Nonprofit Budgeting: How to Get Started + Template

A nonprofit operating budget is a financial document that provides an overview of how a nonprofit organization is planning to spend its money. It also breaks down the nonprofit’s operating expenses and overall costs. The nonprofit operating budget is essentially the financial reflection of what the nonprofit business expects to achieve over a 12-month period (annual budget). Not enough funds budgeted to accomplish their impact goals, no buy-in from the rest of the staff, and an under-resourced organization. A budget is a planning tool that reflects an organization’s programs, mission, and strategic plan.

Client Accounting Services

• Well-defined policies ensure consistency and accountability at every level.
• Some organizations don’t like to include miscellaneous income such as interest income in their budget, because it is not a dependable revenue stream.
• Finally, budgeting software programs like Xero or QuickBooks are excellent tools for creating nonprofit budgets due to their ease of use and robust features.
• By doing so, you can keep an eye on your big-picture forecast with the assurance that every detail of your accounting is in order.
• Anyone who’s run a nonprofit or any other organization knows the one thing you can expect is unexpected expenses.

It is important to be thorough and transparent in your presentation, including all assumptions, risks, and opportunities behind the budget. Be sure to also leave enough time for questions, concerns, and feedback from your Board members. Nonprofit success is heavily tied to two things – mission, and money. How to create your superstar team and assign the right Givebutter roles to unlock your team’s full potential—without risking donor data or burnout. Ready to see how Givebutter can help you stick to your budget and accomplish your mission? Transform funder connections with our 10 expert-crafted cold email templates.

Align nonprofit budget planning with your goals

Don’t forget to track restricted and The Key Benefits of Accounting Services for Nonprofit Organizations unrestricted funds, and how you are spending them. For example, if you tell your donors that all donations will go directly to program expenses, those are then restricted funds that you need to exclusively use to support programs. Effective board governance is the cornerstone of success for nonprofit organizations, playing a pivotal role in steering operations, ensuring accountability, and driving mission impact. As nonprofits navigate complex landscapes, characterized by limited resources and…

Services

By establishing these policies, nonprofits create a reliable environment for financial operations. This clarity helps prevent mismanagement and supports compliance with regulatory standards. Clear financial policies improve how things operate and build trust.

• Grab a free copy of this comprehensive guide to developing your business from scratch.
• The organization has planned to spend $102,500 on operations and projects (expenses) and expects to raise $135,500 through donations, fundraising events, and program fees (revenues).
• These allow you to discover additional insights into your organization’s finances that will help you craft future budgets.
• Our services include Google Grant application, Google Grant hygiene, Google Grant reactivation, keyword research, and Google Grant management.
• Excel’s budget templates are highly customizable and can significantly streamline your financial planning process.
• By focusing on these strategies, nonprofits can build a strong financial foundation, ensuring long-term success and growth.
• Nonprofit success is heavily tied to two things – mission, and money.

Once you’ve established a new nonprofit, one of your first considerations will likely be fundraising. After all, the only way you can fulfill your organization’s mission is if you can bring in the funding you need to support your programs and initiatives. Many nonprofits hesitate to reveal how much they spend on overhead costs with donors. Reframing overhead costs as stepping stones to making an impact can help donors understand why not all their funds go directly to programming.

• Most organizations look at how much money they raised last year, maybe add 3-5%, and declare that number as this year’s budget.
• Zero-based budgeting requires examining every expense anew, regardless of its history in your organization.
• Creating a budget for your nonprofit organization is an important step in ensuring your financial success.
• Think about how easily the system can grow and connect with other tools.
• Once you have your budget, compare the predicted numbers to the actual figures every month in order to look for differences and establish why they occurred.
• More and more nonprofits are finding that cloud-based tools solve these issues, often incorporating templates and automated pathways that take a lot of the stress out of budgeting.
• Budget-to-actual performance should be reviewed monthly by both management and the Board.

Fixed costs are expenses that remain constant, such as rent or salaries, while variable costs fluctuate based on activity levels or other https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ factors, such as utilities or event expenses. Of course, exact totals will vary from organization to organization. According to the 2023 M+R Benchmarks Study, nonprofits spent an average of $0.11 on digital advertising for every dollar of online revenue in 2022.

Review the budget periodically to ensure that it remains accurate and relevant

• This ensures a comprehensive and accurate overview of an organization’s financial situation, facilitating effective budgeting.
• This alignment allows nonprofits to focus on activities that directly support their mission and enhance impact.
• Besides the different types of budgets, there are also fundamental approaches to strategic budgeting.
• This way, you can figure out how to make up the difference more quickly and continue covering your expenses.
• 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.
• There is no one-size-fits-all answer to this question, as the steps involved in creating a nonprofit budget will vary depending on the specific organization and its financial situation.

Analyze financial statements, accounting records, debts, reserve funds, operational costs, payroll, and any other monetary elements related to your nonprofit. Identify strengths to build upon as well as problem areas that may need to be addressed or improved. This should concisely reflect your core values and the change you aim to create.