Knowing which type of budget you adopt will help you ask yourself the right questions and gather the right information for creating the most accurate budget. But, there’s a place in the nonprofit universe for a surplus in the budgets too. They can mean the difference between surviving a rough patch and being forced to close down. Having extra cash can help stabilize your nonprofit and absorb an unexpected delay in receiving funds, a shortfall in revenue for a special event, or unbudgeted expenses.
How to Create and Track a Nonprofit Budget
Board management software is a valuable tool in assisting nonprofits in budget planning. BoardEffect provides a secure platform for board communications where they can share confidential documents about the budget and other important board matters without concern over hacking. The platform has a feature for granular permissions so that only the people involved in budget planning can access the budget planning details.
Alignment with your nonprofit’s mission
As we look towards 2025, nonprofits face a unique set of challenges and opportunities. From fluctuating income streams to increasing demand for programs, organizations must plan carefully to navigate financial complexities while maximizing impact. Whether you’re managing general operations, launching a new program, or amplifying your marketing efforts, a thoughtful budget can be the difference between a successful year and a strained one. The best way to ensure your budget is accurate and actionable is to have expert nonprofit financial professionals create it for you—like our team at Jitasa. We work exclusively with nonprofits, so we understand the unique complexities of your organization’s financial situation and can use our experience to develop tailored solutions for your needs.
What is an operating reserve?
Ask departments to share their projections for revenue, planned expenditures, and anticipated changes for the upcoming year. This collaborative approach highlights emerging needs, ensures accounting services for nonprofit organizations transparency, and avoids oversights during the budgeting process. Begin by creating multiple versions of the budget based on different assumptions, such as fluctuations in donor contributions or grant funding. Use tools like spreadsheets or fund accounting systems with scenario features, such as Financial Edge NXT, to forecast these scenarios effectively. Analyze and compare the results to identify risks and opportunities and refine the budget drafts accordingly.
Understand – and budget for – true program costs
- Consider the key information every report should have, and create a template to ensure that data is front and center for each presentation.
- Budgets should not be written in stone, because the financial position of the nonprofit may change during the year.
- Additionally, you’ll indicate whether these funds will come from program, management and general, or fundraising activities.
- For instance, examining historical fundraising performance can help forecast future revenue and identify the most effective strategies.
- While the last few years have seen huge upticks in donor giving, it’s still important to remain realistic.
When creating a multi-year budget, account for inflation on each line item and over each year. Minimizing line items allows you to https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ be flexible in allocating funds throughout the year. Here are some tips and tools to help ease the pain of building your next budget.
