Starting a Nonprofit? Here’s What to Know Before Budgeting

staff meeting

When you have just put up your nonprofit organization, many logistic concerns must be dealt with. One crucial aspect is to know how to work within a budget because it fuels daily operations and what you can do within a certain period.

Before opening a new spreadsheet to lay out all expenses and revenues, an organization must first have a plan. Taking a moment to detail long-term objectives and current priorities helps you build your budget and stand by it once the ball starts rolling.

This can be an overwhelming ordeal, so should you feel the need to approach an expert, do so. Licensed financial planners can provide greater insight into setting financial goals and achieving them.

Determining Your Purpose and Goals

As a non-profit, the purpose and goals are more straightforward than, say, a personal budget. But it is still important to state them clearly as a guide for every next step you take.

Why are you doing the work?

Simply put, why did you create this organization? What are you hoping to contribute to your community? Reflect on what need or needs you are going to meet through your nonprofit.

Your answer determines the ultimate purpose of your nonprofit. After giving it much thought, write it down in a succinct, powerful mission statement. According to Donorbox, a mission statement works when it answers the whyfor whom, and how of your organization.

Reminder: Do not confuse your mission statement with your vision statement. Both introduce people to your nonprofit, but your vision talks about where you hope to be and what you will have achieved in the future. The mission informs how this vision will come to fruition.

How will you prioritize your goals?

Now that you have a solid mission statement, it is time to get even more specific. What exactly do you want to do? Set measurable goals for your nonprofit and then rank them according to priority.

It may seem too early to have concrete goals, but these are large motivating factors when you work. You should also set deadlines.

A time limit does not only add another layer of inspiration to achieve your goals. It also makes it easier to map out a budget for each one later on.

Projected Expenses

counting money

When your goals have been set, it is time to brainstorm what activities you wish to put up to achieve them.

What projects will you be setting up?

When thinking of projects, do not let your excitement get the best of you. Being a young nonprofit organization limits the amount and scale of activities you can organize, but remember that this is only the beginning. Start small and build towards bigger results.

With these in mind, you can now realistically plan your activities. But do not immediately throw away ideas that don’t seem practical now. Make a list and shelf them for now because you can always come back to these ideas later when you have a larger network and more financial mobility.

What will your recurring expenses be?

Project expenses will vary, but when you begin to operate, your nonprofit will have its share of fixed weekly or monthly expenses. These usually include property rent, employee salaries, utilities, and digital tools (which are especially important for a post-pandemic setting).

These are easy to estimate and ultimately reveal how much your base budget should operate comfortably every month.

Map Out Potential Sources of Revenue

In its initial stages, some self-funding may be necessary for your organization. But you should find other sources of funding to remain operational in the long run. This means having regular fundraising efforts.

How will you invite people to donate money to your organization? Will you ramp up social media marketing and hold an online fundraising event? Will you hand out flyers in public places?

First, determine the market that is most likely willing to donate money. Consider particular age groups or backgrounds and develop a marketing strategy that targets them. Make sure that methods for donating will be visible on your website and all social media pages.

Build the courage to contact the people in your network, too. Connections create partnerships that allow individuals and companies to invest in your nonprofit and what it stands for.

Final Thoughts

The planning process is often the most intimidating, but these plans set the stage for how your nonprofit will fare in its beginnings. Let your answers to these questions guide your budget and watch as you begin making a difference in your community.

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