You can also explore alternative income sources, including corporate partnerships or social enterprise initiatives or collaborate with non-profits to pool resources and share expertise. Conduct thorough needs assessments and allocate resources strategically to activities that deliver measurable outcomes and align with the organization’s mission. Then, plan how you’re going to raise the funds you’ll need on the revenue side of the budget. This includes determining how much revenue will come from small, mid-level, and major gifts, as well as whether you’ll use any existing funding toward the initiative.

Inflation is hitting nonprofits hard: Here’s what you need to know

Blue Avocado provides space for the nonprofit sector to express new ideas. The opinions and views expressed in this article are solely those of the authors. They do not purport to reflect or imply the opinions or views of Blue Avocado, its publisher, or affiliated organizations. Blue Avocado, its publisher, and affiliated organizations are not liable for website visitors’ use of the content on Blue Avocado nor for visitors’ decisions about using the Blue Avocado website. As previously mentioned, the contingency line is about preparing for the unexpected within the budget year. In contrast, the budget-to-surplus practice is about looking to the future to ensure your organization’s long-term sustainability.

Get started with a free nonprofit budget template

The next step is to forecast your organization’s revenue for the upcoming year. This can be challenging because, unlike for-profit businesses, nonprofits rely on a wide variety of funding sources. This example shows the estimated expenses and revenues of a nonprofit organization that runs community programs.

• Alternatively, if the goal is to increase donor support, then a greater proportion of funds should be allocated to fundraising expenses.
• When your organization is not in line with the budget, you should look at “why,” and what factors you can control or change.
• A budget for non-profit organizations must balance multiple priorities while maintaining clarity and usability.
• It allows stakeholders, including board members, donors, and beneficiaries, to understand how funds are utilized and ensure that the organization operates with integrity.
• This granular approach reveals insights that traditional budgets often miss, such as hidden costs that could affect program sustainability.

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• For a nonprofit, the operating budget is the organization’s plan for the future.
• Many nonprofit leaders assume they can’t afford the type of back-office that’s required for effective nonprofit budgeting and comparing budgets vs. actuals.
• For example, if your nonprofit is a food pantry and you want to add shelving, don’t guess how much those shelves will cost.
• That means diligently tracking and recording expenses and revenue, plus program numbers (like number of people helped, number of dogs adopted, etc.).
• The first step is understanding true program costs across both hidden and obvious or necessary expenses.
• In fact, some estimates suggest that your payroll will account for 18-52% of your total budget.

Then, you can use any leftover revenue to build your nonprofit’s reserve funds. They also simplify monitoring financial progress and adjusting strategies as needed, proving indispensable for both new and established organizations. Explore a range of nonprofit budget templates available for download to enhance The Key Benefits of Accounting Services for Nonprofit Organizations your financial planning and ensure your organization’s sustainability.

No one wants to give money to a nonprofit in a precarious financial situation. If your fiscal year starts January 1, start working on your budget in September or October so you have plenty of time to create it and get it approved before you need to implement https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ it. So, here’s a helpful guide to creating a budget for your small nonprofit. With these easy steps, you’re well on your way to creating a workable, up-to-date budget to help your organization thrive. For one, they’re designed to reinvest any extra money back into the organization rather than take it out as income for business owners.

Make Sure To Review Your Budget Often

Many nonprofits also use a budgeting technique called cost-benefit analysis. This is an easy way for nonprofits to figure out what will work best for them based on the value it provides and whether or not the costs are worth it. Are you looking for more resources to support your nonprofit organization?

These templates are designed to be user-friendly for small to medium nonprofits and include both traditional budget formats and simplified versions for organizations with limited financial expertise. Beyond templates, TechSoup offers valuable resources like video tutorials and step-by-step guides, making budget planning accessible even for those new to the process. This holistic approach makes TechSoup a valuable partner for nonprofits looking to strengthen their financial management. Thankview’s Nonprofit Budget Template is specifically designed to help nonprofit organizations manage their finances effectively. It offers a user-friendly layout that allows for detailed tracking of both income and expenses, ensuring that organizations can maintain oversight of their financial health. You should also have a plan for how to effectively manage your funding, which is where your financial strategy comes into play.

Board management software solutions assist in budgeting for nonprofits

As such, a budget for non-profit organizations should start fresh each year. Zero-based budgeting requires examining every expense anew, regardless of its history in your organization. This balanced approach to cost management strengthens your organization’s resilience while ensuring resources remain available for mission-critical work. Variable costs, like program supplies, event expenses, and part-time staff hours, offer flexibility when funding fluctuates or new opportunities arise. When creating a budget for non-profit organizations, understanding these core elements is essential. Most organizations work with two primary budget types, each serving distinct purposes in your financial strategy.

BoardSource Nonprofit Budget Template

• 3 Please note that funds relating to Currencycloud’s services are not FDIC insured or protected by the Visa Zero liability protection policy.
• You can also explore alternative income sources, including corporate partnerships or social enterprise initiatives or collaborate with non-profits to pool resources and share expertise.
• Beginning from when the Board of Directors needs to approve the final budget, work backwards to set internal deadlines for preliminary drafts.
• Keep in mind the difference between fixed and variable costs when you are tracking expenses.
• Social service agencies frequently utilize them for government contracts, appreciating the templates‘ detailed breakdowns of personnel and program costs.

Make your goals SMART—specific, measurable, actionable, relevant, and time-bound. If you want to move into a new office space this year, you can estimate the rent. If you want to hire a new marketing director, you can look up salary trends to discover how much you need to pay them.