When creating a 501(c)(3) nonprofit organization budget, you want to review the different types of budgets, how they work, and chose the best fit for the organization. Below, we have defined several types of budgets that various nonprofit use in order to track their finances and remain financially healthy.
Common Types of Budgets
- 1. The operating budget is the most common budget discussed. It includes the day-to-day expenses required to run an organization. This can include your utilities, office supplies and rent.
- 2. A capital budget is used for a long-term investment such as buying a building for the organization. This budget not only includes immediate expenses but also long-term maintenance expenses.
- 3. A program budget focuses on the specific program or project the organization is working on at the time. It will include all expenses and revenue to operate the program. This budget is specific to the program and not the overall budget of the organization. If your organization has more than one program, you will need more than one program budget.
- 4. A cash flow budget tracks the money that flows in and out of the organization over a specific period of time. This helps ensure the organization has enough cash to meet its obligations.
- 5. A fundraising budget focuses on costs associated with raising money for the organization. An example would be how much money will be spent on marketing materials for the fundraiser.
Specialized Budgets
- 6. If you are seeking grants for the organization, you must have a grant budget. The grant budget will focus on outlining a detailed budget on how the grant funds will be used. The grantor will have to approve this budget before disbursing the funds so be very detailed in your submission.
- 7. A special project budget is for specific, often one-time projects that do not fall under regular programs or operations, such as a major event, a research project, or a new initiative.
- 8. A restricted and unrestricted funds budget are 2 types of budgets that organizations need to be aware of. A restricted budget is when funding is received and can only be used for a specific purpose such as a tutoring program. An unrestricted budget is funds received that can be used for any purpose. This means the organization has discretion as to what area of the organization the funding will support.
- 9. An administrative budget focuses on the overhead costs associated with running the entire nonprofit organization.
- 10. Emergency/Contingency budgets are funds set aside for the unexpected expenses or unforeseen challenges of the organization.
- 11. An endowment budget outlines how the endowment funds will be invested, managed, and allocated for use ensuring long-term financial sustainability.
Conclusion
Having these various budgets helps a nonprofit manage its financial resources effectively, plan for the future, and ensure transparency and accountability to donors and stakeholders.
As consultants, BryteBridge Nonprofit Solutions is here to help you navigate this journey and unlock your nonprofit’s full potential. For more information, join BryteBridge Connect Membership for Live Bootcamps, Webinars, and classes. Speak to a BryteBridge Consultant today by calling 877-857-9002.
