There are different types of budgets intended for specific purposes, departments, or focused periods. Use this as a guide to ensure your financial activities contribute to your organization’s financial sustainability and long-term impact. To get your budget started, you want to collaborate with key staff to align the budget with the organization’s strategic goals. Budgeting for nonprofit organizations involves unique considerations, especially for trade associations operating under section 501(c)(6) of the Internal Revenue Code. This nonprofit organization typically generates revenue from membership dues, events, sponsorships, subscriptions and program fees.
Calculate your nonprofit’s expenses 📊
- The closer to accurate you can get documenting your expenses, the easier it’ll be to stick to your budget.
- As a result, you can spend less time worrying about your nonprofit’s expenses and more time helping your beneficiaries.
- Nonprofit budgeting is a crucial aspect of managing a nonprofit organization’s finances.
- These numbers help guide your business choices—a sample nonprofit budget will show you what to include.
- Whit’s innovative vision has helped countless organizations raise more funds and reach their goals, driving BetterWorld’s ongoing success.
Once you have a full picture of the past and present and have reasonably forecast the future, it’s time to https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ actually create your nonprofit budget. In order to be successful, there are a few things to keep in mind when establishing a nonprofit budget. Grant-makers have the potential to contribute large sums to nonprofits and board directors should ensure that they meet the grantor’s requirements to qualify.
Determine a budgeting approach.
Regularly monitor how aligned your projected budget is with what you’re actually experiencing, and make tweaks as you need to. Using the budgets, you can determine where you’re losing and earning the most. Cash flow refers to the monthly movement of money coming in and out of your organization. Tracking this number tells you how much you have in the bank at any given time. This information is hugely important, because it shows you the best (and safest!) times to spend. Consider who’s available to give you the most useful insight—is there an experienced head of finance supporting you, or a treasurer?
Strategic resilience for mission-driven organizations
Some of your organization’s expenses remain steady month after month, while others change based on your activities. Every successful budget for non-profit organizations balances mission impact with financial stability. Understanding and managing both fixed and variable costs helps you make smarter spending decisions and maintain financial flexibility. When you’re just getting started, it’s critical that one of your first steps is to create your nonprofit’s first budget to help you manage both your organization and your finances as it grows. For this reason, it’s important for nonprofit organizations to be flexible and to revise the budget upon the occurrence of significant unplanned events.
Create Supplier + Partner Relationships, and Set Costs
This category includes things like educational materials, workshops, and conferences. YPTC is not a CPA firm, and provides no attestation services with regard to financial reports. Regularly reviewing your budget 5 Main Benefits of Accounting Services for Nonprofit Organizations helps your organization detect and address issues early on, make well-informed financial decisions, and build trust with stakeholders by reporting on your findings. You’ve got the budgeting basics down, but how do you ensure your budget is ultimately effective? 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. Early in my career when I was really getting the hang of fundraising, we ended a year with a $50,000 surplus.
Fundraising and Marketing Costs
With your mission statement as the foundation, establish specific, measurable, achievable, relevant, and time-bound (SMART) goals your nonprofit wants to accomplish. Be realistic about what is feasible within your organization’s scope and resources. While you should consider everything, be as realistic as you can in setting revenue projections.
How to Create a Nonprofit Operating Budget
- Be sure to also leave enough time for questions, concerns, and feedback from your Board members.
- For this reason, it’s important for nonprofit organizations to be flexible and to revise the budget upon the occurrence of significant unplanned events.
- These documents provide valuable insights into the organization’s financial health and performance, allowing nonprofit leaders to make informed decisions and adjustments as needed.
- We’ve already talked about managing your budget with Relay, but we know nonprofit financial management doesn’t stop there.
- Having your program directors carefully create budgets for each of their programs will knock out a big portion of the data you need to produce an overall nonprofit budget.
Google Sheets is a great tool to use for creating nonprofit budgets due to its ease of use and robust features. Using Google Sheets, you can create financial reports and track expenses and revenue. Gather historical financial data, project future revenue sources, and estimate program costs. Use a program-based approach to understand true costs, include adequate overhead allocation, and build in reserves.
Tips to Follow When Creating a Nonprofit Budget
However, you can adapt some of our tips to create other types of budgets. Additionally, remember that any budget that covers a specific aspect of your nonprofit’s spending and fundraising should align with your operating budget. We’ll also cover different types of income sources for your budget, like grants and donations, and how to keep your expenses in check.
- Minor variances might require simple monitoring, while significant deviations could demand immediate action.
- Mastering cash flow management helps prevent these timing mismatches from disrupting your mission-critical work.
- ACCOUNTS by Software4Nonprofits is a specialized tool designed for non-profit organizations.
- In addition, they should review the final draft against the organization’s goals and objectives.
- Take time to collect financial data from previous years as best as possible.
Don’t operate on a shoestring budget
A regularly updated and realistic budget helps you know exactly how much money is coming in and out of your organization, allowing you to manage your resources more effectively. Apart from fundraising, nonprofits may occasionally feed volunteers or entertain potential donors as part of their development efforts. Create a rough list of these costs and highlight the ones that will apply to the coming fiscal year.
