The Ultimate Guide to Nonprofit Budgeting + Free Template

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 5 Main Benefits of Accounting Services for Nonprofit Organizations nonprofit budget will show you what to include. A nonprofit budget template is a fillable document that simplifies your budgeting. It should include some typical sources of revenue and expenses, which saves you time on listing everything out. If any of the sources don’t apply to you, you can just delete them—likewise, you can add anything that’s missing.

What Is A Nonprofit Budget and Why Is It Important?

He’s been a dedicated board member of many nonprofit organizations – including seven years working for Amnesty International USA – where he was the Director of Development and Chief Financial Officer. His time at Amnesty reinforced Steve’s life-long commitment to giving back to the community through charitable causes. Regarded as one of the accounting industry’s top thought leaders, he’s currently serving as President & CEO of GrowthForce, a heart-centered company with specialized teams providing accounting for nonprofits.

Free operating budget template for nonprofits

Reviewing the organization’s past financial performance is another important step in creating a nonprofit budget. This information can provide insights into trends in the organization’s income and expenses, which can be helpful in estimating future income and expenses. After reading over the complete draft of your nonprofit operating budget and revising any inconsistencies or unclear information, send it to your board of directors for approval. Make sure this happens well before the new fiscal year begins, so you have time to make any last-minute edits that the board recommends. Next, turn to the revenue side of your budget to figure out exactly how and when you’ll raise the funds you need to cover all the costs you outlined.

• Review your spending regularly to ensure it aligns with your strategic goals and keeps your nonprofit financially healthy.
• What this practice says to your stakeholders, both internal and external, is that you know your mission will still be relevant after the fiscal year.
• This can include covering liability for employees or volunteers, property insurance for buildings and equipment, and insurance for events or activities that your nonprofit hosts.
• You can download this example here and repurpose it to use as your own budget template.
• In some cases, program delivery costs can represent roughly 25% of the charity’s budget, highlighting the importance of careful nonprofit budget planning.
• A common budgeting myth is being a “nonprofit” means your organization can’t make a profit.

Estimate And Categorize Expenses

• Organizational budgets are both plans and records of all the money that comes in and all the money that goes out of your organization, broken down by years and into more specific categories.
• Partner with Jitasa to create accurate, actionable budgets for your nonprofit.
• Take time to organize the budget document to make it easier for your grant writer(s) to extract the necessary allowed expenses.
• Use the same categories in your budget to easily generate financial reports to funders and others.
• In general, the steps to creating a grant budget, include identifying all your potential expenses, delineating between direct and indirect costs, and giving yourself some buffer for unexpected costs.

Consider segregating staff expenses as it usually comprises anywhere from 60% to 90% of an organization’s budget. Make sure that you clearly determine the roles and decision-making processes that will yield the most effective information gathering, analysis, and decision making. Additionally, determine https://greatercollinwood.org/main-benefits-of-accounting-services-for-nonprofit-organizations/ a timeline that ensures approval prior to the fiscal year-end. Budgets may be requested by parties involved in financial transactions with the nonprofits, such as banks, or by donors/grantmakers considering a gift to the nonprofit.

Types of Budgets for Nonprofit Organizations

BoardSource, a nonprofit board leadership and educational corporation, did a survey in 2000 and found that the average size of nonprofit boards, not including churches, was 17 directors. The number decreased slightly to 16 members in 2007, and the median number is 15. Getting Attention’s nonprofit marketing statistics reveal that it can take points of contact to reach a new donor (or, as Convergent Nonprofit Solutions refers to them, investors) for the first time. As you go along, don’t be afraid to make changes and adjustments to your budget to better fit the year’s actual numbers.

Implement a contingency fund

• Work to identify potential risks to your operations and create basic contingency plans that can make dealing with problems more straightforward when they occur.
• For example, if you have a strong fundraising track record and anticipate an 80% chance of achieving the predicted $100,000 revenue goal, the forecasted amount would be $80,000.
• So, nonprofit revenue can be divided into traditional revenue (sales and services) and other forms of support (donations and grants).
• By reviewing and adjusting budgetary goals and projections regularly, nonprofits can ensure they remain aligned with their mission, address emerging needs, and adapt to the evolving landscape.
• Below, we explore the major challenges of a nonprofit budget proposal and provide real-world examples of how organizations have successfully addressed them.

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. Once you have a general idea of how much money you need to bring in, you can start to develop a budget. Zero-based budgeting, on the other hand, starts from scratch each year, with all expenses being justified anew.