For new expenses, request quotes from vendors or providers to budget for these costs as accurately as possible. For example, you may reach out to the new bus company you plan to use for your organization’s summer camp to estimate how much their services will cost. Learn the essentials of developing a nonprofit budget—tips, best practices, and free resources to help you build a strong, credible budget or refine your current one.
#3 Nonprofit Grant Proposal Budget Template
Building operating reserves provides an additional buffer against temporary shortfalls. Regular monitoring and adjustment of these strategies helps ensure consistent program delivery and organizational stability. Pay special attention to periods when multiple large expenses coincide or when income traditionally slows. This foresight allows you to plan proactively rather than reacting to cash crunches. These visible expenses and non-monetary contributions, including volunteer hours, form the foundation of your program budget, but they’re only part of the equation.
Program expenses
A well-crafted nonprofit budget ensures financial sustainability, supports strategic decision-making, and fosters transparency with donors, stakeholders, and the communities you serve. In short, for nonprofits, where every dollar has a purpose, efficient budgeting is highly important. Google Sheets is a great tool to use for creating nonprofit budgets due to its ease of use and robust features. Using Google Sheets, you can create financial reports and track expenses and revenue. In nonprofit budgets, around 35% of your expense budget should be used for administrative expenses (overhead) and the other 65% for program expenses.
Conclusion: Nonprofit Budgeting Is a Process
To make sure you don’t forget anything critical, here’s a look at several key areas you need to include in a program budget plan. Start with a nonprofit budget template excel sheet that includes all the expenses you can think of. Running a nonprofit is hard work, and an essential part of that is budgeting.
- Make sure that you clearly determine the roles and decision-making processes that will yield the most effective information gathering, analysis, and decision making.
- Modern solutions like predictive analytics can help you visualize past and future scenarios and are often built into commercially available nonprofit accounting solutions.
- Nonprofits can keep tabs on their annual program revenue vs. expenses with this easy-to-use nonprofit program-based budget template.
- The second is to make sure that the expenses are in line with the goals of the organization.
- These numbers help guide your business choices—a sample nonprofit budget will show you what to include.
- Good budgets assure donors that the nonprofit is actively overseeing the budget process.
- To ensure that all expenses are accounted for, it is helpful to create a budget template that can be used on an annual or monthly basis.
Operating budgets are easier to develop because you can estimate the amounts based on the day-to-day costs in your organizational budget from the prior year. There also might be items that simply don’t fit neatly into another category, or you want to have extra funds to cover the unexpected. It’s a good idea to create a miscellaneous category for those budgeting needs. A budget for non-profit organizations should function as a living document, not a set-and-forget plan. You can also use industry benchmarks and specific examples to demonstrate responsible resource management. Help stakeholders understand that effective administration actually multiplies the impact of their program investments.
Throughout the fiscal year, the adopted budget is referred to as the operating budget. Using both of these strategies will help your organization to stay closely aligned with its mission.If you’re also wondering how to calculate your cash flows, download Keela’s cash flow forecasting tool! Use this simple resource to help balance your books and reduce your financial worry. In these meetings, it’s also helpful to look forward to the next few months and revise your budget to match your current reality.
- Use last year’s actual numbers as a starting place and get quotes from vendors for new or expanded expenses.
- Since we’re in the business of helping nonprofits, and creating the tools they need to do more good, we wanted to help by creating a sample nonprofit budget template that is free to download and use.
- Help stakeholders understand that effective administration actually multiplies the impact of their program investments.
- By simply gathering your data, making revenue and expense projections, and regularly reviewing and updating your budget, you’ve conquered a key part of the business of running a nonprofit.
- Like many businesses, nonprofit organizations often lack the resources and funding to do everything they want.
- In the long-term, these surpluses should accumulate until it’s time to make your next capital investment as part of expanding your work.
Setting aside a portion of the budget (typically 5-10%) as a reserve will help your organization handle unexpected challenges like sudden drops in donations, emergency repairs, or economic downturns. Be sure to consider inflation, potential cost increases, https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ and one-time expenses. While variations in funding may be beyond your control, make sure to monitor your expenses. For example, your programs may have multiple goals, such as improving the quality of aid while also reaching more beneficiaries. Your budget is a recipe for financial health over the forthcoming year, but don’t ignore the health status you expect when closing the current year.
Financial Ratios
In a zero-budget approach, nonprofits plan their budgets as if they were brand new or from scratch. They start planning with no history to add to the process and the budget is based on future projections rather than historical data. With accounting services for nonprofit organizations a centralized platform for creating and managing budgeting, every organization member has clear and direct access to your spending plan. It leads to more effective financial management and decision-making processes.
