Propel Nonprofits video about depreciation, which can be confusing but is an accounting concept we can all understand. To learn more, contact your Warren Averett advisor directly, or ask a member of our team to reach out to you to start the conversation. If the structure or mission of your organization seems to share some things with them, that’s a good sign that you should apply.

Pay Attention to All Your Budgets (eg. Marketing vs. Operating vs. Project budgets)

For the purposes of this article, we’ll focus primarily on operating budgets because of their central role in nonprofit finance. However, you can adapt some of our tips to create other types of budgets. Additionally, remember that any budget that covers a specific aspect of your nonprofit’s spending and fundraising should align with your operating budget.

Stay updated on grants

Since you have some control over these expenses, this is where a lot of decision-making will happen. Every accounting system has a chart of accounts which classifies the accounting services for nonprofit organizations sources of revenue and the types of expenses you incur. Use the same categories in your budget to easily generate financial reports to funders and others.

How to Set Up Your Nonprofit Accounting System RIGHT So it Helps You Grow

• In addition, they should review the final draft against the organization’s goals and objectives.
• There’s a lot of advice you’ll hear through the grape vine regrading grant budgets.
• The budgeting process begins by gathering input from the right people.
• Boards should analyze variances and consider if there will be any impact on the upcoming budget.
• Regular comparison of budget versus actual figures highlights areas needing attention before they become problems.

On average, nonprofits spend 15% to 40% of their revenue on administrative costs. However, many foundations recommend keeping these costs between 10% and 15% of your revenue. It’s easy to budget for costs that we foresee in the future, but what about the costs that we don’t plan for? Our advice is to set up a small contingency fund, no more than 10% of the budget, so those costs are accounted for.

• The second is to make sure that the expenses are in line with the goals of the organization.
• Since you have some control over these expenses, this is where a lot of decision-making will happen.
• This is an easy way for nonprofits to figure out what will work best for them based on the value it provides and whether or not the costs are worth it.
• Consider staff costs, professional services, technology investments, insurance, and office expenses.
• For example, if the goal is to increase access to services, then a greater proportion of funds should be allocated to program expenses.
• When it comes to planning an event, executing it successfully depends on how prepared you are!

Budget checking on every data entry screen to protect from overspending. Award-winning online accounting software designed for small business owners and accountants. Your budget https://greatercollinwood.org/main-benefits-of-accounting-services-for-nonprofit-organizations/ is full of a lot of information, but it doesn’t have to be overwhelming. Go one category at a time, and don’t panic about getting overly detailed. You want your budget to be a useful tool, not something you’re too intimidated to look at. Using the budgets, you can determine where you’re losing and earning the most.