Budgeting

This NP Engage article walks through seven steps to developing a policy to manage the use and replenishment of reserve funds. Once an appropriate target amount has been determined for operating reserves, the board needs to draft a policy that establishes the fund and sets forth guidelines for using it.

7 Step Policy Guide to Nonprofit Operating Reserves

Understanding a nonprofit’s costs is necessary in order for charitable nonprofits to be financially sustainable. Rather than reporting artificially low costs, or ignoring what it really costs to deliver programs and services, the National Council of Nonprofits is encouraging all nonprofits and board members to model transparency of full costs. (National Council of Nonprofits)

#OwnYourOwnCosts

How Much Profit Does a Nonprofit Need? identifies the key variables and explains how any organization can calculate the minimum profit it needs to prevent slow, steady erosion of the quality of its output. (Nonprofit Quarterly)

Get best practices and tools for managers of environmental and conservation nonprofits in challenging economic times. Learn how to track your finances, recognize danger signs, assess your options, and make tough decisions fairly with the best interests of the organization in mind. (Institute for Conservation Leadership and Environmental Support Center)

Operating Reserves for Nonprofits - For seven consecutive years Nonprofit Finance Fund’s State of the Sector report revealed that less than 25% percent of those nonprofits responding had more than 6 months of cash in reserve. In fact the majority of the nonprofits responding reported that they had less than three months of operating reserves on hand.

Financial ratios are an established tool for businesses and nonprofits to understand an organization’s financial situation and help leaders identify strengths and weaknesses in financial condition. This tool provides calculation of 14 ratios, including a mix of balance sheet and income statement ratios. (Propel Nonprofits)

This sample is a starting point for designing your own budget. You may customize this sample budget to fit your organization's needs.

Healthy nonprofit organizations employ financial management practices that build stability and flexibility both today and in the future. In Nonprofit Finance: 12 Golden Rules, Propel Nonprofits sets out the twelve golden rules for nonprofit finance, including budgeting, diverse funding sources, and interdependence.

Knowing your nonprofit’s actual costs is common sense. Fortunately, an increasing number of enlightened donors, grantmakers, and government partners are recognizing the reality that essential costs include not only direct program costs, but other costs too – whether referred to as "overhead," "management and general," "administrative," or "indirect costs."

What does it cost to deliver your nonprofit's mission?