Every nonprofit needs a strong foundation for financial planning, and that foundation is your organizational budget. While the numbers tell your financial story, how you present them can make the difference between winning or losing funder confidence. (And please, whatever you do, don't just export a Profit & Loss Statement from QuickBooks and call it a day!) Let's dive into the a, b, c’s of creating a professionally formatted budget that demonstrates your financial stewardship to donors, funders, and stakeholders.
What Goes into an Organizational Budget?
Think of your organizational budget as the kitchen sink of financial plans – it should include everything from salaries to project expenses, ongoing programming to one-off capital expenditures. The rule of thumb is simple: if you're going to spend it during the fiscal year, it belongs in your organizational budget.
This document is crucial for grant funding. In our decade-plus of grant writing experience, almost every funder has required an organizational budget with their grant application. While it might look like just numbers on a page, it tells an important story to potential funders – it demonstrates your nonprofit’s ability to manage money effectively and create programs aligned with your mission and strategic plan.
For example, if you're a conservation organization with a line item for a maternal health program, funders might raise eyebrows. Was this a strategic decision approved by your board and staff? Is it reflected in your strategic plan? Are you equipped to run such a program? Or could this signal mission drift and lack of focus? (Spoiler alert: lack of focus typically leads to poor fiscal management and inefficient spending!)
Creating a Professional Budget Layout 👩🏽🎨
Header Section – should include:
Organization name
Fiscal year (specify months, e.g., January-December or July-June)
Clear budget title ("Annual Organizational Budget")
Optional: small version of your logo
Income Section - Your revenue can come from various sources. Here's how to organize them effectively:
Grants
List each grant separately with award amounts
Mark whether each is secured
Consider separating foundation grants from state/federal grants (some funders want to know your percentage of non-federal funding)
Donations - Break these into subcategories to showcase your diversified approach:
Corporate
Individual
Annual Appeal
Other Revenue - Include categories such as:
Interest Income & Dividends
Program Fees (charged to beneficiaries)
Program Income (from products/services)
Contracts
Events
In-Kind Contributions
💡 Pro Tip #1: List reasonable income you expect to receive. Funders understand that budgets are moving targets – that's why they often request additional financial documents like audited statements and P&L reports.
💡 Pro Tip #2: Cash reserves or endowment income should not be reflected in your income section, unless it is specifically being used for expenses. If that is the case, make sure to explain that on your budget in a Notes section somewhere (for example: Organization A’s Board voted on an intentional drawdown from the organization's financial reserves to advance its long-term strategy, in accordance with their current strategic plan. An investment of $200,000 was approved to support startup costs including equipment and construction for a new food pantry.)
Expense Section:
Create at least three columns for the following:
Admin/Fundraising expenses
Direct Program/Services expenses (Optional: Separate columns for each major program)
Totals
Then, create rows for each of the following line items:
Personnel Expenses:
Salaries (full-time and part-time staff)
Fringe benefits (give an average percentage or list out each individually)
Include: retirement, health insurance, life insurance, vision/dental, workers comp, paid vacation, meal/travel subsidies, commuter benefits, unemployment
Payroll taxes
Non-Personnel Expenses - Include items such as:
Equipment
Insurance
Materials & supplies
Telephones and internet
Postage & shipping
Technology and software
Marketing/PR
Travel
Professional development (i.e., training and capacity building)
Rent/facilities
Audit
Utilities
Professional fees (audit, bookkeeping, etc.)
Events
Program Expenses - Create a separate section and line items for each program's unique costs that do not fit squarely into the categories above. You can also list In-kind donations in this section.
💡 Pro Tip #3: Direct costs are those that touch your beneficiaries. Your Executive Director's salary is typically administrative unless that person is directly delivering programs.
💡 Pro Tip #4: In-kind donations should include all donated non-monetary goods and services such as consulting/professional fees, specialized services, event space, furniture/equipment, etc.
Allocating Shared Costs
For expenses that span multiple programs, use a logical allocation method to determine costs incurred by each program. Here's an example:
If Staff Member 1 ($60,000 salary) leads both afterschool (300 sessions/year) and preschool programs (250 sessions/year):
Total sessions: 550
Afterschool allocation: 55% ($33,000)
Preschool allocation: 45% ($27,000)
Formatting Best Practices
There is no shortage of templates you can use, but regardless of which one you choose, you should aim to follow these simple formatting rules:
Use dollar signs sparingly (mainly for totals)
Right-align all numbers
Use consistent comma formatting
Round to whole numbers
Use clear column headers
Maintain consistent spacing
Use clear section breaks
Include subtotals and totals
Use readable fonts
Ensure adequate white space
Include page numbers and organization name in header/footer
Essential Calculations to Include:
Total income (revenue)
Total expenses
Net surplus/deficit (aim for balanced or slight surplus)
Category subtotals
💡 Pro Tip #5: If you show a surplus, explain its purpose (e.g., "15% Net Profit is Board restricted for future facility improvements").
The Bottom Line
Your organizational budget is more than just numbers – it's a professional document that tells the story of your financial competence and planning capacity. Take the time to format it properly!
Comments