0192 Budgeting for Nonprofit Organizations online course Duke Learning Innovation & Lifetime Education

It’s important to be realistic in reviewing income sources and expenses. Board directors should be careful to consider the state of the economy and any unusual or unforeseen financial situations of their contributors. Historical budgeting simply means using the previous year’s budget as a starting point for the coming year’s budget.

• Take control of your nonprofit’s finances and start building your budgeting skills with these best practices.
• This will require prioritizing program delivery goals and setting organizational financial goals.
• Variable costs, like program supplies, event expenses, and part-time staff hours, offer flexibility when funding fluctuates or new opportunities arise.
• But all are usually surprised by at least some aspect of managing not-for-profit finances.
• Variable costs are directly tied to events, increasing or decreasing and changing with each situation.
• Once you develop your budget, you will have a clear plan for moving forward, shaped by concrete data and strategies.

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It should include some typical sources of revenue and expenses, which saves you time on listing everything out. If any of the sources don’t apply to you, you can just delete them—likewise, you can add anything that’s missing. 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.

Managing Restricted Funds

It provides a clear financial roadmap for achieving organizational goals. Analyze your previous balance sheets, income statements, and cash flow reports to understand your accounting services for nonprofit organizations organization’s financial health. Look for trends in income and expenses that can inform your budget allocations. Budgeting is a crucial part of keeping your organization on track and solvent.

Nonprofit Startup Operating Budget Template

• Getting input from stakeholders is important in the budgeting process.
• With income projections set, you can now map out expected expenses.
• Here’s a very basic example—but remember that your organization’s budget might be more complicated than this (or maybe even simpler!).
• Enter project expenses in the same month-by-month columns to compare total expenses to total revenue.
• However, the board offers important thought partnership at the start of the process, and will be responsible for approving the final budget annually.

Even still, some donors may be unwilling to contribute directly to overhead costs. But sooner or later you need to take a more formal approach, to meet compliancy rules, impress potential donors with clearly displayed information, or simply to avoid errors. Be sure to consider inflation, potential cost increases, and one-time expenses. While variations in funding may be beyond your control, make sure to monitor your expenses. In both cases, the standard advice is to start by reviewing past performance to isolate patterns, such as cyclical trends.

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Because nonprofit funding is often very flexible, it’s absolutely necessary to have many diverse revenue streams. When you’ve got big marketing dreams, a financial breakdown will help you decide where you really want to allocate your resources. Your operating budget shouldn’t be confused with your capital budget. A capital budget covers one-time expenses that will take years to fully fund, like major construction projects. Grant-makers have the potential to contribute large sums to nonprofits and board directors should ensure that they meet the grantor’s requirements to qualify.