The Ultimate Guide to Nonprofit Budgeting + Free Template

The final analysis will clearly show what program areas require these sources of support and enable leaders to make the all-important decision about how to best attract and direct flexible funds. One of the most valuable results of understanding the true cost of programs is the ability to make wise choices about how to support mission critical work. For most nonprofits, some programs may be financially self-sustaining or even generate a surplus. Other activities may require periodic or ongoing subsidy from fundraising or other program areas. Deciding whether and how to support these services is a central strategic decision for nonprofits.

Establish format and structure for accounting

• Engage, build bonds, showcase impact, and elevate conversations effortlessly.
• While we all want amazing lighting, large screens and good sound systems, not everyone can afford a $20,000 price tag for these things.
• 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).
• I always work closely with my AV team to maximize my dollars spent with them.

Nonprofits have to walk a fine line between funding their fundraising and funding their mission efforts—be sure to think through this balance carefully. Finding sponsors for your events can help you earmark a larger portion of your fundraising for your mission program expenses. Include revenue you expect to generate from fundraising events, grant proposals, individual donations, corporate sponsorships, and other sources of funding. This guide and accompanying spreadsheet template break down the process of understanding true program costs, either through budgeting or financial reports, into several stages. Still, creating a solid nonprofit budget is an essential foundation for being a financially healthy organization and having the basis you need to go about advancing your mission.

How to determine nonprofit income for a budget?

Donors expect to know how their donations are helping the organization so boards need to consider how they can communicate this information to donors. List program expenses (staff salary, insurance, supplies, fundraising fees, etc.) to see your total nonprofit program expenses vs. your actual revenue. Before you can develop an accurate budget, you’ll need to gain a clear understanding of the nonprofit’s financial situation.

• Another key factor that organizations often forget to consider is the budget format.
• Nonprofits engaged in merger discussions have leveraged NFF tools to assess the financial implications of combining operations and develop integrated budgets.
• Here are some common categories found in an annual budget for a nonprofit organization.
• With this comprehensive annual nonprofit operating budget template, you’ll get  quarter-by-quarter and yearly insights into income and expenses.
• But you need to be realistic about your event’s capacity to raise money.
• Zero-based budgeting requires examining every expense anew, regardless of its history in your organization.

Financial Ratios

• Congratulations – you now have the basics of your nonprofit operating budget!
• If you’re ready to dive into creating budgets for your nonprofit, there are various templates available online to help you get started.
• Capital expenditures are expenses needed to acquire or maintain fixed assets, such as fixing or maintaining buildings, land and cars.
• Because nonprofit funding is often very flexible, it’s absolutely necessary to have many diverse revenue streams.
• The nonprofit operating budget categorizes revenue by different funding sources.

Before you develop your new budget, examine your nonprofit’s past budgets, financial reports, and donor base to gain a clear understanding of its financial situation. Utilize BetterWorld’s platform for nonprofit fundraising solutionsSet up a campaign and start raising money in as little as five minutes. Select and customize the fundraising method best suited for your organization. Nonprofits typically allocate between 5 and 15% of their overall budget to marketing, with fundraising costs ideally staying at or below 15%. Every nonprofit approaches program budgeting differently, depending on the services offered. Program expenses cover everything tied directly to the services you provide—whether that’s offering housing, healthcare, or meals in your community.

This may involve making adjustments based on changes in the organization’s operations or financial situation. Start with your known fixed costs like rent, utilities, salaries and insurance. Create a list of “nice to haves” you can add into your budget if you have projected funds left over after your necessary expenses are covered.

Don’t operate on a shoestring budget

What supplies, equipment, facilities, and staff will you need to operate the program(s)? When your nonprofit is new, it’s easy to bite off more than you can chew initially. Be realistic about what you can successfully operate the first https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ year, especially if you will need to raise the money for the program(s) (fundraising can be a bit slow at first). When you’re just getting started, it’s critical that one of your first steps is to create your nonprofit’s first budget to help you manage both your organization and your finances as it grows.

Want to build an effective fundraising campaign?

Candid templates are highly regarded for their alignment with funder expectations. Developed by experts in the grantseeking field, they incorporate common budget categories and terminology. This makes it easier for grant reviewers to understand your organization’s financial needs and assess the feasibility of your proposed projects. The built-in formulas minimize errors and ensure consistency, further strengthening your application’s credibility. Creating a budget for non-profit organizations requires balancing mission impact with financial sustainability. The most successful nonprofits treat budgeting as an ongoing strategic process rather than a yearly task.

Financial Control Recommendations For Small Nonprofits

• A solid annual operating budget is at the core of an effective nonprofit financial management strategy.
• Early in my career when I was really getting the hang of fundraising, we ended a year with a $50,000 surplus.
• One of the most important tools for a nonprofit is a cash flow projection.
• Here’s a comprehensive, step-by-step guide to building a budget that supports your nonprofit’s mission effectively.
• Examples might include materials purchased specifically for a tutoring program or the cost of an evaluation consultant to document the results of a preschool program.
• A budget for non-profit organizations must balance multiple priorities while maintaining clarity and usability.

Generate real-time reports on budget performance, helping you to monitor the budget closely and make necessary adjustments promptly. Successfully implementing a budget for non-profit organizations requires systematic effort. Ensure your process includes appropriate approval steps for different types of changes while maintaining enough flexibility to respond quickly when needed.

Empowering Your Nonprofit’s Financial Future

Therefore, it can be helpful to establish these first and figure out what’s left. While you should consider everything, be as realistic as you can in setting revenue projections. While it might be less than ideal to underspend when your organization has the capacity to spend more, it’s accounting services for nonprofit organizations far worse to overestimate fundraising or grants and end up scrambling to cover costs. All operating budgets can be broadly split into two categories – revenue and expenses. Even if your nonprofit is just getting started, it’s not too soon to get into Quickbooks or another accounting software that can help you track and analyze all your income and spending.