilities to technology and insurance. Are you looking to expand a program, hire additional staff, or purchase new technology?

Include Non-Monetary Contributions

Transparency fosters trust and ensures everyone is working toward the same financial goals. For example, Doctors Without Borders allocates a significant portion of its budget (over 80%) to direct program expenses, ensuring most donations fund medical care in crisis zones. Creating an organizational budget takes time and lots of thought, but these strategies can contribute to a more successful process. Involve key leadership to contribute guidance and details from the start. Propel Nonprofits video about cash flow to help you better understand the ebbs and flows of your organization’s cash. If you have started a new nonprofit, you will still need to create a budget.

• While familiar, this approach might keep you from spotting opportunities for significant improvements.
• Involve key stakeholders in the planning process and create regular review cycles for monitoring and adjustments.
• The two primary components of a budget are income and revenue, and many subcategories fall under the umbrella of each.
• For nonprofits, understanding and managing income sources is crucial for financial stability.
• Examples might include materials purchased specifically for a tutoring program or the cost of an evaluation consultant to document the results of a preschool program.
• Similarly, the cost of fundraising is valuable to programs and the final step is to allocate fundraising expenses to each.
• It’s meant to help you manage your cash flow so that you can run smoothly while achieving the goals you have set out for your organization.

Create Your Nonprofit Budget: 9 Simple Steps + Free Template

Having a miscellaneous budget line offers flexibility in your budget, helping you cover unforeseen costs as they arise. For example, WWF (World Wildlife Fund) frequently reviews its budgets to optimize spending for conservation projects, making data-driven decisions for global campaigns. In FY23, WWF increased spending on conservation programs by 16% compared to FY22. Are you looking for more resources to support your nonprofit organization? StriveTogether offers online training to help community leaders strengthen their work.