Nonprofit operating budget: 4 steps to get started

For example, some nonprofits list corporate grants with their other grant funding, while others consider them a type of corporate philanthropy. If you’ve created a budget for your household before, you probably averaged your expenses, calculated your income, and determined how much you could save for the future. Nonprofit budgeting follows a similar process, except you’re projecting revenue and expenses for your entire organization. This toolkit empowers nonprofits to move beyond basic budgeting and embrace financial management as a strategic driver of mission impact. Most likely, The Key Benefits of Accounting Services for Nonprofit Organizations your organization’s executive director will lead the budgeting process, but a nonprofit accountant can also provide support. A good budget for non-profit organizations balances program delivery with operational sustainability.

See Financial Statements Through Your Accountant’s Eyes!

A budget for non-profit organizations needs structure without unnecessary complexity. Well-designed budget templates streamline financial management while ensuring you capture all essential information for decision-making and reporting. Even profitable programs can face challenges when expected revenue arrives months after expenses occur or when donation patterns don’t align with regular operational costs. Mastering cash flow management helps prevent these timing mismatches from disrupting your mission-critical work. Managing a budget for non-profit organizations effectively can make the difference between thriving and barely surviving. Industry research shows that most nonprofit organizations operate with less than six months of cash reserves, highlighting the critical need for smart financial management.

Benefits to budgeting for nonprofits

The goal is to avoid the “nonprofit starvation cycle” of never having enough to invest resources in infrastructure, or having an overhead that is “too lean” to effectively run the organization. Monitoring your revenue and expenses should ideally become a part of your nonprofit’s organizational culture, something everyone is aware of and contributes to. Mark the events in everyone’s calendars, so that it becomes easier to repeat the process each year. The budget paints a clear picture of how much cash is coming in and how much is going out. Budgets form the basis for boards to make better decisions and to avoid making mistakes. Budgeting allows boards to put limits on certain expenses as necessary and work to increase income sources early when it looks like there may be a shortfall.

Developing a nonprofit budget: The basics and best practices

• A nonprofit budget is a financial plan that details how a nonprofit organization will raise and spend money.
• Nonprofit budgeting follows a similar process, except you’re projecting revenue and expenses for your entire organization.
• To help you get started, we’ve created a basic nonprofit budget template to track your revenue and expenses.
• For most nonprofits, some programs may be financially self-sustaining or even generate a surplus.
• Are you looking to expand a program, hire additional staff, or purchase new technology?
• Nonprofit organizations receive donations and volunteer service to achieve the desired goals.

Often, the definition of programs is evident in how your organization delivers services and functions internally. https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ Some nonprofits identify every activity or grant as a separate program while others combine many activities under the umbrella term. For budgeting and allocations we suggest that you separate your activities into distinct programs that will provide meaningful insight into the financial model. As an example, an afterschool program may operate in two locations or be funded by three grants.

Revenue And Profit

• Budgeting for nonprofit organizations should always be in alignment with your strategic plan, and it should help to further your nonprofit’s goals and objectives.
• These expenses include salaries for administrative, support, and fundraising staff.
• Start by building toward three months of reserves, then adjust based on your organization’s specific needs and risk factors.
• This comprehensive approach makes it valuable for both seasoned financial professionals and those new to nonprofit budgeting.
• In our collection, you can find perfectly designed non-profit budgeting form templates that help you track your income and expenses efficiently.
• Nonprofit budgeting is a strategic process, creating a financial roadmap for organizations.
• Every nonprofit is unique, so feel free to adjust the categories and templates to fit your needs.

This guide and accompanying spreadsheet template break down the process of understanding true program costs, either through budgeting or financial reports, into several stages. In this way, accurate budgeting by calculating the current and expected revenue that the company receives with annual expenses and savings reduces the risk of failure. Download the budget sheet in Excel, Word, and PDF format which helps you to create a successful budget. If you are running a general fundraising campaign and don’t specify direct funding, those donations are unrestricted and you can use them at your discretion. This distinction, and maintaining an even balance of both types of funds, is critical for organizational health. If you only have restricted funds, you won’t have enough money to support your overhead costs.

Create Supplier + Partner Relationships, and Set Costs

We leave this step until last because some funders, including many government funders, will not allow fundraising expenses to be charged to their grants or contracts. Regardless of whether a funder will pay for fundraising expense, it remains part of the total cost of running each program and we need this information to be truly informed. This guide will provide startup nonprofits with an overview of budgeting — what information to track and how, and how to analyze your organization’s financial health. We’ll also discuss framework and tools to set-up, adjust, and analyze your own budget and financial planning, at any level of the organization. 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.

• If your nonprofit can operate remotely, you may be able to save a considerable amount of money in this category.
• As a small business owner, you must know how to go about opening your bank account and managing your finances through business banking.
• Now that you know what should be included in your nonprofit budget, it’s time to start creating one.
• Unlock the secrets to transforming your business from a job into a profitable, cash-generating machine.
• Seeing these things side by side gives you the tools to decide how you can best use your resources.
• Additionally, determine a timeline that ensures approval prior to the fiscal year-end.

The budget template sheets are a good way to keep track of all the revenues and expenses in an organization. It also gives a perfect overview of what is the current financial status of any business. This sample budget for nonprofits is a template for an organizational budget for a fiscal year. This includes program expenses, staff salaries, an operating budget and other expenditures. Once finalized you can create the nonprofit budget template in excel to make it easy for you to update next year. It helps them create and maintain a comprehensive budget plan that provides financial stability and supports their mission.