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. You need to know how your nonprofit’s cash flows and what to do if the cash doesn’t flow. Involve your Board, your staff, and your volunteers in creating the budget and reviewing your revenue and expenses. This not only helps create a more accurate and comprehensive budget but also ensures buy-in across the board. The budget also plays a key role in forcing organizations to prioritize their activities so as to determine those that are most critical for fulfilling their mission. The capital budget may include projects which will have ongoing effects on operations.
What is a Nonprofit Budget Template?
Make sure you set aside enough time to gather information and discuss various elements of the budget. It demonstrates your ability to responsibly manage financial resources and provides a roadmap for activities in the upcoming year. With a proper budget, your nonprofit can stay focused and organized while remaining accountable to the stakeholders who make your work possible. Donors and stakeholders demand transparency in how their contributions are utilized.
Identify Key Stakeholders
A well-structured budget details how restricted and unrestricted funds will be allocated, ensuring transparency and accountability. Fundraising is already challenging enough, but keeping your organization financially sustainable accounting services for nonprofit organizations adds another layer of responsibility. You’ll also want to get a clear idea of your revenue streams to understand where your money is coming from.
Are there different types of nonprofit budgets?
In the meantime, schedule a meeting with us and we’ll be in touch soon. Take our 2-minute survey to find out if outsourced accounting and bookkeeping is a good fit for your organization. 4 Ways to Decide On Your Annual Nonprofit Fundraising Events When you sit down with your team… If you make any assumptions (and you probably will) while creating your budget, be sure to make note of those assumptions.
Board management software solutions assist in budgeting for nonprofits
Zero-based budgeting, on the other hand, starts from scratch each year, with all expenses being justified anew. This can be a more time-consuming and difficult process, but it can also lead to a more accurate and transparent budget. There are two primary ways that a nonprofit organization can choose to budget its finances – historical budgeting and zero-based budgeting. Many nonprofits also use a budgeting technique called cost-benefit analysis. This is an easy way for nonprofits to figure out what will work best for them based on the value it provides and whether or not the costs are worth it. Once the organization’s major sources of income and expenses have been identified, the next step is to estimate the amount of income and expenses for the upcoming budget period.
Schedule a free consultation with The Charity CFO today and let’s build a budget that empowers your mission. Even a great budget can fall short without strong cash flow management. Cash flow ensures your organization can meet its obligations month-to-month. If your numbers don’t add up or pieces of the project are missing, that can suggest you may not fully understand how the project really works. While you can (and should) use the previous year’s numbers to estimate upcoming expenses and income, you should carefully evaluate each one.
These elements work together to create a comprehensive financial framework that supports both day-to-day operations and long-term strategic goals. Above all, a budget for non-profit organizations must remain flexible enough to adapt to changing circumstances while maintaining fiscal https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ responsibility. Driver-based budgeting helps your nonprofit align its financial planning with operational activities, making adjusting to changes and improving decision-making easier. Think of it as a roadmap that helps your team manage financial resources effectively, ensuring you have the funds to support your programs and initiatives. In this guide, you’ll walk through the essentials of budgeting for nonprofits, covering different budgeting methods, best practices, and key components. Determine the amount of funding needed for each of your organization’s programs and services.
Resources
Once approved by the appropriate committee, the budget will be presented to the full board for approval. Unless something drastic happens, in my opinion, that should be the only approved budget for the year. You should reforecast on a quarterly basis to get an idea of where you will end up for the year, but the board does not necessarily have to approve the reforecast. Excel or a similar spreadsheet-software system that allows you to organize, format and calculate data with formulas.
- In 2023, it allocated 46% of its program budget ($58.2M) for emergency disaster response.
- Nonprofits often rely on unpredictable funding streams such as donations, grants, and seasonal fundraising campaigns.
- The closer to accurate you can get documenting your expenses, the easier it’ll be to stick to your budget.
- Capital expenditures are expenses needed to acquire or maintain fixed assets, such as fixing or maintaining buildings, land and cars.
- Identify opportunities, threats, and emerging trends likely to influence your activities (both internal and external to your organization).
Ready to see how Givebutter can help you stick to your budget and accomplish your mission? Once you develop your budget, you will have a clear plan for moving forward, shaped by concrete data and strategies. That’s why most nonprofits implement a combination of these strategies.