How to Create a Budget for a Non-Profit
Learning how to create a budget for a non-profit is an essential skill
for anyone who plans to work in the non-profit field. Failure to
understand the financial structure of a non-profit organization is a
recipe for disaster. To hand over the budget to another person without a
solid understanding of the budget can set you up to be a victim of
fraud or theft.
Assess the group's cash flow. This is an exercise in
basic accounting. Take a look at the influx of all monies and donations.
List these on a balance sheet as assets. Record all accounts, liquid
cash and investments.
Detail expenses. Take a long, hard look at the
group’s expenditures. Count in everything from paid staff positions to
office supplies. Figure the operating expenses like the rent for
facilities, travel costs and utilities. Count in fundraising costs as
well. List these as liabilities.
Create a balance sheet. Now it is time for simple
arithmetic. Add together the assets and liabilities. Deduct the
liabilities from the assets and study the result. This will give
you a basic guide for where to take the budget.
Time for a trim. Take a fresh look at the group’s
expenses. Are there areas that can be eliminated? Think about which paid
staff positions could be replaced by a volunteer. Maybe a student in
need of volunteer hours could handle the responsibilities and save the
organization money. Eliminate any unnecessary travel expenditures. After
the budget is trimmed, assess the extra revenue the paring down has
Project expenses. While you are in the mode of
looking closely at the non-profit group’s financial layout, make
projections for the next year, giving special attention to upcoming
events. Try to anticipate unexpected needs and budget accordingly.
Assess needs. Next, take a look at the numbers you
have accumulated. Look at the current budget and projected needs to help
you determine future needs. Brainstorm fundraising ideas. Be sure
to document and consider the additional expense fundraising efforts
will add and deduct them from the projected monies raised.
Put it all together. Now that you have the figures,
make a budget. Plan out expenses and assign a dollar figure to each.
Create a projected budget based on the predictions for the upcoming
weeks and months. Make plans to replenish monies spent on
Revisit the budget on a regular basis. Instruct all organization
members to document all expenses closely. Routinely reevaluate the
budget to keep a tight handle on the money. When it comes down to it,
managing a non-profit group revolves around one bottom line. You are in
the non-profit field to make a difference for a cause you care about.
Creating a solid budget for a nonprofit ensures that the most good will
come out of your efforts. Remember everyone who votes is accountable!