Mastering the Art of Nonprofit Budgeting: Key Principles & Best Practices GoFundMe Pro

Historic data is the most reliable information you can use for creating a budget. Just be sure that you’re using timely and accurate historic numbers when forecasting future expenses and revenue. This includes estimating the amount of money you expect to receive from donations, grants, fundraising events, and investments.

Operating Budget

• When budgeting, nonprofits sometimes make the mistake of forgetting to account for in-kind donations or volunteer hours.
• Facilities costs are the day-to-day expenses that keep your nonprofit running.
• Organize your contributed income by source, e.g., individuals, foundations, corporations, net of special events, and any other income sources that might be relevant to your nonprofit.
• Grant tracking helps monitor restricted funding compliance, while cash flow projections ensure adequate liquidity.
• Engaging staff and volunteers in the budgeting process also enhances accuracy and buy-in.
• Estimate your organization’s income for the upcoming fiscal year, including grants, donations, membership fees, and any other revenue sources.

This is a good time to review the current year’s actual income and expenses against the budget. Boards The Key Benefits of Accounting Services for Nonprofit Organizations should analyze variances and consider if there will be any impact on the upcoming budget. This is also a prime opportunity to clarify the annual goals from the strategic plan.

Expected Expenses

A board can either be very hands-on or hands-off, depending on how you want to use them as a resource. Annual goals are absolutely necessary, but open yourself up to what could be possible five years from now. You’ll thank yourself later for having worked towards a long-term plan from the start.

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The needs of the Colorado Springs area are diverse, as are the various nonprofit organizations that serve those needs. As a result, your operating budget must be tailored to reflect your unique mission, vision, and goals within the nonprofit sector. While no two nonprofits are exactly alike, there are some best practices that all organizations should use when building their annual operating budgets.

• Recognizing seasonal fluctuations in revenue and expenses can also aid in better cash flow management and expenditure timing.
• Here are some tips and tools to help ease the pain of building your next budget.
• The Nonprofit Annual Budget Template is designed specifically for nonprofits looking to streamline their yearly financial planning.
• Develop, analyze and apply your organization’s budgets with expert help from the nonprofit financial professionals at Jitasa.
• One of the most important tools for a nonprofit is a cash flow projection.

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• Explore a range of nonprofit budget templates available for download to enhance your financial planning and ensure your organization’s sustainability.
• Before you can develop an accurate budget, you’ll need to gain a clear understanding of the nonprofit’s financial situation.
• After creating a nonprofit budget and having it approved, you’ll continue to look at this financial document throughout the year.
• Even the financially or programmatically smallest nonprofits—often operated entirely with volunteers — have their knowledge of costs spread across two or more people.
• If your nonprofit can operate remotely, you may be able to save a considerable amount of money in this category.
• Preparing for the annual board meeting is a critical step in the budgeting process.

Their on-the-ground perspective will help forecast realistic program costs and identify https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ cost-saving opportunities. Blackbaud Financial Edge NXT®️ delivers intuitive cloud fund accounting software designed specifically to meet the needs of nonprofits and tax-exempt organizations. Put simply, revenue is the money you bring in from normal business operations.

• Your cash flow is the movement of money that comes in and out of your organization.
• Throughout the year, you’ll be able to track which avenues are working best for you.
• Without an annual nonprofit budget, you’re essentially operating in the dark.
• This sample budget for nonprofits is a template for an organizational budget for a fiscal year.
• For example, if you have it in your plan to buy new computers for your staff or to build a new website, create a separate budget for those projects.
• Budget planning includes some degree of forecasting and assumptions and boards should thoroughly vet assumptions before finalizing the budget.

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Remember that underfunding these areas often leads to inefficiency and reduced impact over time. Consider donor retention rates, grant renewal probabilities, program participation trends, and seasonal fluctuations. Use known values to budget for other related estimates, such as personnel costs. Create a detailed personnel tab by listing each employee’s base salary for the year and calculating bonuses, benefits and taxes as a percentage of the known salary. A standard rule of thumb is to include a 3-5% bonus and benefits/tax costs at a rate of 25-30% of each employee’s salary. When creating a multi-year budget, account for inflation on each line item and over each year.