Nonprofit Budgeting: Step-by-Step Guide + Free Template

Remember to base your budget on your nonprofit’s specific needs and history. All funding sources can fluctuate, even government grants can dry up or disappear. This is why it’s so important to diversify your income streams as much as possible so you’re never reliant on one funding source. Some ways to do this can be hosting different or seasonal fundraising events, offering membership programs, or partnering with local businesses for sponsorships.

Facilities Costs

Creating lasting relationships with your suppliers and partners will save you time, energy, and even money! The better relationships you build early on, the easier things will be in coming years. Feeling inundated with too many spreadsheets, repetitive data entry, and version-control issues? When teams have clarity into the work getting done, there’s no telling how much more they can accomplish in the same amount of time.

Develop Program-Based Budgeting

Nonprofit budgeting is a strategic process, creating a financial roadmap for organizations. This detailed guide helps you allocate resources efficiently, presenting a holistic view of operating costs and expenses. The annual nonprofit budget illustrates the financial objectives to be achieved over a year. The key components of a https://nyweekly.com/business/accounting-services-for-nonprofits-benefits-and-how-to-choose-the-right-provider/ nonprofit operating budget include revenue, expenses, and surplus planning. As far as revenues, these numbers are projected over the course of the year and come from sources such as grants, donations, membership fees, or event earnings.

Don’t operate on assumptions

• Many nonprofit budget templates also come with built-in formulas and functions to automatically calculate percentages, variances, and totals.
• If you don’t have a financial history to review, tally up the expenses you expect to incur.
• With a proper budget, your nonprofit can stay focused and organized while remaining accountable to the stakeholders who make your work possible.
• An accounting software might be a better way to gather expenses than google sheets, so look into tools that make it easier to track your finances!
• Depending on the type of grant you win, the award will cover only direct costs, or, if a general operating grant, it may cover much more.

Use the same categories in your budget to easily generate financial reports to funders and others. Nonprofit organizations continually grapple with maintaining and improving their operations, especially in today’s volatile economy and a rapidly changing world. They must constantly strive for sustainability, and an essential part of that quest is proper budgeting. Apart from budgeting, the module also supports forecasting, helping you to anticipate future financial trends and make informed decisions.

• This template allows organizations to clearly outline and monitor annual financial resources and allocations, ensuring that all funding aligns with their operational and programmatic goals.
• Even if you operate within a virtual working environment, you’ll likely have facilities expenses, such as work laptops or technology reimbursement for your team.
• Before you can develop an accurate budget, you’ll need to gain a clear understanding of the nonprofit’s financial situation.
• This is the most common type of budget, typically covering an entire fiscal year (usually 12 months).
• For example, program managers can offer details about anticipated costs, while financial officers can provide an overview of past income trends.
• As we look towards 2025, nonprofits face a unique set of challenges and opportunities.
• It’s not just about balancing the books; it’s about creating a clear financial roadmap, a basis that aligns resources with mission-driven goals.

Make Sure To Review Your Budget Often

Grab all the details you need to know to run efficient accounting for your mission. Remember that your budget is a living document that requires regular review and adjustments. Regularly accounting services for nonprofit organizations compare actual expenditures against the prepared budget to ensure your nonprofit is on track.

• Consider segregating staff expenses as it usually comprises anywhere from 60% to 90% of an organization’s budget.
• It’s no secret that budgeting guels your nonprofit’s ability to make an impact.
• In determining the income budget, the committee will need to project income based on the current fundraising and revenue activities.
• If you forget and include those actuals, your revenue will be $50,000 overstated, and you’ll be left scratching your head in confusion when your revenue in the new year is $50,000 short.
• This balanced approach to cost management strengthens your organization’s resilience while ensuring resources remain available for mission-critical work.
• This information can be used to estimate income and expenses for the upcoming budget period.
• This is the budget of revenues received and expenses paid, broken down monthly to ensure cash will be there when needed.

Then, detail your expenses across program, administrative, and fundraising categories. You need to know how much is coming in, where it’s going, and whether you’re staying on track. This is more than just numbers—it’s a guide to keeping your mission on point. Propel Nonprofits is an intermediary organization and federally certified community development financial institution (CDFI). Once the initial nonprofit budget is prepared, it should be reviewed and approved by the organization’s Board of Directors. Work with your key internal and external stakeholders to create a nonprofit budget that is reflective of how you’ve done in the past and what you expect for the immediate future.