Annual Organization Budget with Cashflow

Budgeting is a crucial activity for nonprofit organizations as it aligns its financial resources with its mission-driven goals. It is a strategic tool enabling nonprofits to prioritize their programs and services, measure performance, and make informed decisions. Without a well-structured budget, a nonprofit may risk inefficient use of resources, financial instability, and potential inability to fulfill its mission. Budgeting is not just about numbers but also about fulfilling the mission and maintaining the organization’s integrity and sustainability.

I speak with five to ten nonprofit professionals weekly in a mentoring capacity. More times than not, we will talk about how their organization’s finances are not where they would like them to be. When asked what the solution to their problem is, 99% of the time, they will tell me they need to raise more money. That may be true, but when I ask to review their organization’s budgeting files, I will be shown a basic budget that doesn’t communicate the organization’s short or long-term vision.

I love introducing nonprofit professionals to the Annual Organization Budget with Cashflow. We have used this budget daily over the past ten years at The Library Project, which has served us well. I highly recommend this budget.

Plan Strategically About Your Fundraising

When filling out the Annual Organization Budget with Cashflow for the first time, I recommend starting with your fundraising strategy. Do two things; 1) think about the types of funding sources you want (corporate, foundation, individual, events, campaigns, or other) and, more importantly, what types you do not want to pursue, and 2) build your fundraising capacity over time.

For example, at The Library Project, we focus our fundraising efforts on corporate and online fundraising but do not have a focus on foundations; this is a decision that we make at the budgeting stage. This defines everything from our HR to programming. Finally, I recommend building your fundraising capacity slow and steady. If you aim to raise $1,000 monthly through online donations, then make that an annual goal. Start by putting $50 down in January, then $75 in February, and $900 in November. This will set your fundraising team up for short-term wins that will build into long-term successes.

Plan Your Spending Like a Nonprofit

The Annual Organization Budget with Cashflow approaches a nonprofit organization’s spending strategy through the lens of a nonprofit organization, not a for-profit corporation. This is important.

Initially, you will see that Expenses are broken apart into two distinct sections; Program Expenses and Overhead Expenses. I will not go into great detail about the differences between Program and Overhead Expenses. With that said, it is important to ask yourself questions like, “Is this office being used to implement or design programs?” If yes, putting your office down as a Program Expense might make sense. In the Reports section at the bottom, you will find an Overhead Ratio which calculates the percentage you plan to spend on Overhead Expenses.

Have Fun (Play with the Numbers)

I can almost guarantee that your first budget will be messy. This still happens to me, and I’ve been creating nonprofit budgets for twenty years. Take a deep breath, and begin to push your numbers around. Change your fundraising plan, update your HR strategy, and ask yourself if your monthly goals are realistic. Do not forget to input your Beginning Cash Position at the bottom (E144). This will automatically calculate your cash balance at the end of each month.

Most importantly, remember to have fun. You are not only making an annual budget for your organization. You are also creating a plan to realize your organization’s mission and vision to make the world a better place.