Above all, a budget for non-profit organizations must remain flexible enough to adapt to changing circumstances while maintaining fiscal responsibility. Our template offers a comprehensive financial overview, covering both revenue and expenses in detail. It allows you to track various income sources, categorize expenses, and compare current figures with previous years. You can easily find pre-built templates for operating budgets, program-based budgets, and grant proposals. Once your nonprofit budget is created, it must be reviewed and approved by the organization’s board of directors. Revenue projections are all about estimating the money your nonprofit will bring in.

Step 3: Balance Income and Expenses

Once your costs are set, you know precisely what numbers you can expect to work with. Making a budget is a whole lot easier when you’re not relying on guesswork. Consider who’s available 5 Main Benefits of Accounting Services for Nonprofit Organizations to give you the most useful insight—is there an experienced head of finance supporting you, or a treasurer?

Create a budget that allocates the organization’s resources in a way that supports its financial goals and objectives

Even the financially or programmatically smallest nonprofits—often operated entirely with volunteers — have their knowledge of costs spread across two or more people. There are as many forms of nonprofit budgets as there are forms of organizations. Unlike financial statements, which have some rules and guidelines according to accounting standards, the same level of industry-imposed standardization for budget documents and formats doesn’t really exist. A comprehensive annual assessment of your organization’s financial picture, program costs, and overhead will put you in a better position to develop a realistic budget and sound financial management. You can also check out customizable templates to fit the unique needs of your nonprofit.

The Nonprofit Administration Dilemma: How Much Should You Spend on Fundraising?

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. Now that you understand your nonprofit’s financial goals, it’s time to begin drafting your budget.

Driver-based budgeting helps your nonprofit align its financial planning with operational activities, making adjusting to changes and improving decision-making easier. Knowing what you want to accomplish and how much money is available, you can now create your expense budget. Most likely, your organization’s executive director will lead the budgeting process, but a nonprofit accountant can also provide support. It will cover all the expenses required to keep the organization running, from salaries and utilities to technology and insurance. One key to writing strong grant applications is being clear about how you’ll use the funding you’re requesting. There are a number of tools that can assist in creating a nonprofit budget.

Raise funds with Zeffy. 100% free, forever.

With these templates, you can easily create a detailed budget that includes all the necessary information, from projected income and expenses to funding sources and cost estimates. Plus, the easy-to-use format makes it simple to track your progress and make adjustments as needed. Well-developed budgets help your nonprofit be financially transparent with its team, board, supporters, and community at large. This accountability—which is at the heart of all nonprofit accounting activities—is essential for instilling trust in all of these individuals and being able to fund your mission for years to come.

• It’s not uncommon for this to be one of the biggest expense categories for nonprofits.
• Address overhead costs transparently in your nonprofit budget and donor communications.
• Additionally, think about organizing your budget document to group together expenses and expense areas that are the responsibility of each manager.
• A nonprofit budget template is a fillable document that simplifies your budgeting.
• It also helps to use a standard format for budgets as you can compare them and track growth and changes over the years.

By considering these inconsistencies in financial planning, a nonprofit can ensure that it has enough reserves to cover periods of low income. Without a budget, running a nonprofit is like driving blindfolded – you might struggle to manage funds and meet goals, ultimately impacting your mission. A nonprofit operating budget helps you plan ahead and use your resources to serve your community. This financial roadmap is just one crucial aspect of running a nonprofit successfully. Although you’ll finalize a new operating budget at the start of each fiscal year, budgeting shouldn’t be a one-and-done event. At https://greatercollinwood.org/main-benefits-of-accounting-services-for-nonprofit-organizations/ least once a month, meet with your team to compare your budget predictions to the actual numbers in your financial records.