In determining the income budget, the committee will need to project income based on the current fundraising and revenue activities. This is also sometimes called a “broad scope budget” or an “annual budget” because it gives you a full picture of what the coming year should look like. A nonprofit operating budget template can help you make sure you’ve hit all the bases.

Consider fluctuations in revenue and expenses.

• Instead of predicting revenue by individual grants or line items, the cutoff method looks at revenue as a whole.
• For example, one of the helpful grant budget examples comes from the Substance Abuse and Mental Health Services Administration (SAMHSA).
• Whether you’re planning for the year or managing a specific project, a budget helps you organize your income and expenses.
• While there will inevitably be some assumptions in your budget, try to work with real numbers as much as possible.
• There are also a number of accounting software programs that can help you create and manage your nonprofit budget.

One key reason many nonprofits struggle when it comes to accounting and finances is their failure to treat their organization as a business. While nonprofits and small businesses differ in many ways, managing your nonprofit’s finances similarly to how you’d run a business is essential for success. There are many resources around best practices including the Council of Nonprofits and AAFCPAs. Zero-based budgeting, on the other hand, starts from scratch each year, with all expenses being justified anew. This can be a more time-consuming and difficult process, but it can also lead to a more accurate and transparent budget. A cash flow budget is focused on covering big expenses like capital projects or payroll work.

Importance of Budgeting for Nonprofits

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. The organization has planned to spend $102,500 on operations and projects (expenses) and expects to raise $135,500 through donations, fundraising events, and program fees (revenues). Track your nonprofit’s project-specific budget with this basic template. List income sources and figures in monthly columns to determine month-by-month total income.

• Use a free template to get you started and once you’ve added any unique requirements to it, this can be reused for subsequent budgeting sessions.
• Then determine how you might secure the remaining amount (e.g., grants, fundraising events, participant fees).
• That’s why Relay (that’s us! 👋) helps nonprofits organize cash across multiple checking accounts.
• Most likely, your organization’s executive director will lead the budgeting process, but a nonprofit accountant can also provide support.
• During your last budget review meeting of each quarter, review your financial data more closely and take more time to visualize the current and future state of your organization’s activities.
• Donors and stakeholders demand transparency in how their contributions are utilized.
• This guide will cover the five important sections that every nonprofit budget should include.

Create an annual total for your budget.

If you haven’t developed a program description yet, think through all the activities required to plan for and implement the program. As you’re thinking through all those activities, write down all the expenses for each one. The first step to create a program budget is to make a list of all the expenses your organization will have The Key Benefits of Accounting Services for Nonprofit Organizations to cover annually for the program to be successful.

Nonprofit Budget Templates for Your Organization

However, this doesn’t mean that your nonprofit’s overhead spending can go unchecked or should be prioritized over program expenditures. Instead, treat this as a guideline to reduce overhead spending (within reason) before taking funding away from your programs if you need to cut costs. Note that some revenue sources bridge multiple categories and can be organized in different ways. For example, some nonprofits list corporate grants with their other grant funding, while others consider them a type of corporate philanthropy.

Customize your template based on your organization’s specific needs and reporting requirements. Consider board expectations, grant requirements, and program manager input. A budget for non-profit organizations must account for timing differences between revenue and expenses. Regular performance reviews and cost-benefit analyses help optimize resource allocation and ensure each program advances your mission effectively.