Each nonprofit will have its own optimal overhead allocation, depending on its age, size, geographic location, and specific needs. Plus, an experienced agency can help you when allocating funds for marketing channels you aren’t familiar with. They can help you determine the best spend for your money so you can make the best impact. Working with an agency can generate creative ideas for expanding your mission awareness into new markets at a reasonable cost. Streamlining your outsourced marketing support by working with a single agency can lead to long-term cost savings.

Tips for Effective Partnership Management

An operating, or operational, budget outlines the funds you need to make your business run efficiently and successfully during a period. It consists of all revenues and expenses your company expects to use for its operations. You might not be able to predict what your donors give, but you can control a lot when it comes to spending. 💸 If you’re feeling overwhelmed, try using your goals to prioritize expenses—and remember, you can always increase spending if you’re able to raise more revenue later in the year.

What is the Pay by Experience Level for Chief Executive Officer (CEO), Non-Profit Organizations?

While traditional channels like television or radio may have a broader reach, they can also be more expensive than digital channels. The master budget is a planning process of aggregation of all the small budgets of The Key Benefits of Accounting Services for Nonprofit Organizations the organization to create the final one budget. The capital budget is a process of spending the funds for long term projects to get the maximum profit.

How much of a nonprofit budget should be salaries? (

If you only have restricted funds, you won’t have enough money to support your overhead costs. For ASF, they know they have one donor that contributes a large amount in February, and another high-level donor in July. They have monthly expenses and know that they have increased expenses for a fundraising event they host every June. They have to allocate their cash from their big and small donors and program fees accordingly.

• By integrating cost-saving strategies into travel planning, charities can potentially reduce travel-related expenses by up to 15%, allowing more funds to be channeled toward direct program delivery costs.
• Most budgeting software will allow you to tweak your figures easily until you’re satisfied with the final budget.
• Every accounting system has a chart of accounts which classifies the sources of revenue and the types of expenses you incur.
• The most successful nonprofits treat budgeting as an ongoing strategic process rather than a yearly task.
• Nonprofit HR is pleased to offer our guidance to the current compensation landscape.

Choosing the Right Marketing and Advertising Channels for Nonprofits

• Creating a budget, planning finances for the future, and analyzing financial data will set you apart early on as an organization to funders and partners, and make daily and strategic planning easier.
• Still, be careful — don’t allow yourself or your managers to think you have an extra 1% to spend on this event or that project.
• Nonprofits can leverage a variety of free and low-cost marketing and advertising tools to maximize their impact without breaking the bank.
• Well-designed budget templates streamline financial management while ensuring you capture all essential information for decision-making and reporting.

Stay up-to-date with the latest nonprofit resources and trends by subscribing to our free e-newsletters. Changes in a state’s laws can be just as consequential as changes in federal law for charitable nonprofits in that state. As this chart reveals, the likelihood of changes in state laws are significantly higher than changes at the federal level. Your board members should have a direct role in developing cash flow projections, agreeing on the assumptions to use, and reviewing the projections carefully. Before putting the numbers down, talk to all foundation and corporate donors to determine the likelihood of their repeat gifts. Articulate the main purpose of your budget and think about a structure that will best support that purpose.

• This guide will provide startup nonprofits with an overview of budgeting — what information to track and how, and how to analyze your organization’s financial health.
• In nonprofit financial management, understanding specific operating expenses is crucial for planning resource allocation and achieving long-term sustainable impact.
• Good budgeting for nonprofit organizations is critically important to success, as nonprofits typically have stretched resources, fluctuating funding, and/or heavy reliance on specific funding sources.
• When creating a nonprofit budget, you’ll typically include key financial details in a structured format.
• Organizations that spend more on overhead are seen as wasteful and poorly managed, while those that keep overhead spending slim are viewed as nimble and more efficient in carrying out their missions.

However, this doesn’t mean that your nonprofit’s overhead spending can go unchecked or should be prioritized over program expenditures. Instead, treat this as a guideline to reduce overhead spending (within reason) before taking funding away from your programs if you need to cut costs. For the purposes of this article, we’ll focus primarily on operating budgets because of their central role in nonprofit https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ finance.

• Known as the overhead myth, the principle that nonprofits must stick to a certain percentage (typically estimated between 15 and 35%) is false.
• As you start to outline your marketing budget, communicate what’s needed for your marketing tactics to be successful, and also advocate for the resources your team will need to accomplish them.
• This surplus can then go into your cash reserves (ideally a money market or other savings account that earns a bit of interest) and be available for the following years’ liquidity needs during slow revenue periods.
• Think of it as a roadmap that helps your team manage financial resources effectively, ensuring you have the funds to support your programs and initiatives.
• A well-designed template transforms nonprofit budgeting from a yearly burden into an ongoing strategic tool.
• Establishing expectations at the start will make the months ahead easier to navigate.
• Some overhead, like rent, may be fixed costs, while other costs like advertising, human resources (HR) costs, and legal fees may fluctuate from month-to-month.

At Plante Moran’s 2023 Nonprofit Summit, nonprofit leaders cited predicting future funding as the top challenge they face. This underscores why budgeting is crucial to the success of nonprofit organizations. 97 percent of nonprofits have budgets of less than $5 million annually, 92 percent operate with less than $1 million a year, and 88 percent spend less than $500,000 annually for their work.

Scenario Planning for Financial Resilience

The nonprofit sample budget helps you to create a perfect plan to manage the income and expenditure of the organization. Fundraising and marketing expenditures also represent a significant portion of nonprofit organization expenses. Many charities allocate a portion of their budget—sometimes up to 25%—for engaging donor campaigns, volunteer recruitment costs, and digital marketing initiatives. The variable nature of these expenses depends largely on the effectiveness and scale of each fundraising push, which can shift from quarter to quarter. Partnership and collaboration expenses with local entities are another key component.

This budget model helps you track each program’s financial performance separately, ensuring funds are used effectively and in accordance with donor or grant requirements. Program-specific budgets detail the income and expenses related to a specific initiative, such as a youth mentoring program, a community food bank, or an educational campaign. It serves as your financial roadmap, guiding day-to-day financial planning, monitoring cash flow, and evaluating your organization’s overall financial health. Once the top-level numbers are created, amounts are allocated to individual functions, programs, or departments that must create a detailed budget and plan with their allocated expenses or revenue targets. Most nonprofit budgets have columns indicating the period covered, budgeted amounts, actual spending, and the percentage difference from the previous period or year. When creating a nonprofit budget, you’ll typically include key financial details in a structured format.