Strategic Budgeting Considerations for Nonprofits

Luckily, in this section, we’ll cover some of the features of effective nonprofit budgets, so that anyone can improve their financial planning. A nonprofit budget is a planning document used to predict expenses and allocate resources for your organization. It details both the costs that your organization will incur as well as the revenue you expect to receive over a set period of time. The second meeting of the budget committee should focus on developing a draft of an expense budget and an income budget. The committee will need to determine the costs for the upcoming program goals, organizational goals and strategic goals. In determining the income budget, the committee will need to project income based on the current fundraising and revenue activities.

Shifting some workload to that area could free up capacity to support some of your goals. To learn more about taking control of your nonprofit’s finances, watch budgeting for nonprofits our free video, Seven Lessons Learned from Nonprofit Leaders. The “Fuzzy Math” section includes tips about better bookkeeping and financial transparency.

Why grantmakers ask to see budgets for completed years

They have to look good, in other words be competitive, compared to the interest rates of today and the interest rates of the future. Right now, yields on the 10-year note are high, in part, because people believe the interest rates of the future will also be high. To support these efforts, I have squeezed US$ 100 million from our budget to allocate to country offices. And the final P, performing for health, is about the work we are doing as the Secretariat to support you better. The first priority is to promote health and prevent disease by addressing its root causes, in the air people breathe, the products they consume, and the conditions in which they live and work.

Creating and sticking to a nonprofit budget will put your organization in a healthier financial position. As a result, you can spend less time worrying about your nonprofit’s expenses and more time helping your beneficiaries. The approved budget then serves as a guide for financial activity in the months ahead.

How to Create an Operating Budget for Your Nonprofit

Maybe you’ve been doing the same thing year after year just because that’s the way you’ve always done it. But strategically eliminating certain processes that add little to no value or are considered obsolete will increase efficiencies and reduce costs. Ultimately, this will help free up needed funds that can be used to support your strategic objectives. For example, do you have a program or department that is really good at doing a particular task?

• A nonprofit budget is an important financial document that helps organizations allocate expenses and predict revenue.
• “We get to help shape the leaders of tomorrow. I want that future to be bright.”
• To support these efforts, I have squeezed US$ 100 million from our budget to allocate to country offices.
• This can be done by reviewing past financial performance and trends, as well as by considering any changes that may be coming up in the organization’s operations.
• A capital budget is a long-term financial plan that covers major investments and projects needed to strengthen your organization over time to sustain its growth.

Join the other nonprofit success stories by implementing the budgeting best practices in this guide. When a nonprofit organization creates an annual budget, they prepare a budget for their entire fiscal year at once. Then they present that budget to a board of directors or a bank and leave it alone until the year is up. The budget doesn’t change throughout the year, but your nonprofit would need to answer questions during the year about why actual amounts are different than what you budgeted for. Nonprofit budgeting primarily focuses on stewarding an organization’s financial resources well rather than on profitability.

Grant Proposal Budget

In order to be as effective as possible with your nonprofit budget, you need to be strategic about how you use your money. If you’re a board or staff member of a nonprofit or are just starting a new organization, sign up for our newsletter to receive weekly articles on nonprofit financial rules and regulations. We also provide several resources and tips for fundraising, management, events, and more on our Nonprofit Blog. Expenses are usually broken down into fundraising, administrative, and program categories.

A nonprofit budget template is a fillable document that simplifies your budgeting. 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. At this point, the budget committee should have a draft budget ready and do a thorough review of it. The review should include verifying that the budget is able to meet program and organizational goals. Budget planning includes some degree of forecasting and assumptions and boards should thoroughly vet assumptions before finalizing the budget.

In the for-profit world, it’s fairly standard to determine a marketing budget by allocating 10-20% of projected gross revenue to marketing and communications. For organizations in the nonprofit sector, try to allocate between 5-15% of your budget to marketing. From daily operational costs to monthly donations, there is a wide range of elements that should be included in your nonprofit’s budget. These tips will guide you through budgeting basics, and recommend new ways to stay on top of your finances, like supplementing your marketing budget with the Google Ad Grant. Let’s get started by defining what a nonprofit budget is and why it’s important.

Having extra cash can help stabilize your nonprofit and absorb an unexpected delay in receiving funds, a shortfall in revenue for a special event, or unbudgeted expenses. When determining how to allocate funds, it is important to consider the organization’s overall goals and objectives. For example, if the goal is to increase access to services, then a greater proportion of funds should be allocated to program expenses. Alternatively, if the goal is to increase donor support, then a greater proportion of funds should be allocated to fundraising expenses. The majority of community nonprofits with whom I work need to build reserves.

We’ll share why it’s so important to have a plan, policies you should include, and some best practices to guide you. Given our focus on foundation grants, most of Candid’s budget resources are for proposal budgets. You can also find information here about other budgeting tools, such as organizational operating budgets and cash flow forecasts.