nonprofit budget categories

This is the budget of revenues received and expenses paid, broken down monthly to ensure cash will be there when needed. Operating budgets are typically developed and implemented on a yearly basis, according to an organization’s specific fiscal year. However, some organizations choose to create a two- or three-year operating budget instead. A budget is a guide that can help a nonprofit plan for the future as well as assess its current financial health. It is good practice to periodically review the budget https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ as well as compare it to the actual cash flow and expenses, to determine whether they are playing out as expected during the course of the year.

Understanding Nonprofit Budgets: Organizational vs. Program vs. Capital

For new expenses, request quotes from vendors or providers to budget for these costs as accurately as possible. For example, you may reach out to the new bus company you plan to use for your organization’s summer camp to estimate how much their services will cost. HTH has a $675,000 budget that pays the salaries of eight full-time personnel in addition to program supplies, rent, utilities, and youth stipends. Leadership raises funds from government, foundation, and corporate sources, in addition to hosting a small annual fundraising event. Apart from fundraising, nonprofits may occasionally feed volunteers or entertain potential donors as part of their development efforts.

  • A budget for non-profit organizations often faces scrutiny over administrative expenses.
  • Boards also use the operating budget to show projections of various amounts of revenue and their sources.
  • However, it’s always a good idea to review the provider’s security policies before making a decision.
  • Creativity is key to keeping your fundraising campaigns fresh and engaging.
  • In this sense it is the primary source for making informed decisions, assessing funding needs, and communicating financial expectations to your board and stakeholders.

Step 3: Define what your nonprofit’s revenue streams are

nonprofit budget categories

This category includes accounting and audit expenses, or a proportion of the costs of these services support other organization programs. You need to know how your nonprofit’s cash flows and what to do if the cash doesn’t flow. One of the most important tools for a nonprofit is a cash flow projection.

What If I Need Help with Nonprofit Budgeting?

nonprofit budget categories

Budgeting is the process of planning, organizing, and controlling financial resources and how they are allocated to achieve organizational goals. It’s important to budget because it helps the organization manage its funds in a more effective way. While it’s often most useful to categorize revenue by source to keep your nonprofit’s fundraising on track, the most effective way to organize expenses is usually by function. This is because nonprofit tax returns require you to report on your functional expenses, so it’s helpful to keep all of your documents consistent for financial analysis purposes. Effective financial management is the backbone of a thriving nonprofit, ensuring stability, transparency, and informed decision-making. Our free courses provide in-depth knowledge on key accounting principles, budgeting strategies, and reporting requirements to help your organization thrive.

Can I try the software before making a decision?

It’s no secret that nonprofits often operate in unpredictable environments, so your budget should be flexible enough to adapt to growth opportunities and unexpected shortages. More sub-accounts can be added to the capital campaign project costs for hard and soft costs and for campaign costs as the project warrants. These expense  line items can be direct costs (one program), shared costs (more than one program), or common costs (benefitting all programs proportionately). Equipment with a useful life of less than a year and that  costs below the board-established capitalization threshold would be assigned to account 7220. Notice that each account in this cluster starts with 71… and that the accounts are essentially in alpha order within the cluster.

nonprofit budget categories

The best practices we shared in this guide are the fundamentals of sound budgeting for nonprofit organizations. The process of building a nonprofit operating budget is fundamentally a planning process. Once adopted, the operating budget also becomes an essential financial management tool helpful in monitoring ongoing operations and organizational activities throughout the year. With each reporting period, the organization compares actual performance against its plan.

  • Regularly monitor your actual income and expenses against the budgeted figures.
  • Enter fundraising, grant, and other income figures to compare your nonprofit’s current budget to your year-to-date actual revenue.
  • This example shows the estimated expenses and revenues of a nonprofit organization that runs community programs.
  • ‍He’s quick to remind his clients that a realistic budget is a winning budget.
  • Below, we explore the major challenges of a nonprofit budget proposal and provide real-world examples of how organizations have successfully addressed them.

In the realm of financial management, particularly within organizations and projects, the categorization of expenses is a fundamental practice that aids in effective planning and resource allocation. Budget categories serve as a framework that allows organizations to systematically track their spending, ensuring that funds are utilized efficiently and in alignment with strategic goals. By breaking down expenses into distinct categories, organizations can gain insights into their financial health, identify areas for cost savings, and make informed decisions about future investments.

Examples of Grant Budgets for Different Types of Nonprofits

This article offers actionable insights and tools recommended by experienced grant writers to help boost your submission volume and improve your funding success. accounting services for nonprofit organizations Learn the key differences in writing successful government vs. foundation grant proposals. This guide offers tips on tailoring your approach for each funder type, helping you excel in both areas and increase your chances of securing funding for your nonprofit. It should be clear by now that your grant budget can make or break your chances of winning funding. The examples, insights, and expert advice in this guide should provide you with the resources you need to craft an effective and compelling budget in your next proposal.

nonprofit budget categories

A Sample Grant Proposal on “Empowering Citizens: A Grassroots Approach to Advancing Democratic Values”

nonprofit budget categories

A program budget focuses on the financial needs of a specific program or project. While the organizational budget covers the entire nonprofit, a program budget zooms in on individual initiatives. This budget outlines the direct costs needed to run a program, such as materials, staff time, and event costs. It should also include program revenue, demonstrating to potential funders that you have a clear plan for how to obtain funding for the specific project or program. At this point, the budget committee should have a draft budget ready and do a thorough review of it. The review should include verifying that the budget is able to meet program and organizational goals.