5 Steps to a Successful Nonprofit Budget Template

Monitoring the budget also provides an opportunity for board directors to move money around to allocate it efficiently as their cash flow changes. Good budgeting demonstrates accountability and transparency, which are important issues that donors and grant-makers look for before offering funds. Good budgets assure donors that the nonprofit is actively overseeing the budget process. List program expenses (staff salary, insurance, supplies, fundraising fees, etc.) to see your total nonprofit program expenses vs. your actual revenue. But, there’s a place in the nonprofit universe for a surplus in the budgets too. They can mean the difference between surviving a rough patch and being forced to close down.

Start Using Your CRM the Right Way

This will ensure that everyone is aware of the organization’s financial position, goals, and priorities, and it will help create a sense of ownership and accountability. While you’ll create your nonprofit’s operating budget from scratch once a year, budgeting shouldn’t be a one-and-done event. Instead, your budget should guide your organization’s spending, fundraising, and reporting throughout the year, so check in with it frequently. In reality, the meaning of “nonprofit” is simply that your organization has to reinvest all of its funding into its mission rather than paying investors or shareholders. The best way to determine nonprofit income for a budget is to review the organization’s financial statements from the previous year. This will give you an idea of how much money the organization brings in from donations, grants, and other sources of revenue.

Consider income inconsistencies

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. Budgeting your revenue based on its source allows you to make the most accurate projections. Plus, if you know exactly where all of your funding comes from, it’s easier to respond to fluctuations in fundraising throughout the year. Your administrative and fundraising expenses put together make up your nonprofit’s overhead. Contrary to popular belief, overhead isn’t inherently bad—it’s actually necessary to keep your organization running.

Budgeting for Nonprofit Organizations (online course)

Well, the thing is like we said before, it’s not like non-profit organizations do not have finances to budget. Their income is basically the donations they get, which are always enough for them. But no matter how you look at it, if not handled properly and divided with care, these donations can fall short very badly. This financial evaluation is not your average evaluation though, it is done to manage https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ a certain organization’s finances and money. Budgeting helps an organization or a certain induvial to plan their finances better, with more profit and less loss. Consider staff costs, professional services, technology investments, insurance, and office expenses.

Step 3: Set department budgets

The two most common methods for allocating indirect costs to programs are percentage of total direct costs and percentage of FTE. This process is most valuable when a nonprofit can understand both the full cost of delivering programs and the amount and type of income that relates to those programs. Leaders can use this information to analyze the financial model of programs individually and as part of the whole.

Review And Adjust

• Use a spreadsheet or budgeting software to organize the information, making it easier to review and adjust as needed.
• For example, program managers can offer details about anticipated costs, while financial officers can provide an overview of past income trends.
• Budgeting allows boards to put limits on certain expenses as necessary and work to increase income sources early when it looks like there may be a shortfall.
• Think about where your organization is right now, the current donor climate, and your current expense climate.
• The best way to ensure your budget is accurate and actionable is to have expert nonprofit financial professionals create it for you—like our team at Jitasa.
• Looking over your budget with new hard data will allow you to make any tweaks as necessary and head off serious potential problems.
• Nonprofit organizations need to budget enough for these expenses to ensure they can attract and retain qualified staff while remaining financially sustainable.

Your annual unrestricted surplus should be sufficient to meet debt obligations, fund depreciation, and add to operating reserves. AAFCPAs recommends a 3-5% surplus operating budget each year, and four to six months of expenses in your operating reserves. Many nonprofits seem to not only operate on shoestring budgets but are also proud of it. Some nonprofit leaders may even be reluctant to show a surplus in their books, fearing the perception that they are not putting their resources to good use. When budgeting, nonprofits sometimes make the mistake of forgetting to account for in-kind donations or volunteer hours. List expenses in the high-level categories of staff, contractors, occupancy, and support expenses (which include all other program and operating expenses).

• Gathering this information before you begin crafting a nonprofit budget will allow you to make the most practical and informed decisions about your organization’s finances.
• This guide and accompanying spreadsheet template break down the process of understanding true program costs, either through budgeting or financial reports, into several stages.
• Investing in some nonprofit budget software will make keeping up with your budget a breeze.
• Divide the annual amount by the number of months left in your fiscal year.
• Good communication between the program, finance, and development departments and the board is key to monitoring the budget during the year.
• Plus, Givebutter’s comprehensive fundraising platform includes a built-in CRM, marketing and engagement tools, and world-class fundraising features—all designed to help you reach your goal.

• Well-designed budget templates streamline financial management while ensuring you capture all essential information for decision-making and reporting.
• Knowing what you want to accomplish and how much money is available, you can now create your expense budget.
• In crafting a robust budget for your organization, utilizing budget templates can streamline the process, ensuring accuracy and ease of financial management.
• A nonprofit operating budget helps you plan ahead and use your resources to serve your community.
• Tracking this number tells you how much you have in the bank at any given time.
• Plus, the easy-to-use format makes it simple to track your progress and make adjustments as needed.
• List program expenses (staff salary, insurance, supplies, fundraising fees, etc.) to see your total nonprofit program expenses vs. your actual revenue.

A common budgeting myth is being a “nonprofit” means your organization can’t make a profit. In reality, your goal should be to budget for a revenue surplus—where your total revenue outweighs your total expenses. 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.

• Boards also use the operating budget to show projections of various amounts of revenue and their sources.
• While there is generally space for hope and dreams in the nonprofit world, when it comes to budgeting – there isn’t.
• Ready to see how Givebutter can help you stick to your budget and accomplish your mission?
• Contact us today to learn more about how we can help your organization unlock its full potential by getting its budget on track.
• In both cases, a sound budget is important for financial sustainability and provides a guide for financial health and sustainability.

This will allow you to make adjustments as needed to ensure that the organization remains on track to meet its financial goals. When determining how to allocate funds, it is important to consider the organization’s overall goals and objectives. For example, if the goal is to increase access to services, then a greater proportion of funds should be allocated to program expenses. Alternatively, if the goal is to increase donor support, then a greater proportion of funds should be allocated to fundraising expenses.