You need a budget for your nonprofit or a nonprofit program. So, you want to identify your income and expenses.
You may find jotting down a budget easy. Or you may prefer never to have to look at the budget and rely on your finance department or someone else to take care of all “that money stuff.”
In either case, here’s a handy list of 20 expense items to consider when you create a nonprofit expense budget. Even if someone else will create the final budget, reviewing this list will help you ensure nothing gets forgotten.
And if you’re writing a grant, you will want to review this post, 10 Common & Avoidable Grant Budget Errors.
Record approximate salaries and hours for each job.
This budget comprises pensions, health care, social security, payroll taxes and typically includes a percentage of salaries. You estimate these based on yearly costs.
In your travel budget, divide it up. Provide separate categories for auto mileage, airline costs, business-related meals, etc.
What skill-building will you need? Consider tuitions, training costs, and other nonprofit capacity investments. Don’t skip this category. This category is critical to incorporate when you seek competitive funding because training expenditures show your nonprofit invests in its human capital.
List cost estimates for the expertise you lack or extra help you need during busy times, such as fundraising, board training, or strategy design.
Will you need meeting rooms and supplies, like whiteboards and handouts? If yes, you need to estimate the price of them for your nonprofit budget.
This expense is sometimes part of overhead. (See #19 below.) In other cases, you’ll list rent for office space and utilities for the relevant time frame.
What will you need to read? List expenses for books, magazines, newspapers, and Internet and software subscriptions, such as Zoom and Dropbox.
Given your recent experiences, you can often estimate an amount per person per year. Or else, pull out a catalog and jot down a list of needed supplies and their costs–from files to pens and paper.
This category consists of money for copies made at print shops, letterhead, stationery, and annual reports.
This item includes estimated costs for essential services and long-distance for your communications equipment.
Will you need funds for regular mail, packages, or mass mailings?
This category includes accounting and audit expenses, or a proportion of the costs of these services support other organization programs.
You will need estimates for computers, printers and if required still fax. Besides, don’t forget to incorporate expenditures for desks, chairs, tables, and file cabinets, and vehicles.
You can include costs for such expenditures as newsletters, print ads, and developing a web page or posts to promote your activities.
Do you pay fees associated with memberships that help you achieve your mission? Include these expenses in your nonprofit budget.
Include costs for policies advised by your financial adviser and coverage required by law. Don’t forget insurance for your board of directors.
Different projects require different supplies; these vary significantly from activity to activity. If the project supplies equal 25 percent or more of the total budget, divide the supplies into additional sub-categories.
In some organizations, this item is a predetermined percent of the total project budget. It generally consists of outlays for the executive director’s salary and office space used by the whole organization. Before you set your overhead, read Is Your Nonprofit’s Overhead Too Low?
Here is where you document expected donated items and volunteer labor. Each type will need a description and an amount. Check the Internet to find current rates. Check this post for more about in-kind and items you might not have considered.
The goal of an expense budget is to create a realistic picture of your future. Any narrative you develop to go with the budget translates this same picture into words. Therefore, make sure your budget narrative and the budget, with the numbers, are two descriptions of the same plan. The second explanation is mostly in numbers; the first uses words.
Together, the budget narrative and the budget provide your best guess about your future expenses.
* Note: Avoid using “miscellaneous” as an expense item. The term raises questions. Increase office or project supplies to cover small, unforeseen expenses. Otherwise, identify the expense and place it in its own category or one of the 2o above.
For information on how to obtain income to fund your expense budget:
Read this article about the 7 nonprofit income streams and, this one, about 20 Often Missed Nonprofit Revenue Opportunities.
For more about developing a strategy that includes obtaining adequate revenue, read this guide to Nonprofit Strategy 101.
And, check out Karen’s CEO Solutions Library . This collection of resources for nonprofit CEOs and executive directors answers your nonprofit questions.
If you’d like to know even more about obtaining income to fund your nonprofit budget, please don’t hesitate to set up a time to talk. I’d love to partner with you to guide you to deliver more money into your budget.