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A well-functioning budget process is more than a set of procedures--it provides a focus for the organization and management to analyze key financial and.
Table of contents

Nonprofit organizations set a budget based on what it will cost to run their programs for the coming year using three budget categories: administration, program and fundraising. Then, the organization must engage in a variety of fundraising and earned-income activities to get the funds needed according to the budget.

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Before a nonprofit budget is finalized, the board of directors meets to approve it, which must be documented in the board minutes. Create the administrative budget for the nonprofit organization. Calculate the costs for an entire year for the following: salaries, benefits, facilities rental, utilities, telephone, Web access, printing, postage, supplies, equipment, professional fees, and travel.

Each of these costs should be recorded as a separate line item on the budget. Add other costs that are unique to your nonprofit organization. Add up the subtotals of these costs to arrive at your administrative budget figures.

Budgeting Terms & Concepts

Calculate the cost of each program that the nonprofit organization will provide over the budgetary year. Use the program's title as the section heading and then create a line item on the budget for each cost. In addition, express each line item in narrative form. Subtotal the cost of each program. Then add the subtotals together to arrive at the program cost of your budget.

Learning Outcomes

Realize that you can assign a percentage of the cost of your facility, your utilities and your personnel costs to specific programs. These are considered indirect program costs. Now, hope is not a bad thing.

ArtUp: 10-Step Budgeting Process for Nonprofit Organizations

But you need some practicality and planning to go with it. Here are 5 steps that will help you create your first budget for your new nonprofit. Carve out time to do it.

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This is not a fast activity, so commit to taking the time to do it and do it right. That means you have a lot of estimating to do. Mark off a couple of blocks of time on your calendar to research things like supplies, materials, and equipment online or call local vendors to find out what things cost. Decide on program activities for this year. What program will you run this year? What supplies, equipment, facilities, and staff will you need to operate the program?

Be realistic about what you can successfully operate the first year, especially if you will need to raise the money for the program fundraising can be a bit slow at first.

The Importance of Budgeting for Nonprofits!

Estimate expenses for all program activities. As much as you can, contact vendors and potential providers to get real estimates for costs. Then get estimates from at least 3 vendors so you can see what the going price is. Put that number in your budget.

Repeat this exercise for every line item in your budget. Estimate revenue. Every budget has two parts: expenses and revenue. Start by projecting any fee for service or program revenue, then get out your fundraising plan. Once you have your total revenue estimated, compare that amount to your total expenses. Again, be careful not to overestimate your revenue just to get a zero bottom line.

Be sure you can actually raise the number you put in for fundraising. Line items to include in your first budget. You may be wondering exactly what line items to include in your budget. Good question. Miscellaneous revenue interest income, etc. Technology website, network, etc. As you put your budget together, here are some tips that can help you. Get smart about budgeting. Start early.

Nonprofit Budgeting: It’s a Different Animal | Forward Together

Start earlier than you think you need to because more time makes everything easier. That means diligently tracking and recording expenses and revenue, plus program numbers like number of people helped, number of dogs adopted, etc. Those details will come in super handy when you start projecting expenses for next year. The Bottom Line.