Including insurance in a nonprofit operating budget helps protect your organization from unexpected financial risks. This accounting services for nonprofit organizations can include covering liability for employees or volunteers, property insurance for buildings and equipment, and insurance for events or activities that your nonprofit hosts. Travel may be necessary if staff members or volunteers attend conferences, meetings, or events related to your mission.
- Regular comparison of budget versus actual figures highlights areas needing attention before they become problems.
- Our team is here to give you more details and guides on how to grow your fundraiser.
- Many organizations include salary costs in grant proposals and build appropriate overhead into their program budgets.
- In short, for nonprofits, where every dollar has a purpose, efficient budgeting is highly important.
- Learn the essentials of developing a nonprofit budget—tips, best practices, and free resources to help you build a strong, credible budget or refine your current one.
- This is also sometimes called a “broad scope budget” or an “annual budget” because it gives you a full picture of what the coming year should look like.
Sample budget for nonprofit organizations
Regularly reviewing and adjusting the salary budget ensures alignment with the organization’s goals and financial capacity. If you know you need to cover telephone costs, research the costs (including all fees and taxes) to cover the phone costs of all your staff. If you plan to use a storage space to store items, price out the monthly costs including fees and add it to your budget. Once the initial nonprofit budget is prepared, it should be reviewed and approved by the organization’s Board of Directors.
- Be sure to include these expenses if the organization needs to rent or maintain a physical location for its operations.
- If the budget isn’t carefully crafted or doesn’t fall in line with the requirements of the funder, it could cause you to lose the award.
- If you use accounting software to for your budget, there is the benefit of those budget to actual reports we discussed earlier.
- The primary purpose of nonprofit budgeting is to ensure that the organization can meet its goals without running out of money.
- Even organizations working with a shoestring budget must think carefully about costs.
- We’ve already talked about managing your budget with Relay, but we know nonprofit financial management doesn’t stop there.
Overview of the Process
The nonprofit operating budget categorizes revenue by different funding sources. It also divides operating expenses by program and other overhead costs. The annual budget focuses on the nonprofit’s planned financial activities, expected revenue sources, and expenditures for the fiscal year ahead. While the annual budget is the primary financial plan, organizations often use other types of budgets to manage different aspects of their finances. This process is most valuable when a nonprofit can understand both the full cost of delivering programs and the amount and type of income that relates to those programs.
- First, the budget must clearly align with the organization’s mission and strategic objectives.
- Compare this against your predictable expenses like payroll, rent, and utilities, as well as variable costs tied to program delivery and special events.
- You can find a glossary of terms in our resource library and below, a list of articles and resources for more in-depth discussion or technical guidance on this topic.
- Before you start a budget for your nonprofit, you must first understand that there are different types of budgets.
Which budgeting method should I use?
Nonprofits must create program budgets to showcase the direct impact of donations and grants. This is not a fast activity, so commit to taking the time to do it and do it right. Since your nonprofit is new, you don’t have historical numbers to look at and base your projections on.
How to Create and Track a Nonprofit Budget
At this point you will have a subtotal of the direct costs of each program, administration, and fundraising. Remember to base your budget on your nonprofit’s specific needs and history. A nonprofit budget is a document that enables your team to plan for expenses and allocate resources.
Step 4: Define your nonprofit’s revenue stream
Without an annual nonprofit budget, you’re essentially operating in the dark. You could easily overspend, winding up deep in debt or worse – unable to continue serving your beneficiaries. The best practices we shared in this guide are the fundamentals of sound budgeting for nonprofit organizations. It’s no secret that budgeting guels your nonprofit’s ability to make an impact.
- Divide the annual amount by the number of months left in your fiscal year.
- Give yourself enough time to gather the necessary information and data, to think through and discuss the various elements of the budget, and to put it down on paper (or in Excel).
- The two primary components of a budget are income and revenue, and many subcategories fall under the umbrella of each.
- If your nonprofit needs TV streaming, cable, or satellite service, include that here too.
- 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.
Nonprofit Budget Templates: 3 to use NOW in Google Sheets or Excel
Creating and sticking to a nonprofit budget will put your organization in a healthier financial https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ position. As a result, you can spend less time worrying about your nonprofit’s expenses and more time helping your beneficiaries. In a zero-budget approach, nonprofits plan their budgets as if they were brand new or from scratch. They start planning with no history to add to the process and the budget is based on future projections rather than historical data.