A nonprofit requires a projected annual budget. In order for grant writers from GrantWriterTeam to help you compile your programmatic budget for a particular grant, you will need to provide an annual budget to the funding source. This will demonstrate that the funds requested will not be the only funds the organization utilizes.
Grants are meant to supplement – in addition to.
A budget is a monetary account of all activities of the previous year or of the upcoming year, almost a ledger of sorts for income and expenditures at an organization. It is a planning tool created, annually. Normally, the budgeting process begins about 3 months before the end of the organization’s fiscal year. This is so that the board of directors can approve of it.
The budget helps an organization to understand how much money is being taken in and where it is going. Essentially, a budget should tell you how much you can afford to spend on the operations of your organization. Make sure you have a computer spreadsheet program or one that comes from your actual computerized accounting program (i.e…QuickBooks, Excel, etc.).
Here is a 5-step checklist to budgeting:
- Determine a timeline
- Agree on program goals
- Develop an income budget
- Create a draft budget
- Implement the budget
First, decide by when the budget needs to be approved (before the beginning of the next fiscal year). The fiscal year could be different for different organizations. Your fiscal year could begin in February or June or something else. Understand who it needs to go to before the Board of Directors, because that will determine the timeline for getting ultimate approval.
Second, determine program goals. What will your organization do to achieve its mission? How will it convey its vision to the community? You need to prioritize program delivery goals. This means to determine which program(s) you find most valuable and want to fund first. In this step, you should set organizational financial goals and clarify annual goals from the strategic plan.
Third, it’s very important to know what money is coming in. Without knowing how much money you have to work with, you cannot determine how much money you can spend. The income budget is based on current fundraising and revenue activities. Here, you will estimate how much money will be coming in from standing practices, and new activities. Will you be applying for grants? or raising money through crowdfunding?
Fourth, make a draft budget! Assign activities to the goals that you set up earlier. Assign monetary values to the activities as itemized expenditures. For example, if you run a youth-centered organization and are forming a new program for after-school basketball, you would have to consider the cost of time on a school’s basketball court, uniforms, basketballs, refreshments, etc. After you’ve assigned monetary values, review and discuss how the budget meets organizational goals. Make adjustments based on goals, income and expenses. Then, review the final draft.
Fifth, it’s time to enact the budget. Assign management responsibilities. This means to decide which manager will be held accountable for the completion of certain activities and funding. Or, perhaps an entire department or individual will be responsible for ensuring funding. Incorporate the budget into the accounting system. This means that your organization’s activities (planned or not) will function according to the budget. You will then monitor and respond to changes, as needed.
So, now you know how to create an annual budget for a nonprofit. A grant writer from GrantWriterTeam.com can help you create a program budget, should you require one.