Skip to main content
Bookkeeping

Nonprofit operating budget: 4 steps to get started

how to create a budget for a nonprofit

Use this operating budget template to ensure that your nonprofit has accounted for every single cost and expense. By doing so, you can keep an eye on your big-picture forecast with the assurance that every detail of your accounting is in order. Nonprofits can keep tabs on their annual program revenue vs. expenses with this easy-to-use nonprofit program-based budget template. Enter fundraising, grant, and other income figures to compare your nonprofit’s current budget to your year-to-date actual revenue.

Candid (Foundation Center) Budget Templates

how to create a budget for a nonprofit

Launched Queen Bee Fundraising to share the art of nonprofit event planning with organizations worldwide. A nonprofit event has five goals – fundraising, raising awareness for the organization, raising awareness of an organization’s programs, cultivation, and appreciation. The event’s budget plays into the profitability portion of those goals.

how to create a budget for a nonprofit

Step 9: Track and assess regularly

  • Work with this realistic baseline upon which you can create an accurate budget for your nonprofit organization.
  • Transform funder connections with our 10 expert-crafted cold email templates.
  • As much as you can, contact vendors and potential providers to get real estimates for costs.
  • Propel Nonprofits developed this guide and spreadsheet template to help nonprofits implement program-based budgeting and financial reporting.
  • Community foundations have implemented these templates to manage diverse funding streams and track expenditures effectively.

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. Creating a budget is a cornerstone in establishing the financial health and sustainability of your nonprofit organization. A well-planned budget not only ensures prudent financial management but also steers your organization towards achieving its mission effectively. In this blog post, we will walk you through the steps to create a robust budget for your nonprofit organization and explore how nonprofit accounting software can be a valuable ally in this endeavor.

  • You should also have a plan for how to effectively manage your funding, which is where your financial strategy comes into play.
  • Getting an idea of what these streams bring in will help you see how useful each of them are to your organization long-term.
  • This foresight allows you to plan proactively rather than reacting to cash crunches.
  • These usually include a comprehensive set of income and expense categories.
  • The cost of return envelopes to be included in a fundraising mailing would be assigned directly to fundraising.

FREE Fundraising Plan Template for New Nonprofits

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. At a minimum, you will be creating and reporting on an operating budget. This can be done by reviewing past financial performance and trends, as well as by considering any changes that may be coming up in the organization’s operations. Calculate monthly costs for line items that are easy to estimate on an annual basis and are relatively consistent.

how to create a budget for a nonprofit

Determine timeline

The National Council of Nonprofits Budget Toolkit has seen widespread adoption across the nonprofit sector. State nonprofit associations have integrated https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ the toolkit into their capacity-building programs, empowering member organizations with effective budgeting practices. Community development corporations have utilized the toolkit to manage complex projects and demonstrate financial sustainability to funders. Faith-based organizations expanding their programs have leveraged the toolkit to navigate the complexities of multi-faceted budgets.

Budgeting For Operating Expenses

how to create a budget for a nonprofit

They should divide about 75% to 90% of this budget into paying employees. A good nonprofit budget provides a framework for financial accountability. It demonstrates the organization’s financial health and responsible use of funds, which is essential for maintaining the trust of the board, donors, and other stakeholders. This category includes all the costs of hiring and retaining staff—including salaries, payroll taxes, health insurance, retirement contributions, and other benefits. Nonprofit organizations need to budget enough for these expenses to ensure they can attract and retain qualified staff while remaining financially sustainable.

  • While many funders and donors focus on program expenses, sustainable nonprofit organizations need appropriate investment in core operations.
  • Once the budget has been created, it is important to monitor actual expenses and income on a regular basis.
  • This alignment helps avoid wasting money on activities that won’t advance your mission.
  • I began to enjoy the process of penciling in numbers and evaluating an event’s potential profitability, and gained confidence in my ability to anticipate both expenses and revenue.
  • We had a client a while back with expenses over $600,000 a year for programs….
  • Note months that may have more revenue coming in or more expenses going out.

Organize your contributed income by source, e.g., individuals, foundations, corporations, net of special events, and any other income sources that might be relevant to your The Key Benefits of Accounting Services for Nonprofit Organizations nonprofit. 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). It’s also very important to the success of your programs that your revenue and expenses estimates are realistic.

Consider board expectations, grant requirements, and program manager input. A budget for non-profit organizations must account for timing differences between revenue and expenses. A budget for non-profit organizations must plan beyond immediate operational needs.