How to Create a Nonprofit Operating Budget + Free Template

The ultimate guide to selecting the best accounting and financial management software for your nonprofit. In this guide, you’ll walk through the essentials of budgeting for nonprofits, covering different budgeting methods, best practices, and key components. In fact, a survey conducted by Sage found that nonprofits rank budgeting and financial planning as one of their top five internal challenges. Are you responsible for managing a nonprofit’s budget, or are you looking to support an organization and want to understand how its finances work? This includes estimating the costs of running your organization; such as salaries, rent, office supplies, and marketing. We have different budget templates here on our site, but we focus on nonprofit budget template especially because of the nature of their types of templates.

Identify the organization’s major sources of income and expenses

This can be a more time-consuming and difficult process, but it can also lead to a more accurate and transparent budget. There is no one-size-fits-all answer to this question, as the steps involved in creating a nonprofit budget will vary depending on the specific organization and its financial situation. Nonprofits should revisit their budgetary goals and projections regularly. Typically, this process should occur at least quarterly, if not more frequently, especially in the face The Key Benefits of Accounting Services for Nonprofit Organizations of significant changes. By reviewing and adjusting budgetary goals and projections regularly, nonprofits can ensure they remain aligned with their mission, address emerging needs, and adapt to the evolving landscape. Ultimately, remember that your budget should categorize revenue by different funding sources and your expenses by program vs. overhead costs.

Download Your Free Nonprofit Budgeting Template

• Once your nonprofit budget is created, it must be reviewed and approved by the organization’s board of directors.
• Full Suite of Accounting, Payroll and Fund Raising and Fund Accounting applications for nonprofit organizations.
• It should include some typical sources of revenue and expenses, which saves you time on listing everything out.
• One key to writing strong grant applications is being clear about how you’ll use the funding you’re requesting.

The data is already available for nonprofits that track time for grants and contracts. If that has not been your practice we urge you to gather some accurate information by completing a timekeeping report or adding time reporting to payroll or database records. We know from experience that allocating time based on general estimates or gut feeling is often inaccurate. The goal of program-based budgets and allocations is to gain a solid understanding of the true costs, and staff cost is too important to leave to guesswork.

Resources

For example, let’s say an education-focused nonprofit had an ongoing program that provided free tutoring for high school students. Similarly, their expenses for supplies, classroom space, and marketing might fluctuate year to year, which the program budget should take into account. This sample budget for nonprofits is a template for an organizational budget for a fiscal year.

You can use a capital budget to ensure such initiatives have minimal impact on daily operations. By prioritizing mission-driven spending, you can clearly demonstrate to donors how their contributions directly support your organization’s goals and impact. It outlines your projected income and expenses over a specific period, usually a fiscal year. By the end, you’ll have the knowledge and tools to build a reliable financial plan with confidence that balances financial constraints with your nonprofit’s ability to carry out its mission. However, a solid budget helps you navigate these challenges, ensuring your nonprofit can operate effectively while making a meaningful impact.

What’s included in a nonprofit operating budget?

While program expenses are the core of your organization’s mission, fundraising and administrative costs also need to be properly accounted for to keep the lights on. Therefore, it can be helpful to establish these first and figure out what’s left. Before you can figure out where your nonprofit is going, it’s vital to figure out what happened in the past. Take time to collect financial data from previous years as best as possible. Additionally, for-profit budgets often have expenses closely linked to revenue, like the cost of goods sold or employee wages. That’s not the case for most nonprofits, which have separate arms for raising money and carrying out their missions.

• If the budget isn’t carefully crafted or doesn’t fall in line with the requirements of the funder, it could cause you to lose the award.
• By choosing Zeffy, you can save more on your nonprofit’s expenses and keep 100% of your donations, with no hidden charges.
• This is also where you should estimate any earned income or program fees if they apply to your situation.
• There are a few things to consider when budgeting for expenses in a nonprofit.

• As you begin creating any of these types of budgets, there are templates and resources available online to help you organize your nonprofit’s unique structure of revenue and expenses.
• Unlock the secrets to transforming your business from a job into a profitable, cash-generating machine.
• Using Excel, you can create tables that display the organization’s finances over time.
• Using the budgets, you can determine where you’re losing and earning the most.
• Budgets are often made for an individual, an organization, a business, a government, or simply about anything that creates and spends money.

In the following section, we will delve into budgeting practices that can aid nonprofits in managing their financial resources effectively. In the world of nonprofit organizations, mission-driven success and sustainability are paramount. The ability to make a positive impact in the communities they serve hinges on effective financial management. One of the key pillars of this financial management is the nonprofit operating budget.

Start planning in advance

Using these programs, you can easily set up financial reports that display the organization’s finances over time, track expenses and revenue, and create graphs that display your financial data over time. In conclusion, non-profit operating budgets play a vital role in the financial management and success of non-profit organizations. Propel Nonprofits developed this guide and spreadsheet template to help nonprofits implement program-based budgeting and financial reporting. This resource is an overview of the concepts and management decisions needed to calculate the true costs of activities for a nonprofit and also a how-to guide for the accompanying spreadsheet template. You can find a glossary of terms in our resource library and below, a list of articles and resources for more in-depth discussion or technical guidance on this topic.

Build Strong Financial Reserves for Your Nonprofit Organization

Create guidelines for when to adjust projections, shift resources between programs, or implement contingency plans. Regular nonprofit budget reviews help identify trends, catch potential problems early, and adapt to changing circumstances. Modern accounting software can automate much of this monitoring process, saving time while improving accuracy. Your budget template should serve as both a planning tool and a monitoring system. Beyond basic income and expense tracking, build in space for context and analysis. Note funding restrictions, timing considerations, and progress toward goals.