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 netted.
- 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 expenses.
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.
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