Budgets for Nonprofits
Nonprofits are unique organizations in that they raise money to further their mission, not create a profit, hence the name. Examples of nonprofits include charities, social advocacy groups, religious organizations, community theaters, and welfare organizations. NPOs have to evolve to meet new trends, appeal to donors, and most importantly devise a practical budget that enables them to do so.
Budgeting for a nonprofit is complex and convoluted, so oftentimes organizations fall short on their financial planning. Since nonprofits rely on donations and external funding, finding a steady stream of income can be difficult. These uncertainties must be accounted for in budgets by keeping an eye out for new income opportunities, and allowing wiggle room for revenues that fall through. The only consistencies in nonprofit budgets are inconsistencies.
What Should a Nonprofit’s Budget Include?
A budget is a comprehensive plan that includes the goals and objectives of the organization for a designated fiscal period. Since NPOs are so dynamic, budgets are referred to throughout the year to accommodate for cash flow and expenses.
Nonprofit budgets are often requested by banks and donors for consideration before they make their decision to give money. This means the budget should be thorough, concise, and dynamic to account for income fluctuations.