Nonprofit Budget 2025: Steps, Planning, Examples & Template

An accounting software might be accounting services for nonprofit organizations a better way to gather expenses than google sheets, so look into tools that make it easier to track your finances! Involve your Board, Executive directors, staff members, and even volunteers during the budgeting process. This will not only help create a more accurate and comprehensive budget but also ensures buy-in from key stakeholders. In this section, we’ll look at a few key steps you’ll need to create an effective nonprofit budget sample.

Develop a budget with your entire team.

• This can be based on the amount of money you need to raise to cover your expenses, or it can be a specific dollar amount that you would like to raise.
• Looking over your budget with new hard data will allow you to make any tweaks as necessary and head off serious potential problems.
• An operating budget for a nonprofit is a financial plan that projects the organization’s revenues and expenses for a specific time period, usually a fiscal year.
• Let’s look at some of the best practices for managing your organization’s budget effectively.
• Your marketing budget ensures you have the funds needed to reach your goals and determine whether your plans are realistic.
• Once the budget has been created, it is important to monitor actual expenses and income on a regular basis.
• These numbers help guide your business choices—a sample nonprofit budget will show you what to include.

This includes estimating the amount of money you expect to receive from donations, grants, fundraising events, and investments. If you don’t have a fundraising history to work from, you can use a fundraising goal as a starting point. This can be based on the amount of money you need to raise to cover your expenses, or it can be a specific dollar amount that you would like to raise. Zero-based budgeting, on the other hand, starts from scratch each year, with all expenses being justified anew.

Shoestring Budgets Are Risky

Often, the definition of programs is evident in how your organization delivers services and functions internally. You may already have clearly defined programs, https://greatercollinwood.org/main-benefits-of-accounting-services-for-nonprofit-organizations/ departments, or projects. Some nonprofits identify every activity or grant as a separate program while others combine many activities under the umbrella term.

Essentials of Nonprofit Accounting

As long as your organization complies with the eligibility requirements, the grant renews monthly. That means your nonprofit will be allocated funding for Google Ads indefinitely. Monitoring your budget throughout the year is the key to financial success, along with setting aside enough funds for marketing. Whether you hold these meetings monthly, quarterly, or annually, ensure that your entire team is involved. If you’re looking for additional ways to streamline operations and fundraising, take a look at Sumac’s donation management software. Your cash flow is the movement of money that comes in and out of your organization.

Startup Operating Budget

Delegate as much of the process as you can to your development employees, program directors, and finance committee members. Having your program directors carefully create budgets for each of their programs will knock out a big portion of the data you need to produce an overall nonprofit budget. You can then focus on the rest of the organization’s expenses and funds. After completing the full program-based budget or financial analysis it’s worthwhile to take a fresh look for both accuracy and a gut check. Do the formulas, amounts, and financial results match what you expected, or do they surprise you? If there are surprises, first review the data to verify the calculations and choices about allocations and definitions.

Nonprofit Budget Best Practices for Better Financial Management

• For example, the rent for your office is likely a fixed expense due to your contract with the building’s management company.
• 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.
• Your budget is the road map to accomplishing your mission, growing your organization, and making a bigger impact, and without a detailed budget you will be lost.
• If you need to know how much it costs to run your programs for the year, you create a budget to plan out what you think it will cost, and then track your spending along the way.

Including these costs in your nonprofit organization budget template is essential because they ensure your programs and services operate smoothly. In this step you apply the allocation methods described above to the various direct costs that are shared between programs, which may include administration and fundraising cost centers. For the earlier office supply example, you would add up how many FTEs work in each program area and calculate a formula as a percent of the total number of staff. These calculations may be automated through the accounting system or completed manually. The formulas should be revisited if there are major changes in the way expenses are used, such as staff reassignments or growth of a program.

• This guide will cover the five important sections that every nonprofit budget should include.
• Consider the impact of any grants or sponsorships, including both new ones you may win and current ones that may shrink or dry up.
• In this A-Z guide, you’ll learn the fundamentals of nonprofit budgeting, including key features of what makes for effective budgets.
• This guide is designed to help nonprofits of all sizes master the art of budgeting.
• The first step in creating a nonprofit budget is to determine the organization’s financial goals and objectives.
• Many nonprofit leaders assume they can’t afford the type of back-office that’s required for effective nonprofit budgeting and comparing budgets vs. actuals.