10 tips for creating budgets at nonprofit organizations

If you have started a new nonprofit, you will still need to create a budget. This can be a daunting task for a new nonprofit because you do not have history to review, but there are some tips that can help make it easier. If you are comfortable working with numbers and have a good understanding of your organization’s finances, you may find that zero-based budgeting is not as difficult as it initially seems. Historical budgeting simply means using the previous year’s budget as a starting point for the coming year’s budget.

Determining and Allocating Expenses

The templates we’ve included in this article can assist you in creating a more efficient nonprofit annual budget. But first, if you’re serious about making a plan, here are some guidelines to follow. In crafting a robust budget for your organization, utilizing budget templates can streamline the process, ensuring accuracy and https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ ease of financial management.

• It’s important to budget because it helps the organization manage its funds in a more effective way.
• It also means any extra funding you have at the end of the year can be put into a long-term savings account for your nonprofit.
• If you’re creating a budget for the first time, create as reasonable a list as possible of expenses.
• There’s no “right” approach to organizational budgeting—you must find the one that works best for you.
• Explore all of the different sources of funding for nonprofits, popular funding models, and five simple steps for kickstarting a funding strategy for your organization.
• Now that you understand your nonprofit’s financial goals, it’s time to begin drafting your budget.

Administrative Expenses

Take control of your business finances with our comprehensive and user-friendly budgeting template. Effortlessly track expenses, analyze budgets, and achieve financial success for your business. Effectively handle project budgets using our free Google Sheets template. Stay informed about expenses, monitor costs, and enhance the financial performance of your project. The decisions you make about revenue and expenses should always align with your organization’s goals and the impact you’re striving to achieve. Although it’s never too late to make a budget, the process should ideally start two or three months before the beginning of your next fiscal year.

• A nonprofit operating budget is a financial document that provides an overview of how a nonprofit organization is planning to spend its money.
• It’s not so much about setting goals as it is making a plan for how you’ll meet your goals.
• Cash flow ensures your organization can meet its obligations month-to-month.
• A popular methodology for this kind of planning is the S.M.A.R.T model, originally formulated for determining management goals.
• A well-structured nonprofit budget aligns expected financial resources with your organization’s mission and goals, ensuring financial sustainability while maximizing project impact.
• Nonprofit operating budgets typically include expected revenue as well as various expense categories that reflect the organization’s day-to-day activities and operational needs.

Try BetterWorld’s robust suite of charity & nonprofit fundraising tools for FREE!

Even the most detailed research into anticipated costs can’t account for all economic and market variables. If your organization does any kind of travel, 5 Main Benefits of Accounting Services for Nonprofit Organizations sends mail, or has any kind of event involving catering, your actuals will certainly vary from your budget. Whoever does the grant writing will inevitably need some form of the budget to accompany most applications. Many foundations and most government agencies will have detailed rules about what can and cannot be included in a proposal budget. This organizing principle will help to track spending against your budget throughout the year and allow managers to identify what flexibility is available to them for mid-year adjustments.

The Importance of Budgeting for Nonprofits

A nonprofit operating budget template can help you make sure you’ve hit all the bases. That’s why we’ve put together the ultimate guide to making your own nonprofit program budget — complete with THREE free nonprofit budget templates. Revenue may not stream in as expected and large, unexpected expenses can creep up.

Ensure that all stakeholders understand the budget and are committed to adhering to it throughout the fiscal year. These documents provide valuable insights into the organization’s financial health and performance, allowing nonprofit leaders to make informed decisions and adjustments as needed. Unfortunately, it often excludes people outside an organization’s finance team. Similarly, the budget is often too focused on the present knowns without regard for the unknowns or the future.

Sample Non Profit Startup Budget

This will not only help create a more accurate and comprehensive budget but also ensures buy-in from key stakeholders. Rushing the budgeting process could cause errors, which could result in future issues – especially troubling for nonprofits who need to report their finances and budgeting to grantors. In this section, we’ll look at a few key steps you’ll need to create an effective nonprofit budget sample.