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). The primary purpose of nonprofit budgeting is to ensure that the organization can meet its goals without running out of money.

• Candid templates are highly regarded for their alignment with funder expectations.
• After all, sometimes you have a boost in revenue, or get hit with a pesky unexpected expense.
• 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.
• Even still, some donors may be unwilling to contribute directly to overhead costs.

Figure out your expenses

Having your program directors carefully create budgets for each of their programs will knock out a big portion of the data you need to produce an overall nonprofit budget. The purpose of budgeting for nonprofit organizations is for it to reflect your realistic financial goals and plans for the upcoming year. Most financial experts recommend nonprofits maintain cash reserves equal to 3-6 months of operating expenses. However, your optimal reserve level depends on factors like funding predictability, program commitments, and growth plans. Start by building toward three months of reserves, then adjust based on your organization’s specific needs and risk factors. When estimating fundraising income, don’t forget to look at multi-year trends in your organization’s fundraising.

Financial Management and Financial Documents

This ratio shows the potential risk of a major reduction in funding if this source is reduced or stops. It is good practice to monitor your budget every month and compare predicted numbers to the actual figures to look for differences and understand why they occurred. If you are not The Key Benefits of Accounting Services for Nonprofit Organizations in line with your projected budget, look at what changed or what could have been controlled. Take our 2-minute survey to find out if outsourced accounting and bookkeeping is a good fit for your organization. Looking over your budget with new hard data will allow you to make any tweaks as necessary and head off serious potential problems. Use this free budget if keeping on top of your deliverables and ensuring the execution thereof is of the utmost importance to your organization.

Calculate your nonprofit’s expenses 📊

• Your cash flow is the movement of money that comes in and out of your organization.
• For example, the rent for your office is likely a fixed expense due to your contract with the building’s management company.
• Most financial experts recommend nonprofits maintain cash reserves equal to 3-6 months of operating expenses.
• Budgeting your revenue based on its source allows you to make the most accurate projections.
• Contact us today to learn more about how we can help your organization unlock its full potential by getting its budget on track.
• A nonprofit operating budget is different than the capital budget, and it plays an important role in budgeting for nonprofit organizations.

The natural expense method categorizes costs according to the nature of payments made, while the functional expense method categorizes expenditures based on how they further your organization’s mission. Although considering natural expenses is helpful during the planning process, your final budget should use functional expense categorization to match your financial reports. Finding the right sample nonprofit budget template can feel overwhelming. This article has explored several valuable resources, each offering unique features and benefits. From the comprehensive toolkit offered by the National Council of Nonprofits to the user-friendly QuickBooks templates, you now have a range of options to consider. The key is to choose a sample nonprofit budget template that aligns with your specific needs and adapt it to reflect your unique programs and activities.

To clear up any confusion surrounding these resources, we’ll begin by answering some common questions about nonprofit budgets. When it comes to budgeting, context is essential when considering every item. Think about where your organization is right now, the current donor climate, and your current expense climate. Or perhaps you have other unusual expenses, fund shortages, or fundraising windfalls that you need to make special plans for.

• Keep your goals and objectives in mind when allocating resources, ensuring that they are aligned with your mission and priorities.
• Grab a free copy of this comprehensive guide to developing your business from scratch.
• Effectively handle project budgets using our free Google Sheets template.
• He’s been a dedicated board member of many nonprofit organizations – including seven years working for Amnesty International USA – where he was the Director of Development and Chief Financial Officer.
• While that check supports a large portion of your expenses, you have to make sure you evenly distribute it throughout the year, or you might not have enough cash to cover expenses at the end of the year.

Marketing and fundraising expenses

• This not only helps create a more accurate and comprehensive budget but also ensures buy-in across the board.
• With these easy steps, you’re well on your way to creating a workable, up-to-date budget to help your organization thrive.
• It will cover all the expenses required to keep the organization running, from salaries and utilities to technology and insurance.
• A nonprofit budget is a document that enables your team to plan for expenses and allocate resources.
• You’ll need a program budget every year, so get your docs in order for the years ahead and plan a clear budgeting process.

Zero-based budgeting requires examining every expense anew, regardless of its history in your organization. This alignment helps create more accurate forecasts and smoother cash flow management. Many nonprofits https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ strategically select their fiscal year to align with their operational rhythm.

Community foundations have implemented these templates to manage diverse funding streams and track expenditures effectively. Even arts organizations with complex funding structures have successfully leveraged BoardSource templates to simplify their financial management. These real-world examples demonstrate the templates’ adaptability and practicality for a range of nonprofit contexts. After completing the full program-based budget or financial analysis it’s worthwhile to take a fresh look for both accuracy and a gut check.