When it comes to creating budgeting for your non-profit organization, having a checklist to help you manage the details can be very helpful and keep you on track.
We found the 10-Step Checklist by Propel Nonprofits to be a great resource. The 10 steps are listed below:
1) Determine a Timeline. It is important to set timeline goals. Start with the target date for the board approval of the budget and reverse engineer the plan to create guideposts along the way. Make sure that you allow the necessary time for each step in the budget. It’s important to have board approval of the annual budget before the beginning of the fiscal year.
2) Agree on Goals. You and your executive team/board need to agree on the goals that you set. Prioritize program delivery, and set financial goals.
3) Understand Your Organization’s Current Financial Status. Taking a snapshot of your organization’s current financial status is critical in creating a budget. First, review your income and expenses compared to the budget for the current year. Then forecast the remainder of the year and finally take a deep look at any variances and understand them.
4) Agree on a Budget Approach. Before creating the budget, assign roles and responsibilities to team/board members, come to a consensus on who has the authority to make decisions and decide on how much margin of error/uncertainty is tolerable.
5) Develop a Draft Expense Budget. This is the step where you determine program costs and all costs associated with reaching organizational and strategic goals.
6) Develop a Draft Income Budget. In this step, you and your team will project income based on current fundraising and revenue activities as well as project income based on new activities.
7) Review the Draft Budget. When reviewing the draft budget, you will verify that it meets the organizational goals, discuss all assumptions, and make adjustments as needed.
8) Approve Budget. In this step, you will present the budget to any necessary committees and to the board for approval.
9) Document the Budget Decisions. To document the budget decisions, create a consolidated budget spreadsheet (best if this is a working/cloud-based document) and file.
10) Implement the Budget. In order to implement the budget you will assign management responsibilities. Incorporate the budget into the accounting system that your organization uses. Monitor the budget and adjust as needed (this is why we recommend a cloud-based working document).
If you are interested in setting your organization up for financial success, learn more about our Frame Up For Funding program.