How to Build a Simple Nonprofit Budget

A budget is the single most important financial tool your nonprofit has. The good news: a useful budget doesn't need to be complicated.

1. Start with your income

List every realistic source of money for the year: grants, donations, fees, events. Be conservative and separate confirmed from hoped-for income.

2. List expenses by category

Group costs: staffing, programs, rent, supplies, technology, travel, and administration. Track project costs separately if you run grants.

3. Build in a reserve

Aim to hold a few months of operating costs in reserve. Even a small surplus line signals discipline to funders.

4. Compare budget to actuals monthly

Each month, compare plan to reality. Big variances are early warnings.

5. Make it board-ready

Lead with the headline: total income, total expenses, surplus or deficit, and cash position.