The Ultimate Guide to Nonprofit Budgets + 3 FREE Templates

Once the budget has been created, it is important to monitor actual expenses and income on a regular basis. This will allow you to make adjustments as needed to ensure that the organization remains on track to meet its financial goals. For example, if the organization is planning to launch a new program, then the budget may need to include funds for start-up costs such as marketing and program development. Your nonprofit’s budget should be organized to align with other key financial resources, including your internal records, financial statements, and tax returns.

• Tracking this number tells you how much you have with you at any given point.
• To turn their visions into reality, nonprofits require a clear and comprehensive financial plan, and that’s precisely what an operating budget provides.
• His passion lies in empowering these entities to optimize their operations through the strategic integration of technology, particularly in the realms of Governance, Risk, and Compliance (GRC).
• Mark the events in everyone’s calendars, so that it becomes easier to repeat the process each year.
• For smaller nonprofits, free or low-cost options like Wave or Mint can provide basic tracking and reporting features.
• Start with setting clear goals and bringing in key stakeholders—such as program managers and department heads—who can provide detailed estimates of expected costs and revenues.
• His entrepreneurial journey started as an accountant for two Big Four accounting firms, then to managing rock bands for 10yr.

Know the Nitty-Gritty of Getting a Business Credit Card

• An operating budget for a nonprofit is a financial plan that projects the organization’s revenues and expenses for a specific time period, usually a fiscal year.
• What’s more, when creating your budget, you will find gaps in your operations where you could potentially save money or invest more.
• As a result, they need to evaluate their budget and make cuts while continuing to grow.
• Are you looking for new ways to keep up with the hustle and bustle of your nonprofit organization?
• An annual operating budget can help you keep your business finances on track and promote organizational growth.

Blackbaud Financial Edge NXT®️ delivers intuitive cloud fund accounting software designed specifically to meet the needs of nonprofits and tax-exempt organizations. When you’ve got big marketing dreams, a financial breakdown will help you decide where you really want to allocate your resources. You can keep all the information in one sheet, or break it up into different pages. A nonprofit budget template Excel creates is pretty similar to a nonprofit budget template Google Sheets does.

• The operating budget is essentially the organization’s planned expenses for the year, reflecting how much they anticipate spending to achieve their mission.
• The ability to make a positive impact in the communities they serve hinges on effective financial management.
• Board management software is a valuable tool in assisting nonprofits in budget planning.
• At least once a month, you should compare your forecast to your budget to ensure you’re on track to fulfill your mission.
• This shows the importance of operating budgets, because a $13 million organization is very different than a $475 million organization.
• America’s 1.5 million nonprofit organizations are at the heart of our communities, from supporting arts and culture to providing essential services for people in need.

Overhead Costs (Fixed)

Calculating your nonprofit’s overhead ratio is as simple as dividing the total overhead costs by the total amount of monthly income. A percentage higher than this might indicate spending that’s disproportionate to the amount of money a group can raise. See below for an in-depth guide on how to create a nonprofit operating budget to get yourself back on track. Driver-based budgeting helps your nonprofit align its financial planning with operational activities, making adjusting to changes and improving decision-making easier. It will cover all the expenses required to keep the organization running, from salaries and utilities to technology and insurance.

How Can A Charity Nonprofit Reduce Operating Expenses Without Sacrificing Quality?

In nonprofit financial management, these expenses typically represent 60-70% of the total budget, reflecting the commitment to hiring skilled professionals who drive the organization’s mission. Allocating competitive compensation ensures that talent is retained and motivated, which is essential when the organization tackles high-impact issues in underprivileged communities. Propel Nonprofits developed this guide and spreadsheet template to help nonprofits implement program-based budgeting and financial reporting. This resource is an overview of the concepts and management decisions needed to calculate the true costs of activities for a nonprofit and also a how-to guide for the accompanying spreadsheet template. You can find a glossary of terms in our resource library and below, a list of articles and resources for more in-depth discussion or technical guidance on this topic. The accompanying spreadsheet template may be used for a one-time analysis project or to implement ongoing program-based budgeting and financial 5 Main Benefits of Accounting Services for Nonprofit Organizations management practices.

Zero-based budgeting

• The committee will need to determine the costs for the upcoming program goals, organizational goals and strategic goals.
• “Our nonprofit will increase overall contributions by 20% by the end of 2024 through partnerships with local businesses and corporate sponsors.”
• It lets you track expenses closely, preventing overspending and identifying cost-saving opportunities.
• One of the key pillars of this financial management is the nonprofit operating budget.
• Some of the best options include Google Sheets, Excel, and budgeting software programs like Xero or QuickBooks.

Meticulous financial analysis and regular nonprofit cost analysis can help identify potential savings. Nonprofit organizations typically invest in digital tools to craft compelling fundraising campaigns and monitor the return on investment for these marketing efforts. For example, current data https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ suggests that over 60% of donors respond better to online campaigns with clear calls-to-action and efficient fiscal tracking.