This can be a daunting task for a new nonprofit because you do not have history to review, but there are some tips that can help make it easier. If you are still unsure of how to develop a budget, you can consult with a financial advisor or accountant. They will be able to help you create a budget that meets your needs and ensures that your nonprofit is financially stable. Historical budgeting simply means using the previous year’s budget as a starting point for the coming year’s budget. This can have some advantages, as it can be easier to get an idea of what has been spent in the past and can help to predict future spending. Overall, good budget planning requires knowledgeable board directors, a solid planning process and the tools to complete the job successfully.

Nonprofit Accounting Terms

However, this doesn’t mean that your nonprofit’s overhead spending can go unchecked or should be prioritized over program expenditures. Instead, treat this as a guideline to reduce overhead spending (within reason) before taking funding away from your programs if you need to cut costs. Note that some revenue sources bridge multiple categories and can be organized in different ways.

Nonprofit Budget Templates for Your Organization

This template simplifies financial organization by providing structured categories for revenue and expenses, allowing for clear tracking and reporting of financial activities. It’s ideal for nonprofits looking to maintain transparency and accuracy in https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ their financial records, helping ensure that funds are allocated efficiently and appropriately towards their mission goals. A nonprofit operating budget is a financial document that provides an overview of how a nonprofit organization is planning to spend its money. The nonprofit operating budget is essentially the financial reflection of what the nonprofit business expects to achieve over a 12-month period (annual budget). Some employees spend their workdays running your programs, while other staff members are planning your annual gala, seeking out grant opportunities, or analyzing data from your last capital campaign.

• In the world of nonprofit organizations, mission-driven success and sustainability are paramount.
• By staying on top of these variances, you can make informed decisions to keep your nonprofit financially healthy and mission-focused.
• According to the National Council of Nonprofits, about 8% of 501(c)(3) organizations manage budgets of over $1 million per year.
• Unlike companies, however, most of your income will be in the form of donations.

Evaluate your organization’s readiness

• If your nonprofit relies heavily on grant funding, this budget outlines program costs to meet grantor specifications, including fund-matching requirements.
• No matter what, it’s always nice to see a surplus and think about how to use it most effectively to build your organization even stronger.
• To prepare this financial document, you’ll need to think about the timing of key fundraisers, appeals, and corporate or philanthropic donations, and any time-based factors that influence spending.
• A well-formulated nonprofit operating budget allows for the best use of limited nonprofit resources and focuses on the primary goals and objectives of the organization.
• 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.
• Your board of directors will see your budget at some point, but it’s important to know how involved they’ll be!

“Our nonprofit will increase overall contributions by 20% by the end of 2024 through partnerships with local businesses and corporate sponsors.” Unlock the secrets to transforming your business from a job into a profitable, cash-generating machine. Donors and stakeholders demand transparency in how their contributions are utilized. Regularly monitor how aligned your projected budget is with what you’re actually experiencing, and make tweaks as you need to.

Nonprofit Fundraising Event Checklist: A Downloadable Guide

These are only some of the many benefits a good budget brings to an organization.

• Start with setting clear goals and bringing in key stakeholders—such as program managers and department heads—who can provide detailed estimates of expected costs and revenues.
• This can be a daunting task for a new nonprofit because you do not have history to review, but there are some tips that can help make it easier.
• We’ll provide a step-by-step process to create an effective budget, offer examples for various budget types, and address common challenges with actionable solutions.
• When faced with challenging and uncertain times, learn three ways that nonprofits can employ to strengthen their organization’s strategic resilience and remain focused on advancing their mission-driven work.
• With each reporting period, the organization compares actual performance against its plan.
• They do not purport to reflect or imply the opinions or views of Blue Avocado, its publisher, or affiliated organizations.

However, this ratio is not as crucial for nonprofits as they aren’t necessarily focused on efficiency. After all, nonprofits are created to maximize impact, not accounting services for nonprofit organizations to maximize profit for shareholders. CLICK’s mission is to engage the community by raising funds for programs that support inner-city kids so they can succeed. This article will discuss how to craft an operating budget tailored to your needs and requirements. For example, one of the helpful grant budget examples comes from the Substance Abuse and Mental Health Services Administration (SAMHSA). You can download this example here and repurpose it to use as your own budget template.