Developing a Nonprofit Budget: Essential Insights and Strategies
I recently explored the Nonprofit Budget Template created by BDO USA in collaboration with the The Wallace Foundation, which provided valuable guidance on nonprofit financial management. Here are some key takeaways that I found particularly useful:
Expense Classification:
Natural Expenses: These are categorized by their type, such as salaries, rent, office supplies, insurance, and professional fees, depreciation.
Functional Expenses: Expenses are classified according to the activity they support, whether it's programmatic work, general management, or fundraising efforts. The statement of functional expenses offers a clearer breakdown.
Distinguishing Specific and Shared Expenses:
Specific Expenses: Directly linked to one or more programs or functions, based on the time or money allocated.
Shared Expenses: These costs benefit multiple programs or functions and are allocated accordingly. For instance, personnel costs might be distributed using the Full-Time Equivalent (FTE) method, while other expenses like rent or maintenance could be allocated based on square footage or the number of staff involved.
Revenue Management:
Program-Specific Revenue: It's important to identify revenue that’s restricted to specific programs. General donations are usually categorized under fundraising, with unrestricted funds also potentially classified under general management.
Satisfaction of Prior Year Restrictions: This refers to restricted funds from previous years that are being used in the current budget. Although this isn’t new revenue, it’s vital to include it in the operating budget and reflect it in the statement of financial position.
For those interested in further exploring nonprofit budgeting, I highly recommend the resources available at Strongnonprofits.org. This toolkit is an excellent source of templates and guidance for building a comprehensive nonprofit budget.
💡 Always Learning, Always Growing 💡
#Nonprofit #Budgeting #Finance #NonprofitManagement #Leadership #StrongNonprofits #BDO #ContinuousLearning #Nonprofit #FinancialManagement #ProfessionalGrowth