How to Create a Nonprofit Operating Budget + Free Template

Include revenue you expect to generate from fundraising events, grant proposals, individual donations, corporate sponsorships, and other sources of funding. Let’s dive into the details of a nonprofit operating budget—what it is, what to include, and how to put it all together. However, nonprofit revenue often comes from other forms of support such as donations, grants, and different types of contributions. So, nonprofit revenue can be divided into traditional revenue (sales and services) and other forms of support (donations accounting services for nonprofit organizations and grants).

Nonprofit Budget Templates for Your Organization

The closer to accurate you can get documenting your expenses, the easier it’ll be to stick to your budget. There are lots of budgeting templates available online or you could create one of your own. Most importantly, nonprofit budgets should be constructed around the organization’s programs and activities, which will help them stay focused on their goals. All operating budgets can be broadly split into two categories – revenue and expenses. Including contracted services in the budget lets you plan and allocate funds for these essential services.

Fundraising Nonprofit Budget

For example, your goal for 2025 can be to increase fundraising revenue by 20% to support a new educational outreach program. At least once a quarter (but ideally bi-monthly or monthly), compare actual expenditures against the projected budget to make sure your nonprofit is on track. QuickBooks Online is a small business accounting software and app that allows you to manage your business anywhere, anytime.

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• Feeling inundated with too many spreadsheets, repetitive data entry, and version-control issues?
• That’s why Relay (that’s us! 👋) helps nonprofits organize cash across multiple checking accounts.
• There are many resources to assist you with creating your own budget after you’ve considered all of the direct and indirect costs of your project.
• Unlike companies, however, most of your income will be in the form of donations.
• In the final section, we’ll explore the importance of leveraging expert financial services, such as Rooled’s outsourced CFO services, to optimize budget management and foster nonprofit success.
• For example, if you tell your donors that all donations will go directly to program expenses, those are then restricted funds that you need to exclusively use to support programs.

The next step is to forecast your organization’s revenue for the upcoming year. This can be challenging because, unlike for-profit businesses, nonprofits rely on a wide variety of funding sources. Most likely, your organization’s executive director will lead the budgeting process, but a nonprofit accountant can also provide support. The primary purpose of nonprofit budgeting is to ensure that the organization can meet its goals without running out of money. It involves tracking where your funds are going and identifying areas where you may need to cut back or raise more money. Well-developed budgets help your nonprofit be financially transparent with its https://holycitysinner.com/top-benefits-of-accounting-services-for-nonprofit-organizati/ team, board, supporters, and community at large.

Expenses

Striking the right balance is crucial for maintaining both operational efficiency and donor trust. We recommend setting aside at least 5-10% of your annual budget for emergencies. If you’re managing a multiple six- or seven-figure budget, asking a financial expert for help is always a good idea.

• Most funders also ask for a grant proposal budget narrative to accompany the budget itself.
• If your organization does any kind of travel, sends mail, or has any kind of event involving catering, your actuals will certainly vary from your budget.
• They do not purport to reflect or imply the opinions or views of Blue Avocado, its publisher, or affiliated organizations.
• When seeking funding for a program or project, you’ll need to separate out direct expenses (expenses that are 100% related to project/program delivery) and indirect expenses.

Nonprofit Budget 2025: Steps, Planning, Examples & Template

Nonprofit organizations face an ever-evolving landscape, where goals, priorities, and external factors can shift. To maintain financial health and ensure that resources are effectively allocated, nonprofits must employ strategies to monitor and adjust their operating budgets. This process is essential for adapting to changing circumstances and maximizing the impact of their mission-driven activities. Revenue diversification requires strategic planning, creativity, and a willingness to adapt. In the following section, we will delve into budgeting practices that can aid nonprofits in managing their financial resources effectively.

Creating a cash flow forecast that tracks expected income and expenses on a monthly or quarterly basis can make a big difference. Review your spending regularly to ensure it aligns with your strategic goals and keeps your nonprofit financially healthy. This type of budget is particularly useful for managing restricted funds—allowing you to demonstrate compliance with donor stipulations, report to funders, and evaluate a program’s financial sustainability. By involving staff from various departments in the budgeting process, you get a more accurate and realistic picture of your financial needs. Zero-based budgeting requires your financial planners to evaluate each expense based on current needs, starting from scratch for each new budgeting period. It outlines your projected income and expenses over a specific period, usually a fiscal year.

• Articles on Blue Avocado do not provide legal representation or legal advice and should not be used as a substitute for advice or legal counsel.
• When your organization is planning a campaign or project, you probably start by taking some time to envision what you want the results to look like and set actionable goals to get there.
• The main budget you’ll create is your operating budget, which details the costs you’ll incur and the revenue you’ll generate over the next year.
• All nonprofit budgets have two sides—revenue and expenses—but aside from that, their structure depends on their purpose.
• Keep financial data in a central platform like a nonprofit accounting system to ensure easy access for your team.
• By doing so, you can keep an eye on your big-picture forecast with the assurance that every detail of your accounting is in order.

Regularly reviewing your budget helps your organization detect and address issues early on, make well-informed financial decisions, and build trust with stakeholders by reporting on your findings. The public phase often includes a public kick-off event and a final celebratory gala. Other public phase expenses can include donor recognition, campaign swag, mileage, and more.