Five Ways to Make Planning Your Nonprofit’s Annual Budget Easier

nonprofit-budgetingCreating a nonprofit’s annual budget is daunting. There is a lot to consider when planning next year’s finances especially when unknowns such as contributions and grant funding play a big role in budget line items.

Tensions run high when the staff and board of directors discuss and determine priorities. As you start to prepare budgets for the new fiscal year, here are five things that can help alleviate some of that stress.

Budget Timeline

Plotting out a timeline for the budget process and a deadline for when the draft will become final ensures the process stays on track. Most Executive Directors are thinking about the budget all year long but discussions for planning the upcoming year’s budget usually do not begin until three months before the new fiscal year. Creating a timeline helps keep everyone on task. The timeline also provides opportunities for planning ahead and setting aside ample time to meet with everyone involved in the budget process, including board members.

Determine Budget Goals

Prior to beginning budgeting discussions, budget goals should be strategically mapped out for the fiscal year. Make sure your top-level employees are on the same page with the financial and delivery goals of your nonprofit. Remember, you will need to consider monthly, quarterly, yearly, event, and grant goals, to name a few. Plan it all out first.

Review Current Year’s Budget

What worked and what did not work with the current budget? What changes had to be made mid-year? What caused problems and what made things easier? Look back on years prior. Where and when did you see growth or a slow-down? Was there a trend?

Budgeting for Unknowns

You’re budgeting for projected revenues, losses, and expenses, but are you also identifying funding sources and uses for those funds? Let’s say you’re expecting $50,000 from a grant. Does your budget identify the source but also say what that money will be specifically used for during the year? Be aware of such details that may skew how these funds are being allocated in your budget.

Emergency Reserve Budgeting

You have already set your priorities and identified goals and funding sources. Now it’s time to consider your emergency reserve. Make sure there is a line item in the budget that considers the loss of an expected grant or less event revenue than anticipated.

The good news is budgeting is a team effort. Talk to your stakeholders, the board president and treasurer, and your nonprofit accountant. They all want to watch your organization grow and fulfill its mission and will offer their expertise to help you get there.

The Numbers 4 Nonprofits team is experienced in preparing annual budgets that will ensure viability moving forward. We would welcome the chance to help you navigate the budget planning process. Involving us and your other stakeholders early in your budget planning will create a process that runs much more smoothly every year.

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