There are many resources around best practices including the Council of Nonprofits and AAFCPAs. When determining how to allocate funds, it is important to consider the organization’s overall goals and objectives. For example, if the goal is to increase access to services, then a greater proportion of funds should be allocated to program expenses. Alternatively, if the goal is to increase donor support, then a greater proportion of funds should be allocated to fundraising expenses. Effective financial management is the backbone of a thriving nonprofit, ensuring stability, transparency, and informed decision-making. Our free courses provide in-depth knowledge on key accounting principles, budgeting strategies, and reporting requirements to help your organization thrive.
Best Free☝️ Google Sheets Nonprofit Budget Templates for 2023
- Sometimes, it’s more beneficial to keep an eye on your revenue and expenses with a top-down approach to pinpoint major areas of concern.
- For example, Doctors Without Borders allocates a significant portion of its budget (over 80%) to direct program expenses, ensuring most donations fund medical care in crisis zones.
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- Use the same categories in your budget to easily generate financial reports to funders and others.
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- It helps them create and maintain a comprehensive budget plan that provides financial stability and supports their mission.
- For example, if the organization’s major sources of income are donations and grants, then the budget may need to include funds for fundraising activities and grant writing.
For the purposes of this article, we’ll focus primarily on operating budgets because of their central role in nonprofit finance. However, you can adapt some of our tips to create other types of budgets. Additionally, remember that any budget that covers a specific aspect of your nonprofit’s spending and fundraising should align with your operating budget. If you’ve created a budget for your household before, you probably averaged your expenses, calculated your income, and determined how much you could save for the future.
Fundraising
Most likely, your organization’s executive director will lead the budgeting process, but a nonprofit accountant can also provide support. 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. A budget for non-profit organizations often faces scrutiny over administrative expenses.
Sample Non Profit Budget Template
This is also a prime opportunity to clarify the annual goals from the strategic plan. The process of building a nonprofit operating budget is fundamentally a planning process. Once adopted, the operating budget also becomes an essential financial management tool helpful in monitoring ongoing operations and organizational activities throughout the year. With each reporting period, the organization compares actual performance against its plan.
The Ultimate Guide to Nonprofit Budgets + 3 FREE Templates
If you’re not sure how to create a nonprofit budget, consider hiring an accountant or accounting service. They can help you estimate your income and expenses, and they can provide guidance on how to best use your resources. A nonprofit budget is a planning document used to predict expenses and allocate resources for your organization. It details the costs your organization will incur and the revenue you expect to receive over a set period of time.
You’d then use those numbers in your budget (e.g. if you allocated a 50% chance to a $10,000 grant – you’d use $5,000 in your budget). Monitoring your revenue and expenses should ideally become a part of your nonprofit’s organizational culture, something everyone is aware of and contributes to. Mark the events in everyone’s calendars, so that it becomes easier to repeat the process each year.
- Tracking this number tells you how much you have in the bank at any given time.
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- And, by reviewing your budget often, you can make sure that you’re on track to reach your financial goals.
- Thus, it is essential to take note of the incoming and outgoing of the organization’s acquired funds to achieve the objectives as set by the organization.
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Program expenses
Fixed costs are expenses that remain constant, such as rent or salaries, while variable costs fluctuate based on activity levels or other factors, such as utilities or event expenses. If you’re looking for additional ways to streamline operations and fundraising, take a look at Sumac’s donation management software. You can keep all the information in one excel sheet, or break it up into different pages.
- These sections will provide a solid foundation for managing your funds wisely so you can stay focused on what really matters—your cause.
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- Make your goals SMART—specific, measurable, actionable, relevant, and time-bound.
- To calculate year-end budget totals, contrast income (e.g., sales, contributions, fundraising, etc.) with expenses (e.g., office equipment, transportation, utilities, etc.).
- Create a detailed personnel tab by listing each employee’s base salary for the year and calculating bonuses, benefits and taxes as a percentage of the known salary.
Whether you are just starting out or are looking to improve your existing budgeting process, nonprofit budget templates are the perfect tool for you and your organization. https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ 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 the budgeting process to create a comprehensive strategy that relies on a variety of perspectives.
