6 Nonprofit Budget Templates for Your Organization

Once adopted, nonprofit operating budgets become an essential financial management tool to plan and monitor operations and organizational activities through the year. Generally speaking, there are two ways to organize expenses in your nonprofit’s operating budget. The natural expense method categorizes costs according to the nature of payments made, while the functional expense method categorizes expenditures based on how they further your organization’s mission. Although considering natural expenses is helpful during the planning process, your final budget should use functional expense categorization to match your financial reports. If your nonprofit has the financial flexibility to budget for a revenue surplus, do so! When your predicted income exceeds your projected expenses, you’ll be more prepared to course correct if you incur unexpected costs or some revenue sources fall short of your goals.

Implement a Zero-Based Budgeting Process

We hope that you will be able to use this resource to understand the concepts and steps and to implement this valuable process at your nonprofit. Nonprofits rely on a combination of funding sources such as donations, grants, fundraising events, and more. An effective nonprofit budget prioritizes important things that push your goals forward. The more resources and funds you dedicate to them, the more likely you will reach your objectives. Consider potential changes in your funding sources, program demands, or economic conditions.

Find Support in Managing Your Nonprofit Operating Budget

The process begins with the decision of which activities at your organization comprise a program for the purpose of budgets and financial reports. Often, the definition of programs is evident in how your organization delivers services and functions internally. Some nonprofits identify every activity or grant as a separate program while others combine many activities under the umbrella term. For budgeting and allocations we suggest that you separate your activities into distinct programs that will provide accounting services for nonprofit organizations meaningful insight into the financial model. As an example, an afterschool program may operate in two locations or be funded by three grants. If the program operates with similar goals, measures, costs, and staff, we’d suggest that these be grouped as a single program.

• Google Sheets is a great tool to use for creating nonprofit budgets due to its ease of use and robust features.
• To estimate your expenses, review your organization’s financial history and base your estimates on that.
• Any accounting software can be used to maintain program-based financials, but they each have their own structure and terminology.
• The best practices we shared in this guide are the fundamentals of sound budgeting for nonprofit organizations.

Capital budget

Once your nonprofit budget is created, it must be reviewed and approved by the organization’s board of directors. Revenue projections are all about estimating the money your nonprofit will bring in. Break down your expected income by source – donations, grants, sponsorships, membership fees, and ticket sales from fundraising events.

• If there are surprises, first review the data to verify the calculations and choices about allocations and definitions.
• To secure the finances of your nonprofit institution’s undertakings, we highly recommend you check out our nonprofit budget examples!
• This is where your budget becomes an effective management and operations tool.
• Simply collecting this crucial data can go a surprisingly long way toward identifying and solving organizational problems.
• This alignment helps create more accurate forecasts and smoother cash flow management.

AAFCPAs recommends a 3-5% surplus operating budget each year, and four to six months of expenses in your operating reserves. Many nonprofits seem to not only operate on shoestring budgets but are also proud of it. Some nonprofit leaders https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ may even be reluctant to show a surplus in their books, fearing the perception that they are not putting their resources to good use. When budgeting, nonprofits sometimes make the mistake of forgetting to account for in-kind donations or volunteer hours.

Nonprofit Budgeting Challenges And How To Overcome Them

This is the budget of revenues received and expenses paid, broken down monthly to ensure cash will be there when needed. The approved budget then serves as a guide for financial activity in the months ahead. Budgets should not be written in stone, because the financial position of the nonprofit may change during the year. Looking at just total revenue or total expenses can mislead you about how big an organization actually is.

Revenue

An accounting software might be a better way to gather expenses than google sheets, so look into tools that make it easier to track your finances! Rushing the budgeting process could cause errors, which could result in future issues – especially troubling for nonprofits who need to report their finances and budgeting to grantors. Develop, analyze and apply your organization’s budgets with expert help from the nonprofit financial professionals at Jitasa.

Bonus – Donorbox Free Webinar on Successful Budgeting & Forecasting for Nonprofits

It’s ideal for nonprofits looking to maintain transparency and accuracy in their financial records, helping ensure that funds are allocated efficiently and appropriately towards their mission goals. An operating budget is not just a financial document; it’s a reflection of a nonprofit’s commitment to achieving its mission. It outlines the expected income and expenses for a specific period, often a fiscal year, and serves as a guiding light for fiscal responsibility. An effective operating budget ensures that nonprofits allocate their resources wisely, prioritize their activities, and stay on course toward their goals. A nonprofit operating budget is a financial document that provides an overview of how a nonprofit organization is planning to spend its money.

Propel Nonprofits Program Budget and Allocation Template and Resource

This example shows the estimated expenses and revenues of a nonprofit organization that runs community programs. The organization has planned to spend $102,500 on operations and projects (expenses) and expects to raise $135,500 through donations, fundraising events, and program fees (revenues). While each of the previous tips offers specific guidance for your nonprofit budget, bringing them together into a cohesive financial management system takes careful orchestration.