Nonprofit Budget 2025: Steps, Planning, Examples & Template
Without a budget, you https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ can find yourself in deep water, fast, with more money going out than coming in. “We get to help shape the leaders of tomorrow. I want that future to be bright.” If you are looking for a more transparent and accountable budget, you may want to consider using a zero-based budget.
Hire An Accountant or Use Accounting Software to Help
Successful nonprofits prioritize competitive compensation to attract and retain talented staff while maintaining transparent communication with donors about staffing costs. Beyond mapping out your expenses and revenues, this financial plan also helps you monitor your organization’s activities and ensure you use your funds wisely to support your mission. Since you’ll detail the source of each line item, you can pinpoint which areas need more resources and where you can cut back on spending. The cost of administration, categorized as indirect costs, adds value to every program at a nonprofit. Programs are more effective, better managed, and more responsive to the community when an organization has good accounting and technology, high quality leadership, planning, and governance. In order to have a true picture of what our programs really cost, we must allocate these indirect or administrative costs as well.
Budgeting for Nonprofits
For example, one of the helpful grant budget examples comes from the Substance Abuse and Mental Health Services Administration (SAMHSA). You can download this example here and repurpose it to use as your own budget template. There are several types of grant budgets you might use in a grant proposal. Even if you have the perfect idea for a new project, you will still lose out on funding if your grant budget isn’t feasible and in line with the funder’s priorities. No one wants to give money to a nonprofit in a precarious financial situation. Early in my career when I was really getting the hang of fundraising, we ended a year with a $50,000 surplus.
- You’ll thank yourself later for having worked towards a long-term plan from the start.
- Consider outsourcing your back office to a bookkeeping, accounting, and CFO services provider with extensive experience in the nonprofit sector.
- They support complex calculations, web and Excel integration, donation tracking, and invoicing.
- Moreover, a well-thought-out budget acts as a financial cushion, helping your organization navigate unforeseen challenges without straining your resources.
- Are you currently working on creating a budget for your nonprofit organization?
- There are lots of budgeting templates available online or you could create one of your own.
Content Management System
Involve key stakeholders in the planning process and create regular review cycles for monitoring and adjustments. You should also have a plan for how to effectively manage your funding, which is where your financial strategy comes into play. America’s 1.5 million nonprofit organizations are at the heart of our communities, from supporting arts and culture to providing essential services for people in need.
You see, your annual operating budget is the numbers version of your annual plan. It tells in numbers what you’re planning to spend money on during the year. The overall point of nonprofit accounting is accountability—demonstrating to stakeholders that your organization is using its funding to further its mission. One major way this figures into developing your budget is in the form of restricted funds, or revenue that has been designated for a specific purpose. You might have heard of the 65/35 “rule” of budgeting, which recommends that nonprofits spend about 65% of their funding on programs and 35% on overhead.
- A budget for non-profit organizations must account for timing differences between revenue and expenses.
- Learn the essentials of developing a nonprofit budget—tips, best practices, and free resources to help you build a strong, credible budget or refine your current one.
- Regular performance reviews and cost-benefit analyses help optimize resource allocation and ensure each program advances your mission effectively.
- This category includes things like educational materials, workshops, and conferences.
- For example, WWF (World Wildlife Fund) frequently reviews its budgets to optimize spending for conservation projects, making data-driven decisions for global campaigns.
Nonprofit Operating Budget vs. Capital Budget
That’s not the case for most nonprofits, which have separate arms for raising money and carrying out their missions. All operating budgets can be broadly split into two categories – revenue and expenses. Are you looking to expand a program, hire additional staff, or purchase new technology? They can be one time, recurring, or anything in between—if it costs you, then it’s an expense! The closer to accurate you can get documenting your expenses, the easier it’ll be to stick to your budget. Your operating budget shouldn’t be confused with your capital budget.