However, the budget should be high-level enough so as to not be cluttered and overwhelming. These are only some of the many benefits a good budget brings to an organization.
- Under the heading of expenses, boards need to focus expenditures on their programs and activities.
- However, this approach to budgeting presents a great opportunity to bring in and unite various perspectives.
- Regular comparison of budget versus actual figures highlights areas needing attention before they become problems.
- Note that some revenue sources bridge multiple categories and can be organized in different ways.
- It doesn’t matter if you’re applying for a government, corporation, or foundation grant, a well-crafted budget will make or break your proposal.
- Do what you can to structure your budgets similarly over the years—this will make it easier to compare them side by side as you track your growth.
Budgeting for Nonprofit Organizations (online course)
Just like it’s ok to have a surplus, it’s ok to have a small deficit as long – as you can explain what your plan is to close the gap and move toward zero so your budget balances. Now, if we had described that money as a rainy day fund and that our Board set a policy that we would have 3 months’ worth of expenses in the bank, that might have been different. Formula mistakes are easy to make (even in tools like Excel or Google Sheet), so double check the numbers manually to be sure you have an accurate bottom line on your budget. 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. If the most you’ve raised is $50,000, don’t put $500,000 down for revenue unless you know EXACTLY where it’s coming from. Elizabeth Male is director of marketing and communication at StriveTogether.
Nonprofit Budget 2025: Steps, Planning, Examples & Template
This is because it doesn’t require you to really comb through and evaluate each program and expense individually. Most new board members join a nonprofit or mission-driven organization with a good understanding of personal finance. But all are usually surprised by at least some aspect of managing not-for-profit finances. Discover seven powerful collaboration tools that transform chaotic nonprofit teamwork into streamlined fundraising success—helping you raise more while stressing less.
Why Budgeting Matters For Nonprofits
Additionally, remember that any budget that covers a specific aspect of your nonprofit’s spending and fundraising should align with your operating budget. A nonprofit budget is a planning document used to predict expenses and allocate resources for your organization. It details the costs your organization will incur and the revenue you expect to receive over a set period of time. Your annual nonprofit budget is a straightforward document with all of your projected expenses and revenue for the year. These numbers help guide your business choices—a sample nonprofit budget will show you what to include.
It’s easy to get excited and put some pie-in-the-sky revenue numbers in your budget but listen – it’s important to the success of your programs that your revenue and expense estimates are realistic. 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). If your fiscal year starts January 1, start working on your budget in September or October so you have plenty of time to create it and get it approved before you need to implement it. So, here’s a helpful guide to creating a budget for your small nonprofit. We had a client a while back with expenses over $600,000 a year for programs…. Start with your known fixed costs like rent, utilities, salaries and insurance.
Well-designed budget templates streamline financial management while ensuring you capture all essential information for decision-making and reporting. Even profitable programs can face challenges when expected revenue arrives months after expenses occur or when donation patterns don’t align with regular operational costs. Mastering cash flow management helps prevent these timing mismatches from disrupting your mission-critical work. Creating a budget for non-profit organizations requires a unique approach that differs significantly from traditional business budgeting. Nonprofit organizations must consider multiple funding sources, program sustainability, and the organization’s mission while maintaining fiscal responsibility. Start with a nonprofit budget template excel sheet that includes all the expenses you can think of.
Mitigating the impacts of a loss of a nonprofit revenue source
- If you are not in line with your projected budget, look at what changed or what could have been controlled.
- This is a standard accounting report that shows how much was budgeted year to date compared to how much has actually been spent.
- If you’re not sure how to create a nonprofit budget, consider hiring an accountant or accounting service.
- Investing in cash management software is also a great way to gain better visibility and ensure financial stability.
- Perhaps some guesses will be little less educated than the other numbers on your budget, so adjust your numbers if needed.
When it comes to budgeting, context is essential when considering every item. Think about where your organization is right now, the current donor climate, and your current expense climate. Or perhaps The Key Benefits of Accounting Services for Nonprofit Organizations you have other unusual expenses, fund shortages, or fundraising windfalls that you need to make special plans for.
- For more on start-up and small business budget templates, see Free Startup Budget Templates and Free Small Business Budget Templates.
- Because budgeting is an iterative process, you need the flexibility that an Excel-type spreadsheet provides.
- I’m not sure how they knew what they were doing, how much money they had, when it was ok to hire someone, or when to expand services.
- Your cash flow is the movement of money that comes in and out of your organization.
- According to the 2023 M+R Benchmarks Study, nonprofits spent an average of $0.11 on digital advertising for every dollar of online revenue in 2022.
- There are many resources to assist you with creating your own budget after you’ve considered all of the direct and indirect costs of your project.
- It offers a user-friendly layout that allows for detailed tracking of both income and expenses, ensuring that organizations can maintain oversight of their financial health.
- By aligning your budget with your mission, prioritizing cash flow, and leveraging technology, you’ll build a strong, sustainable organization that’s ready to tackle challenges and seize opportunities.
- Inflation is on the rise, and nonprofits are not exempt from its effects.
- It helps you communicate how you’re going to make the difference you want to see in the world.
- By doing so, you can keep an eye on your big-picture forecast with the assurance that every detail of your accounting is in order.
Once finalized, document your budget clearly and share it with your team and stakeholders. Transparency fosters trust and ensures everyone is working toward the same financial goals. Creating a nonprofit budget can feel overwhelming, but breaking it into manageable steps can simplify the process and ensure accuracy. Software designed for nonprofits and churches with fund accounting, donor management, giving tracking, https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ reporting, and more. Nonprofit fundraising, donor management, marketing, operations, community and project management, social media, branding, graphic design, website production. Sage Business Cloud Accounting (formerly Sage One) is an online accounting software that gives you anytime, anywhere access to the most important small business essentials.
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? Involve board members, department heads, program managers, and financial officers. Each stakeholder provides unique insights into the organization’s priorities and operational needs. For example, program managers can offer details about anticipated costs, while financial officers can provide an overview of past income trends. Understanding nonprofit budgeting is only one part of the equation; accurate accounting practices are equally essential.