They can help you estimate your income and expenses, and they can provide guidance on how to best use your resources. A program budget focuses on the specific financial requirements of a particular initiative or project. Nonprofits must create program budgets to showcase the direct impact of donations and grants.

Leveraging Technology for Efficient Financial Management

Explore all of the different sources of funding for nonprofits, popular funding models, and five simple steps for kickstarting a funding strategy for your organization. Discover seven powerful collaboration tools that transform chaotic nonprofit teamwork into streamlined fundraising success—helping you raise more while stressing less. Creating an organizational budget takes time and lots of thought, but these strategies can contribute to a more successful process. Involve key leadership to contribute guidance and details from the start. A budget for non-profit organizations must account for timing differences between revenue and expenses. The first step is understanding true program costs across both hidden and obvious or necessary expenses.

• Donors and stakeholders demand transparency in how their contributions are utilized.
• As a small business owner, you must know how to go about opening your bank account and managing your finances through business banking.
• ACCOUNTS by Software4Nonprofits is a specialized tool designed for non-profit organizations.
• A nonprofit budget is more than just a collection of numbers; it’s a strategic blueprint that reflects an organization’s priorities, goals, and mission at a foundational level.
• It’s important to focus on annual goals, but make sure you also look beyond what you want to achieve this year, and include line items in your budget for long-term goals.
• It’s meant to help you manage your cash flow so that you can run smoothly while achieving the goals you have set out for your organization.
• A nonprofit budget template Excel creates is pretty similar to a nonprofit budget template Google Sheets does.

The Nonprofit Accounting Software Buyers Guide

• 3 Please note that funds relating to Currencycloud’s services are not FDIC insured or protected by the Visa Zero liability protection policy.
• Finally, a realistic timeline for budget preparation should be established, ensuring enough time for review and adjustments before final approval.
• Most financial experts recommend nonprofits maintain cash reserves equal to 3-6 months of operating expenses.
• A budget is a guide that can help a nonprofit plan for the future as well as assess its current financial health.
• Editable fields enable you to overwrite example figures (including revenue and expenses) with your own.

Create a rolling cash flow forecast that looks at least six months ahead. Note the peaks and valleys in your cash balance throughout the year. Compare this against your predictable expenses like payroll, rent, and utilities, as well as variable costs tied to program delivery and special events. But look beyond basic mathematical averages when building projections.

What is a Nonprofit Budget, and why is it Different?

• With top-down budgeting, you can ensure all departments and programs in your organization are working towards the same goal.
• Create a list of “nice to haves” you can add into your budget if you have projected funds left over after your necessary expenses are covered.
• Even organizations working with a shoestring budget must think carefully about costs.
• Propel Nonprofits video about depreciation, which can be confusing but is an accounting concept we can all understand.
• Budgets may be requested by parties involved in financial transactions with the nonprofits, such as banks, or by donors/grantmakers considering a gift to the nonprofit.
• A nonprofit budget is a financial plan that details how a nonprofit organization will raise and spend money.

Staff salaries are often the largest expense for any organization, whether a nonprofit or a small business. In fact, some estimates suggest that your payroll will account for 18-52% of your total budget. In recent years, charitable giving from individuals has skyrocketed to a remarkable $500B per year. But even with these staggering numbers, many nonprofits—particularly small- to mid-sized organizations—are still underfunded. Start with your known fixed costs like rent, utilities, salaries and insurance. Create a list of “nice to haves” you can add into your budget if you have projected funds left over after your necessary expenses are covered.

Separate operational from capital budget

These might also be helpful reminders for your team if they need motivation to participate in the budget planning process. The more buy-in you get from your team, the better the process will unfold. Discover the power of budgeting https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ with our free Printable Monthly Budget. Easily manage your money, track expenses, and pave the way for financial success with this intuitive budgeting tool.

This financial management is the way to improve the overall financial health of your nonprofit—even if it isn’t easy, it’s worth heeding to keep your organization alive and thriving. A clear budgeting process also helps to improve other areas of your organization, including your nonprofit accounting system and your management of nonprofit audits. A strategic plan can be used to gain an understanding of leadership’s priorities, where they will focus time, energy, and resources, and how they will strengthen operations. One key reason many nonprofits struggle when it comes to accounting and finances is their failure to treat their organization as a business. While nonprofits and small businesses differ in many ways, managing your nonprofit’s finances similarly to how you’d run a business is essential for success. Minor variances might require simple monitoring, while significant deviations could demand immediate action.

To truly stick to your budget—and ensure you have enough money to fulfill your nonprofit’s mission—you need an efficient way to manage cash flow and organize spending. Relay is an online banking and money management platform that can help you (and your team members) avoid overspending, get clear on income, and simplify financial management. A well-formulated nonprofit operating budget allows for the best use of limited nonprofit resources and focuses on the primary goals and objectives of the organization. In this article, we’ll discuss what is a nonprofit budget, its importance, 12 best practices, a free template, and more. His time at Amnesty reinforced Steve’s life-long commitment to giving back to the community through charitable causes.