With the right tools and strategies, your nonprofit can confidently build a financial foundation for 2025 that ensures stability and amplifies your mission. Excel is another popular tool for creating nonprofit budgets due to its ease of use and plethora of useful features. Using Excel, you can create tables that display the organization’s finances over time.
Contracted services and fees
Even if you have the perfect idea for a new project, you will still lose out on funding if your grant budget isn’t feasible and in line with the funder’s priorities. Aplos partners with Stripe Payments Company for money transmission services and account services with funds held at Fifth Third Bank N.A., Member FDIC. While this guide should help simplify the allocation process, understanding this concept is only half the battle. The next step is to implement these rules and strategies, which can be intimidating for both new and experienced nonprofits.
Plan for Administrative Overhead
- Are you looking to expand a program, hire additional staff, or purchase new technology?
- Comparing budget vs. actual results allows you to stay on top of variances and make changes as needed.
- Modern accounting software can automate much of this monitoring process, saving time while improving accuracy.
- Creating a cash flow forecast that tracks expected income and expenses on a monthly or quarterly basis can make a big difference.
- If you need assistance, reach out to a nonprofit accounting firm that can take care of this forecasting and reporting for you.
- This not only helps create a more accurate and comprehensive budget but also ensures buy-in across the board.
- In a perfect world, most of your expenses would be allocated to this grouping, since donors tend to be drawn to nonprofits that spend the majority of their money on programs.
Begin your planning process by asking, “What financial outcome do we want this year? The dimensions may remain the same across budgets, but the numbers may differ based on various circumstances. For example, salary allocation is a moving target throughout the year, and many organizations want to reallocate monthly based on the number of hours actually spent on the programs. With our software, you can complete financial activities such as budgeting, forecasting, and reporting for enhanced decision-making, transparency, and efficiency. Ideally, you’ll want to say goodbye to the frustration of using outdated budgeting tools and hello to control, confidence, and clarity in your budgeting process with modern solutions. There’s a lot of advice you’ll hear through the grape vine regrading grant budgets.
Nonprofit Website Redesign Guide: Avg. Costs, Best Practices & Examples
This is where the budget becomes an effective management and operations tool for your organization. This allows for a better https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ overview, more speedy addressing of any potential issues, more nimble management of the staff and volunteers, and a more informed everyday decision-making process. Your annual unrestricted surplus should be sufficient to meet debt obligations, fund depreciation, and add to operating reserves. 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.
Top-down budgeting
This will require examining your past budgets, current assets and liabilities, cash flow, and fundraising performance. According to the National Council of Nonprofits, about 8% of 501(c)(3) organizations manage budgets of over $1 million per year. However, most nonprofits are community-based and work with smaller budgets of less than $500,000 annually. It’s not uncommon for this to be one of the biggest expense categories for nonprofits. Depending on the size and structure of your organization, it may account for about 20 to 50 percent of all expenses. It’s important to analyze industry standards when determining the pay rate for specific positions and what benefits to offer.
- (See #19 below.) In other cases, you’ll list rent for office space and utilities for the relevant time frame.
- A pie chart provides a quick breakdown view of your resource allocation (e.g., national marketing, local marketing, public relations, social media, etc.).
- It automates repetitive tasks, reduces manual errors, provides real-time financial insights, and integrates with other financial tools.
- If you’re ready to dive into creating budgets for your nonprofit, there are various templates available online to help you get started.
- This can have some advantages, as it can be easier to get an idea of what has been spent in the past and can help to predict future spending.
Nonprofit Budget Templates for Your Organization
A program budget is a subset of the organizational budget, focusing only on the costs of the specific program. Since most nonprofits offer numerous programs, a separate budget for each is required. This budget is usually necessary even if applicants only seek funding for specific areas such as supplies or personnel. It is important not to guess—approved budgets from the finance department or the executive director should be obtained. Budgets provide the financial foundation upon which an organization must run all its activities.
Ready, Set, Budget! The Budgeting Process
In a perfect world, most of your expenses would be allocated to this grouping, since donors tend to be drawn to nonprofits that spend the majority of their money on programs. Keep financial data in a central platform like a nonprofit accounting system to ensure easy access for your team. Teach team members how to interpret this information and take advantage of the software’s reporting features to simplify The Key Benefits of Accounting Services for Nonprofit Organizations their analysis. Additionally, you’ll indicate whether these funds will come from program, management and general, or fundraising activities. Once you’ve created your nonprofit budget, you’ll be on track to secure financial stability and sustainability for your organization.