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TIPS ON CREATING A PROJECTED BUDGET FOR MY NPO

Creating a Projected Budget

TIPS ON CREATING A PROJECTED BUDGET FOR MY NPO

Creating a projected budget is just as much about planning & process as it is about numbers. 

The numbers are important, of course, but the process allows you to see beyond the numbers in front of you. Having a budget:

▶ allows you to set & understand your fundraising goals and overall goals for your organization 

▶ it gives you a better picture of what you can afford & allows you to make better decisions for the benefit of your organization 

▶ helps create broader accountability

▶ helps you to stay on track & avoid surprises

▶ helps you with maintaining control & avoid temper spending or overspending

But, what’s a budget? A simple & straightforward definition is “an estimate of income and expenditures for a set period of time.” In other words, a document that reflects the priorities of an organization!

And; most people think and are under the impression that the budget of a nonprofit always has to break even – OR – that nonprofits shouldn’t or can’t have surpluses. THAT IS NOT THE CASE AT ALL! 

➾ YES, NONPROFITS CAN HAVE A SURPLUS

➾ YES, HAVING A SURPLUS IN YOUR BUDGET CAN BE A POWERFUL THING!

Having a surplus, meaning, cash reserves, gives you more ownership over your decisions and can be a lifesaver in the face of an emergency. So, it is a great idea to consider budgeting for a surplus – designating reserve funds as an opportunity to support, in the future, new initiatives, new programs & new projects.

Here are some helpful tips for creating a budget: 

➺ set organizational goals & begin creating the budget needed to accomplish them

➺ go over estimated expenses for things your NPO really needs to conduct activities (ex: program & office supplies & equipment)

➺ develop ways of estimating your expenses – begin with the absolute necessities (ex: rent, payroll, utilities, insurance)

➺ go over estimated expenses for anything else your NPO is obligated to pay or can’t do without (ex: loan payments, consulting services such as development, annual audit, accounting, or bookkeeping services)

THEN 👇👇👇

✔review the draft budget to verify that the draft meets the organization’s financial goals 

✔review AGAIN & discuss all assumptions with key staff members and the board

✔make adjustments based on the goals and capacity to match income and expenses

Yes, it will take some back & forth – it will take time – it will take multiple drafts before getting to a version that’s in line with your NPO’s current financial situation & your goals. 

✘ NO BUDGET IS CERTAIN 

✘ THERE’S NO RIGHT OR WRONG AMOUNT

✘ IT IS PART OF THE PROCESS!

BUT, everyone involved needs to have a shared understanding of the planning, the process, the goals, the risks & the bottom line.

AND, it’s important that you start this process at least 3 months before the next fiscal year starts. 

BUT, if you started creating your budget & feel stuck – OR – if you haven’t started & need help.

Contact us….BCS will be happy to help!

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