Pointers For Setting Up A Non-Profit Organization's Budget

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If you have just formed a non-profit organization, you may wonder how your organization goes about setting up its budget. A non-profit operates differently than a for-profit organization does, and if you've never worked with a non-profit before, it can be hard to make the transition. You may want to consider hiring accounting services that specialize in non-profit accounting, so that you know you're doing everything right not only when it comes to setting up a budget, but running the organization. This article will give you a few steps in setting up your budget, so you can start off on the right foot.

Important Pointers in a Non-Profit Budget

The operational budget that you set up will be the foundation for all of the work your organization carries out. It allows you to establish goals and gauge the overall financial health of your organization from year to year. In order to make sure you get a bigger sense of your financial picture, use the following steps and guidelines in setting up your budget. 

  • Set a period for your budget. It can be one year, or can be spanned over a number of years. 
  • Indicate that your organization must perform an annual review the financial performance and your organization's achievement from year to year. 
  • Set specific goals for your budget period. 
  • Estimate all expenses including payroll, rent, taxes, phone and utilities. Remember that costs will fluctuate based on your activity level, so plan accordingly. Have a plan in place for when you exceed your budget. 
  • Estimate your annual anticipated revenue.
  • Have a cash reserve for additional needs that are unexpected, and adjust any line items for revenue and expenses. 

It's up to your board of directors to approve the organization's budget. After it's approved, your budget is your tool for monitoring the progress of your organization, and determining which areas need to be improved upon. You may want to review your budget quarterly, in order to determine if you're on track or where adjustments need to be made going into the next quarter. 

It always helps to plan conservative when it comes to your organization's budget. You can make an indication as to how much money you anticipate your organization to raise, but it's best to be practical. Setting realistic goals helps mange the expectations of everyone involved in your non-profit organization. Talk with your accountant like one from Hurren Sinclair MacIntyre CPA's LLP for more information on setting up your non-profit budget. 

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