World Humanitarian Day is around the corner (August 19), and this is the perfect time to pay tribute to humanitarian efforts around the world. Handling a nonprofit comes down to advance planning and a timely review of financial reports. Having a budget will help your nonprofit plan for the long term and maximize the success of your efforts.
Depending on the staff on hand at your nonprofit, you could be feeling overwhelmed by the financial aspects of running your organization. Budgeting doesn’t have to be difficult: there are certain guidelines that one can follow. Here’s some budgeting advice for nonprofit organizations, courtesy of Strive Together:
Use a Template
There are plenty generic templates out there to give you a start. Use them to your advantage. These templates will define your main revenue sources and basic expense line items, which include personnel costs such as salaries and office expenses like rent and travel. Keeping track of all of these things is a good start to developing your annual budget.
Minimize Your Line Items
Don’t be too specific with your budget. It can make things complicated in the long run. The last thing you want to do is alter your flexibility in funds and costs throughout the year.
Budget By Month
Make sure you budget by month, not by year. It’ll be easier to keep track of. This way if any mistakes are made, it’ll be much more simple to catch them. If you’re budgeting by the year, it’s harder to catch any discrepancies. This way if any funds need to be moved around, it can be done quickly.
Create an Annual Total
By creating an annual total, you can keep track of your money and expenses. This way you can estimate your costs on a monthly and a yearly basis.
Account for Inflation
By using your numbers from prior years, you can estimate what your annual inflation costs will end up being. Inflation accounts for roughly three percent per year. Make sure to account for inflation over each line item, over each year.
Consider Fixed and Necessary Costs First
Just like a small business insurance package designed for your nonprofit’s risk profile, there’s some costs that are necessary when owning a nonprofit. Start with fixed costs that you know you will have regardless of activity level and that you need to cover such as rent, utilities, salaries and insurance. From there, build in variable costs. If you have money left over, then you can use it for other expenses. These are just some of the things you can do to help maintain a healthy budget for your nonprofit organization.
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