However, if your nonprofit organization mainly runs activities in the summer months, you might decide to run a campaign during the spring. Some organizations create a separate category for travel expenses, although these also could be wrapped into a different category. For example, if you’re reimbursing employees for commute miles or work-related travel, it could be put under your personnel category. However, these funds can be used for all travel related to your organization, whether it be attending conferences, presenting at events, or going out of town to promote a fundraising campaign. It might depend on how important travel is for your organizational work or how extensively your team is out and about.

Why building a nonprofit budget is so crucial

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. 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.

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

Recurring costs, such as inventory purchases, must be covered before indirect ones, such as office supplies, salaries of employees, and rent. The total amount should not exceed the total accumulated income of the non-profit organization. The use of budget worksheets will aid in tracking the income and the expenses of the organization, along with setting aside contingency funds for unexpected and uncontrollable circumstances. Creating a budget for the non-profit organization is an essential tool as to the implementation of the financial activities, which keeps the company stable and running. The operating budget must be agreed upon by the board similar to how a grant budget, as shown on the grant budget samples, is approved before given to the potential grantors.

The Ultimate Guide to Nonprofit Budgets + 3 FREE Templates

Before you look at program expenses, set a meeting with executive directors to get clear on what you need to focus on so you can budget accordingly. A budget for non-profit organizations should function as a living document, not a set-and-forget plan. Consider staff costs, professional services, technology investments, insurance, and office expenses. Pay special attention to periods when multiple large expenses coincide or when income traditionally slows.

• A budget for non-profit organizations must account for timing differences between revenue and expenses.
• A nonprofit budget template Excel creates is pretty similar to a nonprofit budget template Google Sheets does.
• Remember that underfunding these areas often leads to inefficiency and reduced impact over time.
• Your administrative and fundraising expenses put together make up your nonprofit’s overhead.

The second meeting of the budget committee should focus on developing a draft of an expense budget and an income budget. The committee will need to https://greatercollinwood.org/main-benefits-of-accounting-services-for-nonprofit-organizations/ determine the costs for the upcoming program goals, organizational goals and strategic goals. In determining the income budget, the committee will need to project income based on the current fundraising and revenue activities.

Just as it sounds, an operating budget shows how much you intend to spend on operations for the next year. 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. Having extra cash can help stabilize your nonprofit and absorb an unexpected delay in receiving funds, a shortfall in revenue for a special event, or unbudgeted expenses. One of the most important tools for a nonprofit is a cash flow projection. This is the budget of revenues received and expenses paid, broken down monthly to ensure cash will be there when needed.

Master Fixed and Variable Cost Management

When you create a nonprofit budget sample, you’ll first need to develop an exhaustive list of program expenses. To make sure you don’t forget anything critical, here’s a look at several key areas you need to include in a program budget plan. This nonprofit budget example caters to nonprofits who need to send cash flow projections and budgets to funding organizations in order to secure grant monies. Running a nonprofit is hard work, and an essential part of that is budgeting.

Identify 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. It also helps to use a standard format for budgets as you can compare them and track growth and changes over the years. Plus, with a budget plan you’ll be better able to manage operations with limited funds.

• Including personnel costs in your nonprofit budget template helps you plan ahead and keep finances under control.
• These programs often have templates that you can use, which can make the process of creating a budget much easier.
• Create guidelines for when to adjust projections, shift resources between programs, or implement contingency plans.
• If you’re not sure how to create a nonprofit budget, consider hiring an accountant or accounting service.
• They must constantly strive for sustainability, and an essential part of that quest is proper budgeting.
• It’s no secret that people are at the heart of any business, and they need to be compensated.

Mid-Year Budget to Actuals Comparison Reports

In 2023, it allocated 46% of its program budget ($58.2M) for emergency disaster response. We recommend setting aside at least 5-10% of your accounting services for nonprofit organizations annual budget for emergencies. Creating a nonprofit budget can feel overwhelming, but breaking it into manageable steps can simplify the process and ensure accuracy. In incurring fixed expenses, you can reduce your overall costs, making it less wasteful. Determine your fixed costs, regardless of the number of financial responsibilities you have, such as rent, employee salaries, insurance, and materials.