Nonprofit Budget 2025: Steps, Planning, Examples & Template

A funder will more than likely skip over your proposal if your budget doesn’t meet the needs of the intended audience. Finally, your budget needs to establish a clear connection between the numbers and your goals. With that said, Sarah Lange, a grant consultant, advises grant teams not to undersell themselves either. If the details aren’t clear or don’t add up, a funder will see through your numbers. General Services Administration, which is a simple budget in Google Sheets that can be tailored to your specific budget line items.

• For example, if you typically receive most of your donations at the end of the year, it makes sense to schedule one-time spending projects for the period spanning January through March.
• This category includes things like educational materials, workshops, and conferences.
• It is often recommended that you should attempt to reach an overhead rate of less than 10% .
• The spending baseline is typically calculated during the auditing phase of the budget cycle, which we will discuss below.
• If you’ve been in operation for more than a year, it best to look at your past financial statements in order to get a better understanding of what was brought in previously.
• Allocating around 5-10% of the budget towards these collaborations helps foster sustainable impact while supporting nonprofit cost-saving strategies.

Budgeting for nonprofit organizations: The board’s guide

This article will discuss how to craft an operating budget tailored to your needs and requirements. Additionally, the Tall Clubs International Foundation financially supports exceptionally https://greatercollinwood.org/main-benefits-of-accounting-services-for-nonprofit-organizations/ tall members of society. This organization raises, manages, and disperses scholarship funds for tall individuals entering their first year of higher education.

• This can be a daunting task for a new nonprofit because you do not have history to review, but there are some tips that can help make it easier.
• Program budgets are more limited in their scope than organizational budgets, since they only deal with the financials of one specific program.
• It indicates which items are subject to specific stipulations—otherwise known as restricted funds—which typically make up the bulk of revenue for nonprofit organizations.
• A budget for non-profit organizations must plan beyond immediate operational needs.
• If you need assistance, reach out to a nonprofit accounting firm that can take care of this forecasting and reporting for you.

Top-down budgeting

Throughout the fiscal year, the adopted budget is referred to as the operating budget. CLICK’s mission is to engage the community by raising funds for programs that support inner-city kids so they can succeed. Full Suite of Accounting, Payroll and Fund Raising and Fund Accounting applications for nonprofit organizations. Software designed for nonprofits and churches with fund accounting, donor management, giving tracking, reporting, and more. Nonprofit fundraising, donor management, marketing, operations, community and project management, social media, branding, graphic design, website production.

Google Grant Workshop

Nonprofit organizations have found that targeted social media campaigns and community-based events can lower marketing spends by 40% compared to traditional channels, while still reaching broader audiences. This approach not only reduces the cost to run a charity but also attracts donor engagement and volunteer support. For a detailed breakdown on planning these strategies, see How Can You Write a Business Plan for a Charity Nonprofit in 9 Steps?. Your administrative and fundraising costs together make up your nonprofit’s overhead.

• We recommend setting aside at least 5-10% of your annual budget for emergencies.
• If your organization does any kind of travel, sends mail, or has any kind of event involving catering, your actuals will certainly vary from your budget.
• Consider donor retention rates, grant renewal probabilities, program participation trends, and seasonal fluctuations.
• No matter what, it’s always nice to see a surplus and think about how to use it most effectively to build your organization even stronger.

It breaks down your revenue by different funding sources and your operating expenses by program and overhead costs. The key components of a nonprofit operating budget include revenue, expenses, and surplus planning. As far as revenues, these numbers are projected accounting services for nonprofit organizations over the course of the year and come from sources such as grants, donations, membership fees, or event earnings. This information is very helpful when it comes to deciding on what types of fundraising events to hold and when and help center your expectations. It’s also beneficial to know when times will be lean so you can better prepare when there are surpluses. Volunteer recruitment and training are vital yet cost-conscious elements in managing charity nonprofit operating costs.

This is best done during board meetings when key players are available to look over everything and make decisions. For example, if donations are lower than expected, you might reduce discretionary spending or launch a targeted fundraising campaign. This creates confidence among your donors and stakeholders and demonstrates your organization’s ability to manage resources responsibly while staying transparent. Regardless of how large or small your nonprofit organization is, you’re going to need funding for daily operations and to fund your programs so your charity can reach its mission goals. In addition to an operating budget, you’ll also need to prepare cash-flow projections to ensure that you’ll have the cash on hand when you need to spend it. To prepare this financial document, you’ll need to think about the timing of key fundraisers, appeals, and corporate or philanthropic donations, and any time-based factors that influence spending.

Organize your expenses by function

It’s also useful to look at the financial trends for your programs over the past few years, and assess if each program is covering its direct costs, or contributing to overhead. Give yourself enough time to gather the necessary information and data, to think through and discuss the various elements of the budget, and to put it down on paper (or in Excel). Nonprofit organizations continually grapple with maintaining and improving their operations, especially in today’s volatile economy and a rapidly changing world. They must constantly strive for sustainability, and an essential part of that quest is proper budgeting. Things have gotten so bad that the heads of the three leading nonprofit rating organizations–GuideStar, Charity Navigator and BBB Wise Giving Alliance—created a website called The Overhead Myth.

Document both findings and planned adjustments to maintain accountability and track progress over time. Grant tracking helps monitor restricted funding compliance, while cash flow projections ensure adequate liquidity. Regular comparison of budget versus actual figures highlights areas needing attention before they become problems. Variable costs, like program supplies, event expenses, and part-time staff hours, offer flexibility when funding fluctuates or new opportunities arise.