To prepare this financial document, you’ll need to think about the timing of key fundraisers, appeals, and corporate or philanthropic donations, and any time-based factors that influence spending. About three to six months before the end of the fiscal year, an organization starts developing a proposed budget. This work is primarily done by the executive director, using empirical data about expenses and revenue, as well as any new expenditures and funding sources projected for the upcoming year.

Nonprofit Bookkeeping and Accounting Services from Charity Charge

• Regularly monitor how aligned your projected budget is with what you’re actually experiencing, and make tweaks as you need to.
• Take time to collect financial data from previous years as best as possible.
• Propel Nonprofits is an intermediary organization and federally certified community development financial institution (CDFI).
• A program budget focuses on the specific financial requirements of a particular initiative or project.
• The second meeting of the budget committee should focus on developing a draft of an expense budget and an income budget.
• You’ll also want to get a clear idea of your revenue streams to understand where your money is coming from.

These documents provide valuable insights into the organization’s financial health and performance, allowing nonprofit leaders to make informed decisions and adjustments as needed. In communicating with your board members, nonprofit leaders, and supporters about how donations are being used, transparency is key. Generate regular reports that outline your nonprofit’s financials and the accounting services for nonprofit organizations impact of your programs. Apart from fundraising, nonprofits may occasionally feed volunteers or entertain potential donors as part of their development efforts. This helps raise awareness for their mission while ensuring sustainability and success in achieving their goals.

Compile Your Expected Income and Funding

An annual operating budget is a critical financial document that outlines how your organization expects to spend your money—and where it will come from in the first place. As the name implies, it should be focused on your daily operations, or what it takes to keep your doors open from week to week, month to month. I will say, though, that there’s a lot more to the topic than we can cover in one post. A common budgeting myth is being a “nonprofit” means your organization can’t make a profit. In reality, your goal should be to budget for a revenue surplus—where your total revenue outweighs your total expenses. That way, you’ll have additional financial flexibility in case some costs are higher than expected.

Nonprofit funding: A beginner’s guide

Now that you know what should be included in your nonprofit budget, it’s time to start creating one. The process of creating a nonprofit budget is similar to the process of creating a budget for any other type of business. The budget paints a clear picture of how much cash is coming in and how much is going out. Budgets form the basis for boards to make better decisions and to avoid making mistakes.

Reviewing and Adjusting the Nonprofit Operating Budget

Take our 2-minute survey to find out if outsourced accounting and bookkeeping is a good fit for your organization. Looking over your budget with new hard data will allow you to make any tweaks as necessary and head off serious potential problems. Read on as we break down the process step-by-step and answer some critical questions many nonprofit leaders often have. Inflation is on the rise, and nonprofits are not exempt from its effects. We’re diving into the harmful impact of inflation and sharing ways your nonprofit can weather the storm.

The template’s operating expenses section allows you to easily determine your rolling cash balance. Keep monthly and quarterly tabs on your nonprofit’s cash flow with this all-inclusive, customizable template. Pre-filled income sources — such as grants, donations, etc. — enable you to track monthly and quarterly income actuals. This https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ template provides an accurate picture of your nonprofit’s budgeted operating costs and all-around fiscal health. In crafting a robust budget for your organization, utilizing budget templates can streamline the process, ensuring accuracy and ease of financial management.

Steps To Create A Nonprofit Budget

• Involving key stakeholders in budgeting is essential for fostering accountability and ownership of financial goals.
• When your predicted income exceeds your projected expenses, you’ll be more prepared to course correct if you incur unexpected costs or some revenue sources fall short of your goals.
• While you should consider everything, be as realistic as you can in setting revenue projections.
• Above all, a budget for non-profit organizations must remain flexible enough to adapt to changing circumstances while maintaining fiscal responsibility.
• Your annual nonprofit budget is a straightforward document with all of your projected expenses and revenue for the year.

Equally important are the indirect support costs that keep your programs running smoothly. Administrative oversight, financial management, IT support, insurance, facility maintenance, volunteer coordination, and grant compliance all contribute to program success. The first step is understanding true program costs across both hidden and obvious or necessary expenses.

Here’s your step-by-step guide to creating an effective and sustainable budget to fulfill your organization’s mission. Most importantly, nonprofit budgets should be constructed around the organization’s programs and activities, which will help them stay focused on their goals. You need to know how your nonprofit’s cash flows and what to do if the cash doesn’t flow. Involve your Board, your staff, and your volunteers in creating the budget and reviewing your revenue and expenses. This not only helps create a more accurate and comprehensive budget but also ensures buy-in across the board. The capital budget may include projects which will have ongoing effects on operations.

Board Basics Certificate

• Lastly, it’s rare that nonprofits have unlimited funds, so they need to be realistic and thoughtful about setting restrictions on what they can spend money on.
• A budget for non-profit organizations becomes more effective when broken down by program expenses.
• This template allows for precise allocation and tracking of grant funds, ensuring that each dollar is accounted for and spent according to grantor guidelines.
• To help you get started, we’ve created a basic nonprofit budget template to track your revenue and expenses.
• This shows the importance of operating budgets, because a $13 million organization is very different than a $475 million organization.

But if you need a hand or are looking for some expert advice, The Charity CFO is here to help. Contact us today to learn more about how we can help your organization unlock its full potential by getting its budget on track. This is also where you should estimate any earned income or program fees if they apply to your situation. 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?