Nonprofit Budgeting: Step-by-Step Guide + Free Template

This can provide a baseline for future budgeting, allowing you to tweak as needed for your goals rather than starting from scratch. Simply collecting this crucial data can go a surprisingly long way toward identifying and solving organizational problems. All operating budgets can be broadly split into two categories – revenue and expenses. Whether you’re a new organization or an established one working to get its finances under better control, there are few more important things to get right than your nonprofit operating budget. The capital budget is a process of spending the funds for long term projects to get the maximum profit. A profit organization’s main objective is to earn profit, whereas nonprofit organization’s primary purpose is to help the needy people by collecting donations and grants.

• It’s important to separate program, administrative, and fundraising expenses.
• Operating budgets reflects the organization’s planned financial activities for the year ahead, showing how much revenue it expects from which sources and how much it will spend on operations.
• QuickBooks Online is a small business accounting software and app that allows you to manage your business anywhere, anytime.
• A capital budget typically includes things like building new facilities or acquiring new equipment needed to meet the demands of increased demand for services provided by the nonprofit organization.
• Once you have your budget, compare the predicted numbers to the actual figures every month in order to look for differences and establish why they occurred.

Gather the Data

Your board members should have a direct role in developing cash flow projections, agreeing on the assumptions to use, and reviewing the projections carefully. Donors and partners like to see how many dollars are spent on the nonprofit’s mission versus executing the mission. List expenses in the high-level categories of staff, contractors, occupancy, and support expenses (which include all other program and operating expenses). If you’re creating a budget for the first time, create as reasonable a list as possible of expenses. Then, assess your best and worst-case scenarios for generating funding. Give yourself enough time to gather the necessary information and data, to think through and discuss the various elements of the budget, and to put it down on paper (or in Excel).

Inflation is hitting nonprofits hard: Here’s what you need to know

This is how many days your organization could operate if all income suddenly became unavailable (all donors stop supporting you, or you spent all your money). Your assumptions could include the number of beneficiaries you are working with, the number of staff, amount of supplies or equipment. When making a budget, it’s also important to track inflation and fringe benefits, especially if you are building a projected budget over several years. For the purposes of this guide, we will use the example of an after-school educational program. This fictional nonprofit provides extracurricular activities, such as sports, to kids in their community.

Allocate staff salaries, benefits, and taxes

• A good budget for non-profit organizations balances program delivery with operational sustainability.
• Plus, the easy-to-use format makes it simple to track your progress and make adjustments as needed.
• This information is hugely important, because it shows you the best (and safest!) times to spend.
• It is very difficult to keep track of every screw of your financial condition.
• A budget for non-profit organizations becomes more effective when broken down by program expenses.

The template includes a revenue summary section that calculates your total grant income and a net section to help you quickly determine your program’s financial sustainability. These organizations will devise accounting services for nonprofit organizations processes for reviewing budget assumptions, developing on-going budget reports, and monitoring organizational performance against budgeted outcomes. Discover the power of budgeting with our free Printable Monthly Budget. Easily manage your money, track expenses, and pave the way for financial success with this intuitive budgeting tool. Take control of your business finances with our comprehensive and user-friendly budgeting template. Effortlessly track expenses, analyze budgets, and achieve financial success for your business.

The best way to do this is to track cash inflow–revenues and donations–and cash outflow–expenses. This helps you better understand when you have revenue coming in and expenses going out, on a monthly and yearly basis. While this is not a strong policy for running a strong nonprofit, it is still widespread. It’s important to separate program, administrative, and fundraising expenses.

• Use a free template to get you started and once you’ve added any unique requirements to it, this can be reused for subsequent budgeting sessions.
• Before you create a budget, make sure you have a clear idea of how much you spend (and receive!) on a monthly basis so you can create accurate projections.
• Program expenses are the costs that are directly related to running your programs.
• Find the best solutions & suite of online tools for your fraternity & sorority fundraising campaign here at BetterWorld.
• The public phase often includes a public kick-off event and a final celebratory gala.

“We get to help shape the leaders of tomorrow. I want that future to be bright.” If you are looking for a more transparent and accountable budget, you may want to consider using a zero-based budget. If you https://namesbluff.com/everything-you-should-know-about-accounting-services-for-nonprofit-organizations/ make any assumptions (and you probably will) while creating your budget, be sure to make note of those assumptions.

Know the Nitty-Gritty of Getting a Business Credit Card

The Nonprofit Program Budget Template by Spreadsheet Daddy is perfect for specific program expenses. Take note of precisely where and how your funds are being allocated to ensure these are all accounted for mission-related purposes. Staff salaries, costs, and benefits all need to be recorded within your budget. Keep your budget simple and group these personnel expenses together, or split them out by team or activity to give you a more in-depth idea of your staff costs. Sometimes your revenue won’t come from an established program or a product you offer.