Once you have your budget, compare the predicted numbers to the actual figures every month in order to look for differences and establish why they occurred. When your organization is not in line with the budget, you should look at “why,” and what factors you can control or change. This is where the budget becomes an effective management and operations tool for your organization. This allows for a better overview, more speedy addressing of any potential issues, more nimble management of the staff and volunteers, and a more informed everyday decision-making process.

• A nonprofit operating budget helps you plan ahead and use your resources to serve your community.
• There are two primary ways that a nonprofit organization can choose to budget its finances – historical budgeting and zero-based budgeting.
• In 2023, it allocated 46% of its program budget ($58.2M) for emergency disaster response.
• This helps get their buy-in to the process and encourages them to work within the budget once it’s approved.
• It also breaks down the nonprofit’s operating expenses and overall costs.
• Social service agencies frequently utilize them for government contracts, appreciating the templates’ detailed breakdowns of personnel and program costs.

Administrative Expenses

For each scenario, you should outline specific action plans to maintain financial stability. This proactive strategy enables quick, informed decisions when faced with financial fluctuations, ensuring your nonprofit remains resilient and mission-focused throughout the year. Administrative expenses might not be the most exciting part of running a nonprofit, but they’re absolutely necessary. These costs cover the behind-the-scenes essentials that keep everything moving smoothly. Many nonprofits hesitate to reveal how much they spend on overhead costs with donors. Reframing overhead costs as stepping stones to making an impact can help donors understand why not all their funds go directly to programming.

Examples of Fundraising and Marketing Costs

Financial reserves act as your organization’s safety net, providing stability during funding gaps and https://greatercollinwood.org/main-benefits-of-accounting-services-for-nonprofit-organizations/ opportunities for strategic growth. As such, a budget for non-profit organizations should start fresh each year. Zero-based budgeting requires examining every expense anew, regardless of its history in your organization.

The Nonprofit Administration Dilemma: How Much Should You Spend on Fundraising?

• Nonprofit fundraising, donor management, marketing, operations, community and project management, social media, branding, graphic design, website production.
• The best way to calculate your expected income is to review your organization’s financial history and base your estimates on that.
• While there will inevitably be some assumptions in your budget, try to work with real numbers as much as possible.
• Repeat this exercise for every line item in your nonprofit’s first budget.
• There should be enough lines in your budget to provide for a comprehensive understanding of the financial situation.

Are you looking to expand a program, hire additional staff, or purchase new technology? Creating a budget for your nonprofit organization is a meticulous process that demands careful planning and execution. Leveraging a comprehensive tool like NonProfit+ can significantly streamline this process, helping you create a budget that is realistic, achievable, and aligned with your organization’s goals. This toolkit empowers nonprofits to move beyond basic budgeting and embrace financial 5 Main Benefits of Accounting Services for Nonprofit Organizations management as a strategic driver of mission impact.

Regular comparison of budget versus actual figures highlights areas needing attention before they become problems. Variable costs, like program supplies, event expenses, and part-time staff hours, offer flexibility when funding fluctuates or new opportunities arise. This alignment should be evident in both resource allocation and program funding decisions.

• We’ll explore why budgeting is crucial for nonprofits and share 9 proven tips that successful organizations use to maintain financial stability while advancing their mission.
• It’s time to ask yourself some questions about the programs and services your new nonprofit will provide this year.
• It’s crucial that the budget be centered around the primary goals and objectives of the organization.
• It typically requires getting income from multiple sources for nonprofits to thrive.
• For example, the rent for your office is likely a fixed expense due to your contract with the building’s management company.
• Ed is a seasoned professional with over 12 years of experience in the Governance space, where he has collaborated with a diverse range of organizations.

Additional Resources and Links

She has produced over 100 events and raised millions of dollars for organizations Cystic Fibrosis, Jane Goodall’s Roots and Shoots and Union Rescue Mission. Below I share with you an effective nonprofit event budget worksheet that is easy to create on an Excel spreadsheet. As a person who has struggled with math, learning how to create a  nonprofit event budget was daunting. Not only are there a ton of numbers and figures, which typically make my pulse race anyway, but also there are so many budget items to figure out and include. Tip #8 Separate operations expenses from capital, equipment, and special projects. If you’re planning on purchasing a vehicle, renovating a facility, or have some other special project in mind, create a separate budget just for that.