Your exact ratios should align with your organization’s size, mission, and growth stage. Minor variances might require simple monitoring, while significant deviations could demand immediate action. Create guidelines for when to adjust projections, shift resources between programs, or implement contingency plans. Regular nonprofit budget reviews help identify trends, catch potential problems early, and adapt to changing circumstances. Modern accounting software can automate much of this monitoring process, saving time while improving accuracy. Address overhead costs transparently in your nonprofit budget and donor communications.

Creating Revenue Projections

Capital fundraising via capital campaigns can help you secure the funds for these projects. Throughout the year, “Feeding Our City” regularly compares their actual income and expenses with their budgeted figures. Next, they identify their organizational goals for the upcoming budget period. For instance, they plan to serve 20% more meals in the upcoming year, which will require additional resources. There’s clearly a lot that goes into developing nonprofit organizational budgets. They’re hard to understand at first, and even once you have a basic idea of what they’re like, you might still need an accountant to help you do it correctly.

Expected expenses

A budget for non-profit organizations must prioritize reserve building through intentional planning and disciplined execution. As mentioned at the outset, industry data shows that most nonprofits operate with dangerously low reserves, making this aspect of budgeting crucial. Creating a budget for non-profit organizations often involves following historical patterns—budgeting based on last year’s numbers with minor adjustments. For example, if your year-end campaign consistently brings in 40% of annual donations, factor this timing into your financial planning. First, the budget must clearly align with the organization’s mission and strategic objectives. This alignment helps create more accurate forecasts and smoother cash flow management.

• There are lots of budgeting templates available online or you could create one of your own.
• When teams have clarity into the work getting done, there’s no telling how much more they can accomplish in the same amount of time.
• Many nonprofits hesitate to reveal how much they spend on overhead costs with donors.
• This information can provide insights into trends in the organization’s income and expenses, which can be helpful in estimating future income and expenses.
• Whether you’re with a large team or a solo entrepreneur looking to start the next great cause, we have a membership package that will help you grow your network and your cause.
• Building operating reserves provides an additional buffer against temporary shortfalls.

Step 1: Review the Current Financial Situation

Use this calendar to plan to pay certain expenses when you have the cash, or reserve enough cash to cover those expenses later. Get our FREE guide to nonprofit financial reports, featuring illustrations, annotations, and insights to help you better understand your organization’s finances. Regular budget reviews on a quarterly or yearly basis are essential to see if you’re hitting your expected benchmarks in both revenue and expenses. This is also a crucial step of the process because you’ll be setting your nonprofit’s priorities and goals by determining which get funded and which don’t. While you should consider everything, be as realistic as you can in setting revenue projections.

• This resource list from the National Council of Nonprofits explores the ways nonprofit organizations should approach the subject of budgeting.
• Forecasting shouldn’t be a shot in the dark; rather, it should be a methodical process that takes into account all relevant information.
• It includes major purchases like buildings, vehicles, technology systems, or equipment that will serve your organization for several years.
• By organizing your budget and allocations this way, you’re also setting up the accounting system to track and report the three functional expense categories required on audits and the IRS Form 990.
• Withum’s Outsourced Accounting Systems and Service Team is here to support your nonprofit’s accounting and finance operations.
• Once expenses are categorized, determine the amount you will allocate to each area.

What is a Nonprofit Budget Template?

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 https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ 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. It typically requires getting income from multiple sources for nonprofits to thrive.

This budget template is designed to help nonprofits quickly and accurately estimate operating expenses while creating a plan to reach their goals in the new year. Every nonprofit is unique, so feel free to adjust the categories and templates to fit your needs. Here’s your step-by-step guide to creating an effective and sustainable budget to fulfill your organization’s mission. The primary purpose of nonprofit budgeting is to ensure that the organization can meet its goals without running out of money. It involves tracking where your funds are going and identifying areas where you may need to cut back or raise more money. We have different budget templates here on our site, but we focus on nonprofit budget template especially because of the nature of their types of templates.

Session Time-Out

You can easily find pre-built templates for operating budgets, program-based budgets, and grant proposals. An effective nonprofit budget prioritizes important things that push your goals forward. The more resources and funds you dedicate to them, the more likely you will reach your objectives. Remember, every nonprofit is unique, and your main sources of income might differ from others. The key is identifying your revenue streams and making realistic estimates for each. This helps you plan better and avoid financial surprises down the road.

Sample Annual Nonprofit Budget Template

• This can have some advantages, as it can be easier to get an idea of what has been spent in the past and can help to predict future spending.
• Evaluate the importance of each area and the potential impact on your mission.
• Here’s a comprehensive, step-by-step guide to building a budget that supports your nonprofit’s mission effectively.
• If you want to move into a new office space this year, you can estimate the rent.
• Be sure to include these expenses if the organization needs to rent or maintain a physical location for its operations.
• Budgeting for nonprofit organizations involves unique considerations, especially for trade associations operating under section 501(c)(6) of the Internal Revenue Code.

But even with these staggering numbers, many nonprofits—particularly small- to mid-sized organizations—are still underfunded. It’s easy to budget for costs that we foresee in the future, but what about the costs that we don’t plan for? Our advice is to set up a small contingency fund, no more than 10% of the budget, so those costs are accounted for.

Givebutter’s top-rated tools are free because of donor tips, which helps it maintain the lowest pricing in the industry. Plus, Givebutter’s comprehensive fundraising platform includes a built-in CRM, marketing and engagement tools, and world-class fundraising features—all designed to help you reach your goal. Within five (5) business days after we receive your registration request for an online course, you will receive an email with the details needed to get started, including your username and password. Participants must login within 30 days upon receiving their username and password. Participants may apply a maximum of 12 hours of online courses towards the Nonprofit Management Certificate. Review your actuals against your budget at least every quarter to ensure everything you planned for is still in line and to make any forecasting adjustments.