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. To help you get started, we’ve created a basic nonprofit budget template to track your revenue and expenses.

Nonprofit Budget Template: 5 Important Sections

Identify the key areas that support your organization’s objectives, such as program delivery, fundraising, staff development, or community outreach. Evaluate the importance of each area and the potential impact on your mission. Divide resources and funds accordingly, prioritizing activities that directly contribute to your goals. Then, plan how you’re going to raise the funds you’ll need on the revenue side of the budget.

Assign direct expenses

Use a format that lets you budget your activity per month rather than on an annual basis so you can track your monthly progress. You’ll be able to make adjustments earlier, like reallocating funds or planning to raise more revenue. Focusing on shorter time periods helps break down your monthly activities and account for special events or one-time costs. 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.

What is an Operating Budget for a Nonprofit?

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. A nonprofit budget is essentially a financial document which lays out how your nonprofit is planning on spending its money. It’s not so much about setting goals as it is making a plan for how you’ll meet your goals. The template’s operating expenses section allows you to easily determine your rolling cash balance. Analyze your previous balance sheets, income statements, and cash flow reports to understand your organization’s financial health.

• Ensure your process includes appropriate approval steps for different types of changes while maintaining enough flexibility to respond quickly when needed.
• No matter what happens with your nonprofit, you never stop needing a budget!
• Many nonprofits hesitate to reveal how much they spend on overhead costs with donors.
• Knowing your goals will help in allocating the budget effectively to different departments and projects.
• Each stakeholder provides unique insights into the organization’s priorities and operational needs.

Understand current financial status

If you’re ready to work with us for your nonprofit budgeting and other financial management needs, don’t hesitate to contact us so we can get started. 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. A budget for non-profit organizations becomes more effective when broken down by program expenses.

Budgeting for Nonprofits

By organizing your budget and allocations this way, you’re also setting up the accounting system to track and report the three functional expense categories required on audits and the https://nyweekly.com/business/accounting-services-for-nonprofits-benefits-and-how-to-choose-the-right-provider/ IRS Form 990. As you begin creating any of these types of budgets, there are templates and resources available online to help you organize your nonprofit’s unique structure of revenue and expenses. However, the best way to ensure an effective budget is to work with a nonprofit accountant. You should also have a plan for how to effectively manage your funding, which is where your financial strategy comes into play. A common misconception about operating budgets is that because nonprofits by definition can’t turn a profit, their budgets have to break even every year. However, if your organization can budget for a revenue surplus, you should!

It’s crucial that the budget be centered around the primary goals and objectives of the organization. Managing a budget for a nonprofit organization is much like planning a household budget, except that there are generally more sources of income and more categories of expenses. In both cases, a sound budget is important for financial sustainability and provides a guide for financial health and sustainability.

• However, if your organization can budget for a revenue surplus, you should!
• While each of the previous tips offers specific guidance for your nonprofit budget, bringing them together into a cohesive financial management system takes careful orchestration.
• While there is generally space for hope and dreams in the nonprofit world, when it comes to budgeting – there isn’t.
• This helps cut cash flow problems and ensure continuity of operations.
• Create a rough list of these costs and highlight the ones that will apply to the coming fiscal year.
• According to the Nonprofit Impact Matter report 97% have budgets of less than $5 million per year.

You’ve got the budgeting basics down, but how do you ensure your budget is ultimately effective? With a proper budget, your nonprofit Accounting Services for Nonprofits: Benefits and How to Choose the Right Provider can stay focused and organized while remaining accountable to the stakeholders who make your work possible. Successfully implementing a budget for non-profit organizations requires systematic effort.