A nonprofit budget is more than just a collection of numbers; it’s a strategic blueprint that reflects an organization’s priorities, goals, and mission at a foundational level. It outlines expected income and planned expenses for a specific period, typically a fiscal year, ensuring that resources are allocated efficiently and transparently. For nonprofits, budgeting plays a pivotal role in aligning limited resources with their mission-driven objectives. A nonprofit budget is a financial plan that details how a nonprofit organization will raise and spend money. The goal of creating a nonprofit budget is to ensure that the organization has enough money to cover its expenses and reach its financial goals. Google Sheets is a great tool to use for creating nonprofit budgets due to its ease of use and robust features.
When putting in the numbers for your revenue, make sure you know exactly where your funds will come from.
You may already have clearly defined programs, departments, or projects.
It could also be a sign that significant changes in the operating environment have occurred and that the nonprofit budget should be revised.
Read our detailed guide on Why Budgeting Is Important For Nonprofits.
Creating a nonprofit budget is one of the most critical tasks for anyone managing a charitable organization.
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Don’t forget to track restricted and 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. No nonprofit executive director is an island, and this is especially true when it comes to making a budget.
How to Create a Nonprofit Budget: A Step-by-Step Guide Including Excel Templates
Budgeting for nonprofit organizations takes a bit of time, but planning your budget is too important to make the mistake of rushing through it. Keep adding to these tips and best practices and you’ll have the process down in no The Key Benefits of Accounting Services for Nonprofit Organizations time. 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.
Make sure this happens well before the new fiscal year begins, so you have time to make any last-minute edits that the board recommends.
Let’s get started by defining what a nonprofit budget is and why it’s important.
In reality, your goal should be to budget for a revenue surplus—where your total revenue outweighs your total expenses.
Board directors should be careful to consider the state of the economy and any unusual or unforeseen financial situations of their contributors.
This template also includes a separate budget plan tab for related nonprofit marketing budget plans.
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There’s no exact science to identifying your programs, but you generally divide up your programs either by the target population or the key activities. For example, you can delineate programs by population (e.g., a high school mentoring program, and a separate elementary school tutoring program). 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. You’ve got the budgeting basics down, but how do you ensure your budget is ultimately effective? Generate real-time reports on budget performance, helping you to monitor the budget closely and make necessary adjustments promptly.
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The process of creating a nonprofit budget is similar to the process of creating a budget for any other type of business. Board management software is a valuable tool in assisting nonprofits in budget planning. BoardEffect provides a secure platform for board communications where they can share confidential documents about the budget and other important board matters without concern over hacking. The platform has a feature for granular permissions so that only the people involved in budget planning can access the budget planning details.
Knowing the real costs of each program allows us to make informed decisions and choices that will lead to mission and financial success. Remember to base your budget on your nonprofit’s specific needs and history. Beyond mapping out your expenses and revenues, this financial plan also helps you monitor your organization’s activities and ensure you use your funds wisely to support your mission. Since you’ll detail the source of each line item, you can pinpoint which areas need more resources and where you can cut back on spending. A nonprofit budget is a document that enables your team to plan for expenses and allocate resources.
Report: Success Rates for Different Types of Grants
The budgeting module integrates seamlessly with other modules in the software, allowing for a holistic approach to budgeting. For instance, budgeting is within grant management to allocate budgets for different grants accurately. Budgeting goes beyond crafting a financial blueprint; it serves as a roadmap guiding your organization in allocating resources wisely and achieving its objectives. It involves a meticulous analysis of both your income sources and expenditures, setting clear objectives, and involving all stakeholders in the process. Moreover, a well-thought-out budget acts as a financial cushion, helping your organization navigate unforeseen challenges without straining your resources. Customize your template based on your organization’s specific needs and reporting requirements.
To help you get started, we’ve created a basic nonprofit budget template to track your revenue and expenses. It will work as a framework regardless of your nonprofit’s area of focus. The purpose of budgeting for nonprofit organizations is for it to reflect your realistic financial goals and plans for the upcoming year. Team-based financial planning is the most effective way to ensure your budget aligns with your organization’s goals. Involve staff and board members in https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ the budgeting process to create a comprehensive strategy that relies on a variety of perspectives.
Benchmarks & Insights for Growing Revenue and Constituents
You’ll be able to make adjustments earlier, like reallocating funds or planning to raise more revenue. Focusing on shorter time periods helps break down your monthly activities and account for special events or one-time costs. One of the most important tools for a nonprofit is a cash flow projection. This is the budget of revenues received and expenses paid, broken down monthly to ensure cash will be there when needed. The capital budget may include projects which will have ongoing effects on operations. The capital budget can also be used for construction and other big, one-time spending projects that often take more than a fiscal year to pay for.
