Using Google Sheets, you can create financial reports and track expenses and revenue. 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.

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

Things like utility, bills, office supplies, and software subscriptions may seem minor on their own, but when combined they can create significant overhead costs that eat into your budget. To prepare for anomalies without disrupting The Key Benefits of Accounting Services for Nonprofit Organizations operations, you should regularly review and adjust the contingency fund based on your financial situation and any emerging risks. A popular methodology for this kind of planning is the S.M.A.R.T model, originally formulated for determining management goals. This budget allocates funds for unplanned or emerging opportunities, such as piloting a new program, investing in innovative technologies, or responding to unexpected needs. A capital budget focuses on long-term investments and major expenses, such as acquiring property and equipment, or technology upgrades. In this sense it is the primary source for making informed decisions, assessing funding needs, and communicating financial expectations to your board and stakeholders.

Connect Your Plans, Teams, and Insights

• Help stakeholders understand that effective administration actually multiplies the impact of their program investments.
• America’s 1.5 million nonprofit organizations are at the heart of our communities, from supporting arts and culture to providing essential services for people in need.
• Just as it sounds, an operating budget shows how much you intend to spend on operations for the next year.
• With each reporting period, the organization compares actual performance against its plan.

Here’s your step-by-step guide to creating an effective https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ and sustainable budget to fulfill your organization’s mission. The primary purpose of nonprofit budgeting is to ensure that the organization can meet its goals without running out of money. It involves tracking where your funds are going and identifying areas where you may need to cut back or raise more money.

Simplifying Nonprofit Budgeting for Success

A well-structured budget details how restricted and unrestricted funds will be allocated, ensuring transparency and accountability. Fundraising is already challenging enough, but keeping your organization financially sustainable adds another layer of responsibility. “We get to help shape the leaders of tomorrow. I want that future to be bright.” If you are looking for a more transparent and accountable budget, you may want to consider using a zero-based budget. Smartsheet provides a better way to unify collaboration and automate workflows so you can spend more time on the work that matters.

Transparency isn’t just a buzzword—it’s a proven driver of credibility and donor trust. For example, a youth mentoring program might break down expenses to show cost per student, cost per hour of mentoring, and successful outcomes achieved. Learn all the best practices of CRMs to simplify customer relationship management and elevate your bond with loyal customers. Grab a free copy of this comprehensive guide to developing your business from scratch. Before you go ahead and opt for a credit card for your small business, make sure you know if it’s worth getting one.

• When creating a nonprofit budget, you’ll typically include key financial details in a structured format.
• Most likely, your organization’s executive director will lead the budgeting process, but a nonprofit accountant can also provide support.
• Each program may require a separate audit trail, and violating any conditions can result in legal consequences and reputational damage.
• 4 Ways to Decide On Your Annual Nonprofit Fundraising Events When you sit down with your team…
• Remember to include, record, and track non-monetary contributions with you budget.