An Easy Nonprofit Budget Template (+ How to Use It)

nonprofit budget template

 

It was my first day on the job at GLAAD. I sat down to meet with our then Director of Finance, and he nearly wept as I pulled my HP 12c calculator out of my backpack.

Why so much emotion?

At that moment, I didn’t know if it was because he could see that I knew numbers and that maybe, just maybe, I could help save the place…OR if he was thinking, “Holy smokes – she knows numbers. She’s going to get one look at these and get on the next plane back to NY.”

Turns out it was the former.

Now I want to be clear: I did not have a background in Financebut I didn’t have math anxiety either.

That’s because thanks to a most excellent boss over at MTV Networks, a really nice and awfully smart man named Mayo Stuntz, I learned something very essential — numbers tell a story.

Back then, numbers told us a story that led us to create the MTV Video Music Awards and then its Merchandising Program (pretty darned good stories they were too!).

These days, I meet at least quarterly with my business manager. As she ticks and ties the numbers, I ask tons of questions that usually go something like, “So what’s the story this year-to-date P&L tells me? What’s going well? Where are the red flags?”

When you ask the right questions and learn how to get to the bottom of the story, budgeting actually becomes really simple. Like a finance person I once worked with told me a while back, “It’s only a budget.” I laughed then (odd words coming from the lead bean counter), but now I get what she meant by this:

A budget is just a benchmark. A good, solid set of numbers that reflect what you know and what might be terrific estimates (as well as a few shots in the dark).

And as a nonprofit executive director, it is your job to make your best effort to create this set of benchmark numbers and then (here’s the really important part) tell the story behind the numbers in a way that all board members, regardless of financial literacy, will really understand.

To help you to do that, I have developed an easy-to-use nonprofit operating budget template. You’ll find a bunch of them on the internet but they are just that — templates. What I’m going to offer you is a basic template and also some advice on how to best use it to tell the story behind the numbers. Because as I said above, the numbers tell a story — but you need to learn how to tell it.

BUDGETING FOR NONPROFITS – MADE SIMPLE

This piece of advice is a real game changer — but it’s not actually about the numbers. Well, it is and it isn’t. You see, the numbers are the HOW. How will I reach my goals? (OR how will we afford it?)

So if you really want a conversation about your budget to mean something, it should be preceded by or accompanied by a set of organizational goals. These goals, presented and endorsed by your board, should lead you to a budget (not the other way around). Trust me on this one — the next time you’re presenting a budget to your board, keep referring back to goals of your organization and I bet you will get exponentially fewer weedy questions.

AND you will be able to talk about the number (affirm / defend) in the context of goals the board has already endorsed. Instant buy-in.

I suggest starting with no more than 10 goals. More will feel too tactical. More like to-do’s rather than what you really want — you know, the things you want to be able to bring up on New Year’s Eve when you brag about the impact your organization has had as a result of your collective efforts….

WHY YOUR NONPROFIT BUDGET IS ONLY AS GOOD AS THE ASSUMPTIONS YOU MAKE

Remember: the numbers tell the story — but the budget does not. That P&L you hand out to your board to approve is riddled with all kinds of assumptions. These assumptions are in fact the building blocks of the budget.

You might say that your board doesn’t really ask about them. That they just want to know the overall increase in revenue and expenses. If that’s true, it’s probably time to get your Finance and Board Chairs to lead a discussion about the role of each and every board member as a financial steward.

I actually like to lead a budget presentation (after reminding them of the goals) with the key assumptions. Here are a few examples:

Individual Giving

  • Current donors at below X will renew at___%
  • Current donors at above X will renew at __%
  • Estimated number of new donors with an average gift of $X: _____

Fundraising Event Costs and Revenue

  • Cost of Fundraising (expenses as a percentage of gross revenue) = X%
  • This represents a X% increase because we are no longer securing the video production pro bono

Foundation Revenue

  • Our budgeted figure of $X represents 10% of the total foundation revenue we expect to apply for (conservative). This represents a total # of proposals ranging from A to B

Program Expenses

  • The X program will increase the number of individuals served by X%
  • Our pilot program will break even in year 1 to illustrate proof of concept

WHY IT’S IMPORTANT TO SHOW ‘EM WHAT YOU HAD TO CUT OUT

We work hard on staff to balance the budget. As important expenses and new positions are cut, it’s important to make sure the board feels that same pain.

Create a schedule of the wonderful and/or desperately needed items you could include if you had confidence that you and the board could raise X% more money. Showing them what is needed or possible can be an incentive to commit to more fundraising.

AH YES… I PROMISED A NONPROFIT BUDGET TEMPLATE

Before you download your free nonprofit budget template, here are some last bits of advice.

  1. Please. Keep it simple. Too many numbers on a single page can cause heads to spin. You need the board’s full attention. Keep the summary page high level and use accompanying schedules to show more detail that you can reference.
  2. Please please start with goals and assumptions. It can make all the difference in setting board members up to review the numbers with a sense of calm and confidence.
  3. This template will make sense of the expenses relative to your org’s revenue. It may not be how your auditor wants to see it — but, it can be easily shifted to accommodate auditors or your 990. I believe firmly that the board needs to see a P&L that they actually understand.

One last thing — we call it a template for a reason. The purpose of this nonprofit operating budget template is to give you a sense of what I think a board member might want to see to better understand the true story behind your organization’s finances.

Now off you go! Click here to get your free download