Our nonprofit bookkeeping clients are always asking us for a good nonprofit budget template. Well, here it is.
This nonprofit budget template has been modified over the years to fit the specific needs of small and medium sized nonprofits. We have tried to make this simple enough that everyone can use it, yet sophisticated enough to be useful. Before downloading and using the template please read the following important instructions, features, and advice.
Instructions for the template
Budget Matches Chart of Accounts
The income and expense accounts need to match the accounting system. A budget is worthless unless you are regularly creating budget vs. actual reports. You need to see whether or not you're spending and raising money according to your plan. If you’re not, then you can make changes.
In order to produce budget vs. actuals, your budget categories need to match your “actual” categories. Your “actuals” come from your accounting system. Therefore, step one is to make sure the income and expense account lines in your budget come directly from your chart of accounts in your accounting system. If you do this, then you can automatically produce budget vs. actual reports straight from the accounting system with a push of a button.
Budget by Cost Center
A cost center is a category that is separate from your income and expense accounts. You have income and expenses, but you can also budget those income and expenses per each of your programs, or per each of your grants. Your programs and grants are different cost centers. For many nonprofits a straight line budget is not sufficient. They need to have a specific budget for each grant, or for each program.
This budget template allows you to break your budget out by up to 12 different cost centers. You can decide whether you want to budget by program, or by grant, or even by month.
Budget by Month
If you don’t want to track your income and expenses per program or grant as part of your budgeting process, you can instead create a budget by month. This can be helpful for cash flow analysis and digging deeper into the specifics when different income and expenses hit at different times. On this template, you can simply use the 12 cost centers as months.
Allocating Salaries
This template provides you with the tool to allocate your personnel expenses across your cost centers based upon percentages. This is especially useful when tracking grant budgets. You can split each employee’s cost across the grants. The template will automatically allocate the other personnel costs based upon these splits.
What this nonprofit budget template does not do
I have created many budget templates over the years varying in degrees of sophistication. This one provides a very solid foundation for most nonprofits. However, there are certain things this budget does not do.
Track year over year grant funds
Not all grants follow the fiscal year and so if you’re trying to budget your grants, the annual budget template may not match up. For example, if your grant budget is for 2 years and goes from June to June, but your fiscal year starts in January, this becomes difficult. If you are running into this problem, one work-around is to split your grant budget up so that you know how much you’re able to spend in the budget template period, and at least plan according to that amount.
Another issue that folks run into with grant funding is when they receive grant funds in a prior year, but spend it down in the next year, the next year’s budget shows a deficit. This is because the revenue doesn’t show up in the same year as the expenses. In this case, you can always add in a “below-line” adjustment to your budget for presentation purposes. You can include a line that shows “carry-over” grant balances and how these affect the bottom line. If doing this, just always remember that this is not part of your actual budget, it is for presentation purposes only.
Budget vs. Actual Reports
Run budget vs. actual reports regularly. This is the most important report you can have besides your balance sheet (Statement of Financial Position). The budget is your strategic plan in numbers version. Looking to see if you’re following your plan is paramount.
By running budget vs actual reports, you can see any major variances in income and/or expenses. Then, you can decide whether or not something needs to change or not. Perhaps there’s an explanation for the variance and everything is still fine as is, or perhaps a pivot needs to happen. The budget vs. actual report highlights these areas of concern for you.
A budget vs. actual should be simple: In the first column you have your income and expense accounts. In the second column you have your actual income and expenses to date. In the third column are your budgeted amounts for those accounts, and the fourth column holds a percentage. This percentage shows you how much of your budgeted amount you have raised and spent.
If you are 50% through the year, you would hope that these percentages are at %50. If not, then you need to see why. This should be done on a monthly basis internally, and presented to your board at least quarterly.
How to use the budget template
Below is a link to a google sheet. You should copy it into your own google drive, or download it as an excel file.
The first tab lists out instructions on how to use the spreadsheet. Please pay attention to this since there are formulas that should not be written over.
We hope you find this budget template useful. Please let us know any feedback you have so that we can take it into account for the next version.
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