Yes, profit in a charity is perfectly acceptable as long as those profits are used for the nonprofit’s charitable purposes and not for the benefit of the Board or key staff. In fact, healthy nonprofits will do this to help fund 3-6 months of operating reserves. A cash flow budget is focused on covering big expenses like capital projects or payroll work. 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.
Understand Your Organization’s Goals
The goal of creating a nonprofit budget is to ensure that the organization has enough money to cover its expenses and reach its financial goals. Budgeting is the groundwork of any successful nonprofit organization. It’s not just about balancing the books; it’s about creating a clear financial roadmap, a basis that aligns resources with mission-driven goals. A well-crafted nonprofit budget ensures financial sustainability, supports strategic decision-making, and fosters transparency with donors, stakeholders, and the communities you serve. In short, for nonprofits, where every dollar has a purpose, efficient budgeting is highly important.
- Their on-the-ground perspective will help forecast realistic program costs and identify cost-saving opportunities.
- Now that we’ve covered why you need a budget and what one looks like let’s unpack a few best practices for optimizing your budget as a nonprofit leader.
- Use this template to step into the financial stability and strategic planning that will enable your organization to make a lasting impact on the communities you partner with.
- See how the online fundraising market is changing, what nonprofits are doing, and how you can adapt your strategies for sustainability and growth.
- This allows you enough time to gather all the information you need and to present the budget to your nonprofit board for approval.
- When you take the time to organize a clear and consistent financial plan that aligns with your timely goals, there are clear benefits.
The Role of the Board in Nonprofit Financial Oversight
For organizations in the nonprofit sector, try to allocate between 5-15% of your budget to marketing. Your marketing budget ensures you have the funds needed to reach your goals and determine whether your plans are realistic. After you calculate your financial statements, pull insights and https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ share them with your staff, volunteers, and board.
- 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.
- Plus, with a budget plan you’ll be better able to manage operations with limited funds.
- 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.
- The better relationships you build early on, the easier things will be in coming years.
- Your budget should consist of the income you expect to make and the expenses you expect to incur.
- Propel Nonprofits video about cash flow to help you better understand the ebbs and flows of your organization’s cash.
- Like many businesses, nonprofit organizations often lack the resources and funding to do everything they want.
Bonus – Donorbox Free Webinar on Successful Budgeting & Forecasting for Nonprofits
Award-winning online accounting software designed for small business owners and accountants. WildApricot is an affordable cloud-based software for small associations, non-profits, state and local chapter organizations. Manage membership, donations, accept payments, host your website, and run events. No matter what happens with your nonprofit, you never stop needing a budget!
Efficient Data Management for Nonprofit Organizations
Below is an example of a nonprofit budget to give you an idea of what you need to do. This budget includes expected income, expenses, and funding for a small nonprofit organization. Budgeting provides a quantifiable reflection of an organization’s priorities. The funds allocated towards different areas highlight what is valued by the organization. As such, the budgeting process provides an opportunity for internal discussions about these priorities and how they align with the organization’s mission.
The purpose of budgeting for nonprofits
Because nonprofit funding is often very flexible, it’s absolutely necessary to have many diverse revenue streams. You can keep all the information in one sheet, or break it up into different pages. A nonprofit budget template Excel creates is pretty similar to a nonprofit budget template Google Sheets does. Even a great budget can fall short without strong cash flow management. Cash flow ensures your organization can meet its obligations month-to-month.
