It’s not just about balancing the books; it’s about creating a clear financial roadmap, a basis that aligns resources with mission-driven goals. A well-crafted nonprofit budget ensures financial sustainability, supports strategic decision-making, and fosters transparency with donors, stakeholders, and the communities you serve. In short, for nonprofits, where every dollar has a purpose, efficient budgeting is highly important. Nonprofits fund employee salaries through diverse revenue streams, including grants, donations, program fees, and earned income. Many organizations include salary costs in grant proposals and build appropriate overhead into their program budgets. Successful nonprofits prioritize competitive compensation to attract and retain talented staff while maintaining transparent communication with donors about staffing costs.

Identify All of your Expenses (that you can!)

• Look for trends in income and expenses that can inform your budget allocations.
• Your budget should consist of the income you expect to make and the expenses you expect to incur.
• In short, for nonprofits, where every dollar has a purpose, efficient budgeting is highly important.
• Customize your template based on your organization’s specific needs and reporting requirements.
• Also factor in new income initiatives your development team has planned.
• Monitoring the budget also provides an opportunity for board directors to move money around to allocate it efficiently as their cash flow changes.

This will require examining your past budgets, current assets and liabilities, cash flow, and fundraising performance. Here’s a very basic example—but remember that your organization’s budget might be more complicated than this (or maybe even simpler!). His growth-hacking abilities have helped Donorbox boost fundraising efforts for thousands of nonprofit organizations. Before starting with what is, essentially, a future-oriented process – clarify the present context. Evaluate current financial health by analyzing the current year-end forecast, current budget variances, and balance sheet strength. Then, take some time to reflect on and learn from programmatic and financial successes and failures.

Additional Types of Nonprofit Budgets

Warren Averett is a top accounting firm providing audit, tax, accounting and consulting services to companies across the Southeast. Our firm has expertise in industries including manufacturing, construction, real estate, financial services, healthcare, government, education and retail. Ed is a seasoned professional with over 12 years of experience in the Governance space, where he has collaborated with a diverse range of organizations. His passion lies in empowering these entities to optimize their operations through the strategic integration of technology, particularly in the realms of Governance, Risk, and Compliance (GRC). Finally, the board or budget committee should be ready to present the annual budget to any necessary committees and the board for final approval.

Nonprofit Budgeting: What Your Organization Needs to Know

To help pick out the signal from the noise, we interviewed several seasoned grant professionals. There are several types of grant budgets you might use in a grant proposal. Even if you have the perfect idea for a new project, you will still lose out on funding if your grant budget isn’t feasible and in line with the funder’s priorities. Remember to include, record, and track non-monetary contributions with you budget. This might include volunteer hours or non-monetary contributions such as vehicles or other equipment.

Nonprofit Budget Template & Example

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. A nonprofit operating budget is different than the capital budget, and it plays an important role in budgeting for nonprofit organizations. Your capital budget includes projects that have an ongoing impact on your operations. A capital budget is also used to plan for major expenses like construction costs and other big, one-time expenses that take more than a fiscal year to fund. In this article, we will discuss what should be included in a nonprofit budget, how to create one, and provide a template and example budget to help guide you through the process. Finally, budgeting software programs like Xero or QuickBooks are excellent tools for creating nonprofit budgets due to their ease of use and robust features.

• It involves allocating funds thoughtfully to ensure that each initiative is adequately supported while aligning with the overall financial capacity of the organization.
• The first step in creating a nonprofit budget is to determine the organization’s financial goals and objectives.
• We recommend setting aside at least 5-10% of your annual budget for emergencies.
• It provides a clear financial roadmap for achieving organizational goals.
• Don’t forget to track restricted and unrestricted funds, and how you are spending them.

How can technology improve nonprofit financial management?

If you are comfortable working with numbers and have a good understanding of your organization’s finances, you may find that zero-based budgeting is not as difficult as it initially seems. You can use cost-benefit analysis to determine if the event would be more valuable than some other methods of fundraising. We strive to provide nonprofit leaders with useful resources, tips, and tools that you can use at your organization. We’d love to hear your feedback about this content and anything else you would like to see more of from NFF. Nonprofits often face scrutiny over how much of their budget goes toward administrative expenses versus program-related activities. Striking the right balance is crucial for maintaining both operational efficiency and donor trust.

Because nonprofit funding is often very flexible, it’s absolutely necessary to have many diverse revenue streams. You can keep all the information in one sheet, or break it up into different pages. A nonprofit budget template Excel creates is pretty similar to a nonprofit budget template Google Sheets does. Your operating budget shouldn’t be confused with your capital budget. A capital budget covers one-time expenses that will take years to fully fund, like major The Key Benefits of Accounting Services for Nonprofit Organizations construction projects.

Otherwise, you won’t be able to accurately compare budgets from period to period. Knowing your goals will help in allocating the budget effectively to different departments and projects. Fixed costs remain constant, such as rent and https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ salaries, while variable costs fluctuate based on activities, like event expenses and marketing campaigns.