It is important to monitor the budget throughout the year in order to keep a close eye on your nonprofit’s strategic plan and performance. Comparing budget vs. actual results allows you to stay on top of variances and make changes as needed. Monitoring the budget is important in order to keep track of their strategic plan and how they are performing. Additionally, monitoring the budget allows for adjustments to be made so that the nonprofit can stay on track with their goals. Use a timeline when creating a nonprofit budget so that goals are realistic and time-based. Having a timeline also allows you to track progress and make necessary changes.

Additional Types of Nonprofit Budgets

Because budgeting is an iterative process, you need the flexibility that an Excel-type spreadsheet provides. Using historical information is a great place to start, but it’s important to keep track of what assumptions you are using to calculate the actual number you are presenting. Tracking these assumptions makes it easier to identify what happened when actual numbers don’t match your estimates. Understanding these assumptions makes budget analysis and strategic decision-making much easier.

Nonprofit Budgets: How to Get Started

• Set monthly check-ins to review financial performance and make necessary adjustments.
• Most organizations work with two primary budget types, each serving distinct purposes in your financial strategy.
• Identifying both fixed and variable expenses helps in projecting annual costs more accurately.
• Monitoring your budget regularly so you can adjust as needed and make sure you are on track to meet your financial goals.
• Involve key stakeholders in the planning process and create regular review cycles for monitoring and adjustments.

This step-by-step guide with practical details will help you create a well-structured and efficient nonprofit budget. The development of a nonprofit budget is fundamentally a strategic process. Once approved, the budget becomes accounting services for nonprofit organizations an invaluable financial management tool for supervising ongoing operations and organizational activities throughout the year. For each reporting period, the organization assesses its actual performance in comparison to the initial plan, ensuring progress and financial stability.

It’s a team effort

The budgeting process, particularly when it’s transparent and inclusive, can promote a deeper understanding of the organization’s mission among its members. By clearly laying out how each dollar is intended to be used, the budget underscores the link between the organization’s financial choices and its mission. The ability to adapt and adjust the budget as needed is crucial for nonprofits operating in an ever-changing environment.

Content Management System

• No nonprofit executive director is an island, and this is especially true when it comes to making a budget.
• For example, if the organization is planning to launch a new program, then the budget may need to include funds for start-up costs such as marketing and program development.
• It’s a great way to evaluate the software’s usability, functionality, and value.
• Monitoring the budget also provides an opportunity for board directors to move money around to allocate it efficiently as their cash flow changes.

Fund accounting systems like Blackbaud Financial Edge NXT® often give you the ability to save a previous budget as a template and export it to Excel for easy distribution. Common categories include program and marketing costs, administrative expenses, and personnel. Fixed costs are expected and the same amount every month or year, like your software subscriptions or mortgage. A variable cost changes each time or arrives at irregular intervals, like program materials and postage for a campaign. A well-crafted budget provides a financial roadmap for achieving success and serves as a strategic tool for planning, decision-making, and measuring performance.

A capital budget focuses on long-term investments rather than day-to-day operations. It includes major purchases like buildings, vehicles, technology systems, or equipment that will serve your organization for several years. Capital budgets typically span multiple fiscal years and often require specific fundraising campaigns or financing arrangements. Regular nonprofit budget reviews help identify trends, catch potential problems early, and adapt to changing circumstances. Modern accounting software can automate much of this monitoring process, saving time while improving accuracy. Address overhead costs transparently in your nonprofit budget and donor communications.

However, it can also lead to a lack of transparency and accountability, as well as to https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ a feeling that the budget is not truly reflective of the organization’s needs. Historical budgeting simply means using the previous year’s budget as a starting point for the coming year’s budget. 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. The Relay Visa Debit Card is issued by Thread Bank, Member FDIC, pursuant to a license from Visa U.S.A. Inc. and may be used anywhere Visa cards are accepted. The Relay Visa Credit Card is issued by Thread Bank, Member FDIC, pursuant to a license from Visa U.S.A. Inc and may be used everywhere Visa cards are accepted.

Reforecasting is the process of reviewing and adjusting your budget based on internal and / or external changes. Gathering this information before the budget process begins will help you create a more realistic and accurate budget. Make sure you’re prepared to answer any questions they may have about the numbers as you present. According to Accudata’s data hygiene guide, unclean data costs about $3.1 trillion a year in the U.S. alone.

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As stewards of mission-driven work, it’s essential to maintain flexibility and responsiveness to serve your communities effectively. Work with your budgeting software’s support team to schedule a time to implement your new software and train key team members on use and best practices. Using a budget template to organize your revenue and expenses means you never have to start from scratch.