Creating a budget for your nonprofit will lead to greater financial success for your organization and help you meet your goals. This important document creates a financial overview of how you bring money in and how you spend it.
Budgeting can be tricky, though, as many nonprofits don’t often have much funding at their disposal, especially when they first launch. Still, your budget will keep your nonprofit on track as your staff and volunteers work to achieve specific goals related to your mission.
Here are some top budgeting strategies to keep in mind when writing a budget for your organization.
Determine Your Current Financial Status
Before anything else, assess the current financial health of your nonprofit. Review the accounting books from your most recent year in operation. What was your income that year? What were your expenses?
Also, analyze each line item and compare them to the fiscal year you’re budgeting for. Will any of these line items change?
Set Goals for the Year
If you’re planning a big project for the fiscal year, such as launching a new program or constructing a building, this will affect your budget.
Before writing an annual budget, make sure your team has established your annual goals. Consider these plans as you create a budget and determine how you’ll fund your nonprofit.
Record Your Expenses
Write down every single expense your nonprofit will have in the upcoming fiscal year. You’ll have two types of expenses to consider—fixed and variable.
Fixed costs stay the same each month no matter what programming you have planned. This includes rent, utilities, insurance, and payroll.
Your variable expenses fluctuate each month. Maybe you have a special one-time event or program with costs associated with it. Or perhaps you need to book travel accommodations for a conference.
Don’t forget to include marketing and advertising expenses in your budget strategy. Many nonprofits don’t include this key line item. Even if you don’t have much money, try to set aside some funds for marketing. It will generate greater success for your organization. And don’t forget, if funding is limited, most nonprofit organizations can qualify for the Google Ad Grant program. This program provides qualified nonprofits with up to $10,000 each month in In-Kind (FREE) advertising dollars on the Google Search network.
Document Your Income
Consider your nonprofit’s funding sources. How do you plan to pay for your programming and day-to-day operations?
Are you relying mostly on donations? Or do you plan to raise most of the funds you need through membership fees and events?
And will you apply for grant funding? There is often a long waiting period to learn if you’ve been awarded a grant. Also, many grants will want to see a proven track record and results before awarding you any funds.
Base Your Budgeting Strategies on Real Numbers
Create an accurate budget for the year by using real numbers. Don’t make uneducated estimations. This will only cause you problems in the long run. You could find yourself falling short on a line item because you didn’t include a realistic figure in your budget.
Use numbers from your previous year whenever possible. If you’re in your first year of business or are launching a new program, research average costs for various expenses in your region.
Document Everything Throughout the Year
Transparency is a big part of operating a nonprofit. So, it’s important to document every financial transaction your business makes.
This organization will be useful when creating your annual budget. All the information you need will be documented and right at your fingertips.
Let Us Help You Grow
Now that you understand the basics of budgeting strategies, let us help you build your nonprofit brand.
The Legacy Theory is passionate about working with nonprofits as they develop their goals, grow as organizations, and, ultimately, succeed. Contact our team for more information about our consulting and marketing solutions that will help you share your story with the world.