Budgeting for Non profit Organizations

The course will continue on to slightly more advanced budgeting topics such as capital budgets, cash flow budgets, and opportunity budgets. You will also learn how non-profit organizations are using different budgeting techniques to handle operating challenges. Before creating your operating budget, check in with your strategic plan. Since it defines your organization’s overarching priorities, you should organize your budget in a way that enables your nonprofit to achieve those goals. 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.

Understanding Net Assets in Nonprofit Organizations: A Guide for Stakeholders

• 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.
• For a wider selection of budget tracker templates, check out more options here.
• You might not be able to predict what your donors give, but you can control a lot when it comes to spending.
• From tech founder to nonprofit CFO and fundraiser, Stephen King brings a unique combination of vision, foresight, and experience to help nonprofits maximize their cash flow and operational efficiency.
• Revenue may not stream in as expected and large, unexpected expenses can creep up.
• When it comes to budgeting, context is essential when considering every item.
• 💸 If you’re feeling overwhelmed, try using your goals to prioritize expenses—and remember, you can always increase spending if you’re able to raise more revenue later in the year.

But it’s essential that you be realistic, especially when it comes to estimating the upcoming year’s revenue. We empower those who champion the collective good to scale their impact online through branding, web design & development, integrated marketing, and technology. Our integrated approach empowers organizations to connect deeply with their audiences, expand their reach, and achieve measurable results—all without stretching their resources. We recommend setting aside at least 5-10% of your annual budget for emergencies. If you have a special project in mind, create a separate budget for it.

• They can help you estimate your income and expenses, and they can provide guidance on how to best use your resources.
• Another step in creating a nonprofit budget is to identify the organization’s major sources of income and expenses.
• List expenses in the high-level categories of staff, contractors, occupancy, and support expenses (which include all other program and operating expenses).
• This is how many days your organization could operate if all income suddenly became unavailable (all donors stop supporting you, or you spent all your money).
• This means that they have more income than they do expenses, which is a good position financially.
• We work exclusively with nonprofits, so we understand the unique complexities of your organization’s financial situation and can use our experience to develop tailored solutions for your needs.

RESOURCES

If you are still unsure of how to develop a budget, you can consult with a financial advisor or accountant. They will be able to help you create a budget that meets your needs and ensures that your nonprofit is financially stable. If you are comfortable working with numbers and have a good understanding of your organization’s finances, you may find that zero-based budgeting is not as difficult as it initially seems.

Develop draft expense budget

Enter the details of your nonprofit’s year-over-year projected and actual revenue, along with expenses, to compare the former to the latter. The template’s operating expenses section allows you to easily determine your rolling cash balance. Capterra’s Nonprofit Grant Budget Template is designed to aid nonprofits in planning and managing their grant funding effectively.

What Budgeting really is, and it’s Importance?

• Let us not go directly into non-profit budgets and their templates, let me tell you a bit more about what budgeting really is, and why it is so important.
• Budget planning is the estimation of earnings and costs for a given time frame.
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• This feature allows non-profits to forecast and manage their finances according to expected seasonal variations.
• Monitoring your revenue and expenses should ideally become a part of your nonprofit’s organizational culture, something everyone is aware of and contributes to.

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. You can kind of see why a nonprofit organization’s budgeting is different from your typical definition of budgeting. Because, a non-profit organization, literally as its name, does not receive any finances, or monetary gain through their services.

Nonprofit Budgeting: How to Get Started + Template

That’s why we’ve put together the ultimate guide to making your own nonprofit program budget — complete with THREE free nonprofit budget templates. Because donors generally require proof of how their money is being put to use, there exists a need for greater transparency regarding the financial standing of a nonprofit organization. This is where a nonprofit budget comes in handy, accurately recording expenses and revenue as they occur in detail. While you’ll create your nonprofit’s operating budget from scratch once a year, budgeting shouldn’t be a one-and-done event. Instead, your budget should guide your organization’s spending, fundraising, and reporting throughout the year, so check in with it frequently. The best way to determine nonprofit income for a budget is to review the organization’s financial statements from the previous year.

Sort Your Expenses

• Every accounting system has a chart of accounts which classifies the sources of revenue and the types of expenses you incur.
• Before creating your operating budget, check in with your strategic plan.
• However, you can adapt some of our tips to create other types of budgets.
• This rigorous approach ensures each dollar actively contributes to your nonprofit’s mission and helps eliminate legacy costs that no longer serve your current goals.
• Understanding nonprofit budgeting is only one part of the equation; accurate accounting practices are equally essential.
• Also, creating an effective program-based budget requires clear definitions, consistent cost allocation methods, and regular impact assessment.

Columns for projected expenses or revenue, what was actually received or spent, and how these differ from one another are also a must. Now that you understand the basics of nonprofit financial planning better, meet with your team, and create a budget and cash flow. Regular nonprofit budgets should be split between expenses and revenues, with expenses split between https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ program, and general and administrative expenses. Looking at just total revenue or total expenses can mislead you about how big an organization actually is. By only looking at expenses that are core to the actual daily operations of the nonprofit — and ignoring the rest — you can get a good idea of the actual size of a nonprofit. The best way to ensure your budget is accurate and actionable is to have expert nonprofit financial professionals create it for you—like our team at Jitasa.

Importance of Budgeting for Nonprofits

Technology is an important tool for responsible budgeting for nonprofits. Creating and managing a nonprofit budget is more than a financial task; it’s a strategic process that enables your organization to align resources with mission-driven goals. As we look towards 2025, nonprofits face a unique set of challenges and opportunities. From fluctuating income streams to increasing demand for programs, organizations must plan carefully to navigate financial complexities while maximizing impact. Whether you’re managing general operations, launching a new program, or amplifying your marketing efforts, a thoughtful budget can be the difference between a successful year and a strained one.