Budgeting for Nonprofits

This document summarizes revenues, expenses, and changes in net assets over a specific period, usually the past year. It also lists sources of income and their sustainability, expense allocations, and any surpluses or deficits. Generally, your bookkeeper will be the one to collect relevant financial information for your nonprofit. According to Jitasa’s nonprofit bookkeeper article, this is the person who will be inputting data, recording one side of transactions, processing payroll, and allocating costs.

Why your nonprofit needs robust financial management

• Once again, making the correct changes early can be a game-changer for your organization and ensure that you stay on the right path.
• Nonprofit financial policies will provide clarity and guidance for many of the decisions involved in financial management of your nonprofit.
• It encourages nonprofits to think proactively rather than reactively, allowing them to anticipate potential financial hurdles and prepare accordingly.
• All of this means that organizations in the nonprofit sector may not have the funds they need to handle an emergency or serve their purpose.
• These articles and related content is the property of The Sage Group plc or its contractors or its licensors (“Sage”).
• Consistency in messaging and frequency cultivates a dependable communication rhythm, which is crucial for sustaining donor interest and participation.

Nonprofit staffers may even trade higher salaries in the private sector. This can mean that staff bring different expectations to working in nonprofit organizations. They want to consistently feel like their work is contributing to a greater good. All of which means that nonprofit leaders will need to think very intentionally about how staff are engaged in and connected to a strategic planning process. Additionally, as organizations grow and evolve, their financial needs may change; therefore, it is crucial to ensure that the contingency plan aligns with the organization’s current goals and objectives.

• That is, it will help you to consider your finances for six months from now, but it will also ask you to consider where you would like your organization to be in, say, six years.
• This will allow your nonprofit organization to optimize financial outcomes and achieve mission objectives.
• Plus, you can use any funding you don’t spend to build your organization’s reserve funds, which contribute to long-term sustainability.
• Keeping everything connected is what financial leadership is all about.
• It is particularly important to create/update your business plan annually to make sure your nonprofit remains on track towards successfully fulfilling its mission.
• Protocols should outline how to disseminate information across multiple channels, from social media to direct email, and include a designated spokesperson to maintain consistency.

Capacity Building

Effective grant management helps nonprofits secure funding, stay compliant, and build funder trust. Modern financial management technology like Sage Intacct can transform how nonprofits handle their finances. By automating routine tasks and providing powerful reporting capabilities, the right technology allows your team to focus on strategic priorities rather than administrative burdens. At the core of your nonprofit, you have your mission statement and the goals that you want your nonprofit to achieve. As you set out to create your financial plan, your goals and objectives should be kept in mind from the very beginning. Having these ideals in place early allows you to build them into your plan from a foundational level and ensures that they are most likely to be adhered to and be successful in the long term.

Strategic Cost Allocation

Studies consistently show that organizations with a written plan double their likelihood of success. Yet according to research, https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ only half of nonprofits have a strategic plan. Among those organizations that do have strategic plans, too few actually put them to use. The process of strategic planning is designed to create shared vision and strategic alignment across organizational stakeholders. Additionally, staying informed about industry trends and economic forecasts can help nonprofits anticipate external threats before they materialize.

• Consider ways that you can trim your monthly and annual budget that will not impede your ability to complete your mission or harm the integrity of your vision.
• If your project or initiative doesn’t yet have any funding, of course, you can simply go on to the next step.
• Ideally, you should have a system in place to track your nonprofit’s revenue and expenses.
• If you’re a medium or large nonprofit organization with strong financial teams and FP&A experts, you may not always need external financial advisors.
• Our integrated approach empowers organizations to connect deeply with their audiences, expand their reach, and achieve measurable results—all without stretching their resources.

Ultimately, it is a detailed planning of your nonprofit’s budget, helping you allocate financial resources and track income & expenses. 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. The first ‘what’,fund accounting, allows a nonprofit to match their sources of revenue with its designation. This provides a method of measuring if a nonprofit has the resources available to meet The Key Benefits of Accounting Services for Nonprofit Organizations their mission-based goals. It identifies the sources of revenue and shows how efficiently a nonprofit is using those revenues for their designated purpose.