To get started, you can use financial statements to provide you with data that can guide you through the budget creation process. On the other hand, if an effort helps two or more https://greatercollinwood.org/main-benefits-of-accounting-services-for-nonprofit-organizations/ programs and comes under the purview of communications, it forms part of the communication budget. For example, if you send a text survey to donors who supported any fundraiser in the past quarter. It is crucial to begin setting your nonprofit’s budget by defining communications to know your expenses and set realistic expectations from the investments. To choose the right channels, nonprofits can consider their target audience’s media consumption habits and preferences. For example, if their audience is primarily active on social media platforms like Facebook or Instagram, they may want to focus their efforts on those channels.

Budget for Non-Profit Organizations: A Comprehensive Guide

When making a budget, it’s also important to track inflation and fringe benefits, especially if you are building a projected budget over several years. Nonprofit staff members should be aware of the difference between restricted and unrestricted funds so that they can understand the differences between program budgets. For example, ASF charges $5 per student per session, so their revenue would be the 5 Main Benefits of Accounting Services for Nonprofit Organizations total number of students served multiplied by $5 each. They also have individual donors and crowdfunding donations that are counted as revenue. It’s important to differentiate between what might be a startup and one-time initial costs and regular costs.

Tip for Reducing Travel Expenses

For new expenses, request quotes from vendors or providers to budget for these costs as accurately as possible. For example, you may reach out to the new bus company you plan to use for your organization’s summer camp to estimate how much their services will cost. Additionally, you’ll indicate whether these funds will come from program, management and general, or fundraising activities.

Identify program specific and general income categories

By doing so, the organization could save 8-10 hours per week, enabling staff to dedicate more time to supporting survivors. Additionally, automation tools could help reduce bookkeeping errors by categorizing expenses and matching donations to grants. The golden rule for nonprofit budgeting is to stay optimistic about general trends but cautious about specifics. While historical patterns are valuable, it’s equally important to monitor emerging trends. One of the top five reasons non-profits struggle financially isn’t a lack of funding in the market—it’s because most likely they’re doing it wrong.

Pick Your Tactics & Plan Ahead

In contrast, the budget-to-surplus practice is about looking to the future to ensure your organization’s long-term sustainability. Take time to organize the budget document to make it easier for your grant writer(s) to extract the necessary allowed expenses. It’s better to be pleasantly surprised when that new donor does renew at the same level than to be unpleasantly surprised that only two of last year’s five new donors renewed at all.

The cash flow clarity your cause deserves

• For example, a homeless shelter using this feature could detect rising winter utility costs exceeding the budget and quickly adjust its fundraising strategy.
• For instance, if year-end donations traditionally make up 40% of annual revenue, don’t assume this pattern will continue indefinitely.
• Changes to the budget should be made in order to stay on track with strategic goals.
• The needs of a food bank are different from a community & economic development organization and from a performing arts nonprofit.
• Most organizations work with two primary budget types, each serving distinct purposes in your financial strategy.
• Leveraging technology for efficient operations helps minimize administrative overhead costs and enables nonprofits to allocate more resources toward mission-critical activities.

However, one surprising study found that almost 20% of nonprofits had no firm budget and simply played it by ear, month to month. Given the importance of the executive director to the organization’s success, boards often spend very little time thinking about his or her salary, and perhaps even less talking it over with the executive. Setting the top salaries is a strategic choice that boards should not be shy about bringing into the open and discussing with candor. More disturbing than generally low salaries are the gender differences in salary.

Small Business

Technology expenses in nonprofits have grown as digital platforms play an increasing role in resource management and program delivery costs. Bookkeeping, donor management systems, and communication tools can represent 5-10% of the overall budget. In addition, efficient resource distribution often leverages technology and is a call to action for many charity nonprofits.

A Complete and Actionable Guide to Nonprofit Budgeting in 2025

It is important to monitor the budget throughout the year in order to keep a close eye on your nonprofit’s strategic plan and performance. Comparing budget vs. actual results allows you to stay on top of variances and make changes as needed. Monitoring the budget is important in order to keep track of their strategic plan and how they are performing. Additionally, monitoring the budget allows for adjustments to be made so that the nonprofit can stay on track with their goals.

Master Fixed and Variable Cost Management

Involve key stakeholders in the planning process and create regular review cycles for monitoring and adjustments. Nonprofit budgeting is the process of creating a plan to manage an organization’s income and expenses. This financial plan serves as a roadmap, helping nonprofits allocate resources effectively to achieve their mission. By automating and simplifying the budgeting process, these tools can free up time for staff to focus on the organization’s mission, while ensuring sound financial management.