If there are significant deviations, they make necessary adjustments. They then forecast their expenses, keeping in mind their goal of serving more meals. This will increase their program costs, and they factor this into their budget. Keep these benefits at the forefront of your mind as you create your next budget. These might also be helpful reminders for your team if they need motivation to participate in the budget planning process.

#3 Nonprofit Grant Proposal Budget Template

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. Get our FREE guide to nonprofit financial reports, featuring illustrations, annotations, and insights to help you better understand your organization’s finances.

• Make sure that you clearly determine the roles and decision-making processes that will yield the most effective information gathering, analysis, and decision making.
• You can use a capital budget to ensure such initiatives have minimal impact on daily operations.
• Tip #8 Separate operations expenses from capital, equipment, and special projects.
• Your organization likely already has a sense of how much money it spends each year.
• Your nonprofit budget is meant to be a flexible document that changes as your circumstances do.

Steps to Creating a Nonprofit Budget

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). You may want to create both types of budgets to help your team stay on track and avoid https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ overspending. For even more detailed planning, you can also create a capital budget (used for long-term projects) and various grant budgets (for defining how you’ll use funds if your grant proposal is accepted). The process of building a nonprofit operating budget is fundamentally a planning process. Once adopted, the operating budget also becomes an essential financial management tool helpful in monitoring ongoing operations and organizational activities throughout the year.

• In our “Feeding Our City” example, the fundraising team’s budget for the year would be directly linked to the targets set by the services team.
• He is passionate about nourishing joyful organizational cultures, supporting equitable self-management, and building liberatory practices.
• Using the budgets, you can determine where you’re losing and earning the most.
• Alicia Radford, CPA (she/her) specializes in nonprofit accounting, consulting, and training.
• Use this as a guide to ensure your financial activities contribute to your organization’s financial sustainability and long-term impact.

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Understanding this can imbue each financial decision with a sense of purpose and meaning, motivating all those involved in the organization. Whether you select one of these budgets or use a combination, understanding how each is unique is the first step. Whether you’re with a large team or a solo entrepreneur looking to start the next great cause, we have a membership package that will help you grow your network and your cause.

Review And Adjust

Start with a nonprofit budget template excel sheet that includes all the expenses you can think of. Once adopted, nonprofit operating budgets become an essential financial management tool to plan and monitor operations and organizational activities through the year. This nonprofit budget example caters to nonprofits who need to send cash flow projections and budgets to funding organizations in order to secure grant monies. A nonprofit operating budget reflects the organization’s planned financial activities, showing how much it will spend on operations. Executive directors should plan and make sure the budget plan is centered around the primary goals and objectives of your organization. A nonprofit budget is a financial document used to plan how an organization will spend its money.

• At The Charity CFO, we’re here to help you master nonprofit budgeting.
• With this approach, you determine the anticipated funding from each fundraising source by multiplying the expected amount with the corresponding probability percentage.
• A nonprofit budget is a financial plan that details how a nonprofit organization will raise and spend money.
• For even more detailed planning, you can also create a capital budget (used for long-term projects) and various grant budgets (for defining how you’ll use funds if your grant proposal is accepted).
• Budgeting is a crucial part of keeping your organization on track and solvent.

For smaller nonprofits like “Feeding Our City,” incremental budgeting can be a practical choice. By building on the previous year’s budget and making adjustments based on anticipated changes, nonprofits can create an effective budget that supports their mission and goals. The purpose of budgeting for nonprofit organizations is for it to reflect your realistic financial goals and plans for the upcoming year. While the goal is to maximize resources and achieve mission-driven objectives, nonprofits often encounter significant challenges in their financial planning. Below, we explore the major challenges of a nonprofit budget proposal and provide real-world examples of how organizations have successfully addressed them. A nonprofit budget template is a fillable document that simplifies your budgeting.

Nonprofit Budgeting Challenges And How To Overcome Them

By now, you’ve created a solid foundation for a super-effective nonprofit budget. The next step is to forecast your organization’s revenue for the upcoming year. This can be challenging because, unlike for-profit businesses, nonprofits rely on a wide variety of funding sources.

It’s not designed to cover large expenses such as capital projects, i.e buying a building. Like many businesses, nonprofit organizations often lack the resources and funding to do everything they want. As a result, they need to evaluate their budget and make cuts while continuing to grow. In order to be as effective as possible with your nonprofit budget, you need to be strategic about how you use your money. The first step in creating a nonprofit budget is to determine the organization’s financial goals and objectives. This will help to ensure that the budget is aligned with the organization’s overall strategy and that resources are being allocated in a way that supports the achievement of these goals.