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Nonprofit finances are truly unique. While for-profit organizations provide a product or service to the community in order to make money, nonprofits ask for money to fund a mission towards the greater good of the world.

This means that the mission is the top priority for nonprofit organizations. Money from donations, sponsorships, and other resources is simply a method to achieve said mission.

There are so many tips and tricks out there about how to build up your annual fund and earn the money your nonprofit needs to work towards your mission. However, there are fewer resources available about how to make the most of these funds and use them responsibly.

That’s why we’ve put together this list of top tips that will help your nonprofit stay on budget once you’ve compiled funds for your mission. We’re here to help you save those resources as much as possible so they can be allocated towards what really matters.

These top tips for nonprofit budgeting include:

  1. Maintain your tax-exempt status.
  2. Keep accurate records.
  3. Use effective budgeting templates.
  4. Determine overlapping timelines.
  5. Prioritize your goals.
  6. Ask for help.

Ready to meet and even exceed your financial goals? Let’s get started with your nonprofit’s budget!

1. Maintain Your Tax-Exempt Status

Consider your personal budget. You likely factor in some extra funds around April and May to help you pay any taxes you owe.

However, your nonprofit doesn’t need to worry about these taxes. As a 501(c)(3), your nonprofit qualifies as a tax-exempt organization. Instead of paying taxes, each year your nonprofit must file a Form 990 to maintain this exempt status.

If you fail to file your nonprofit’s 990, the repercussions could have a drastic impact on your budget!

Depending on your nonprofit and varying circumstances, these repercussions could look slightly different:

  • If your nonprofit’s gross receipts are less than $100,000 and you’re late filing your 990, you’ll see a $20 penalty each day the 990 is late. If you continue to not file, this penalty will continue to grow until you’ve reached $10,000 or 5% of your income.
  • If your nonprofit’s gross receipts equal more than $100,000 and you’re late to file your 990, the daily penalty jumps to $100 per day with a maximum charge of $50,000.
  • If your nonprofit, no matter its size, fails to file your Form 990 three years in a row, your organization will lose its tax-exempt status. This means you’ll need to reapply for tax exemption and pay filing fees again.

Whether your nonprofit is filing a Form 990 postcard or a traditional Form 990, it’s important that you do so on time and accurately.

Your Form 990 will be due at one of two times depending on your nonprofit’s fiscal year. If you follow the calendar tax year, it’s due May 15th. If you don’t follow the calendar fiscal year, the Form 990 is due on the 15th day of the 5th month after the conclusion of your fiscal year.

Instead of rearranging your budget to accommodate paying taxes or tax penalties, make sure you’re ready to fill out your Form 990 every year on time.

This may seem like a lot of information that you need to remember for tax season. The good news is that there is software available to remind you to file on time and helps make filing easier. If you want more information about tax filing software or to learn more about tax forms, check out this Form 990 software article by re:Charity.

2. Keep Accurate Records

Accurate budgets are built from data-informed estimates, generally built from records from previous years’ budgets and expenses.

Accurate records from previous years can help your nonprofit formulate a budget based on real numbers that are applicable to your specific goals.

Basic records of the income from your nonprofit’s previous year can be found on your Form 990, which is public record. If you used tax filing software, like File 990, you can also find records about “taxable” income from your account in the software.

While this is a great resource, your Form 990 can only provide so much information about your nonprofit’s financial standing. Be sure to also maintain more accurate records year after year for more extensive budgeting purposes.

The other information that you should be sure to include in these reports are:

  • Fundraising campaign expenses and ROI
  • Operational expenses
  • Project expenses
  • Individual contribution income
  • Sponsorship income

Not only will these records help you maintain an effective budget, but they’ll also make it easier to create your nonprofit’s annual report. This is the report that will help you stay accountable to your donors.

3. Use Effective Budgeting Templates

If your nonprofit is on the newer side, you’re probably working from a set template within your fund accounting solution. These templates are effective in that they are used to help nonprofits create a preliminary budget.

Be sure you can track the elements of budgeting that are specifically required for nonprofit organizations. For instance:

  • Grant allocations
  • Unrestricted funds
  • Restricted funds

Using specialized software will help your nonprofit take each of these elements into consideration while crafting your budget. It will help you make sure your operational costs come from your unrestricted funds and grants are used for the proper projects.

However, every nonprofit is different. The restrictions of various funds depends on donor preferences and each grant must be used for a different project. Other allocations heavily depend on the needs and wants of your nonprofit’s stakeholders. That’s why it’s important for your nonprofit to make sure you’re working with software with customizable templates.

Customizable templates will help your nonprofit track the metrics that are most important for your specific needs.

4. Determine Overlapping Timelines

Your annual budget spans over the entire year. However, not every aspect of your budget will fit perfectly into a single year. Some of the projects and campaigns will be much longer or much shorter than a year.

For instance, a capital campaign often lasts for multiple years from start to finish. Meanwhile, #GivingTuesday only lasts for a day.

Identify the places within your budget that won’t fit perfectly into your annual calendar, then plan according to their overlapping deadlines.

When elements of your budget last less than a year…

When you have short-term fundraising campaigns, such as a peer-to-peer fundraising campaign, event, or auction, it’s generally a good idea to spread them out throughout the year. Consider the times of the year when the majority of people will be driven to participate for the best return on investment.

An auction for your local school, for instance, will likely be most successful after school hours, but you may have difficulty getting people involved over the summer because the need is not perceived as immediate.

You may also plan payments for your nonprofit to take place over time rather than all at once. Let’s just say you have a conference coming up, but you also want to buy a new computer for your office. It may be worth waiting to purchase the computer until after the conference travel expenses are paid for in order to better spread out your expense budget.

When elements of your budget last longer than a year…

The classic example of a budgetary element that will last longer than a year is a capital campaign. Capital campaigns span over multiple years and are designed to fund major projects.

Be sure you take into consideration the full length of time that these campaigns will take and factor benchmarks into annual budgets.

Benchmarks throughout the campaign will help you plan your fundraising strategy each year and ensure you keep your allocated funds straight.

5. Prioritize Your Goals

It’s important to prioritize your goals in the process of creating your budget. Setting goals for yourself ensures that your nonprofit is constantly moving forward towards your mission.

There are a couple of steps you can take if you’re having some difficulty getting organized:

First: Make a list of all of the goals you’d like your nonprofit to accomplish in the next year.

Next: Estimate the expenses necessary to meet each of these goals. For instance, it may cost $500 to replace an office computer, but $20,000 to renovate the headquarters.

Third: Consider at what times during the year you’ll be most likely to have the most fundraising success and what those numbers will look like.

Lastly: Set deadlines for meeting each of your goals. Be sure you have goals paired on your calendar with fundraising campaigns that will help you reach them.

By including your goals both in your budget as well as on a calendar, your nonprofit will find it easier to meet them and move onto more in the years to come.

6. Ask for Help

There’s nothing wrong with asking for help if your nonprofit needs it. There are a lot of resources out there that can help your organization better organize a budget and improve your fundraising efforts.

After all, better fundraising results in the potential for a more extensive budget and more goals to reach.

A fundraising consultant can help your organization get an objective outside perspective on the various aspects of your fundraising strategy. You can hire one to help formulate your strategy as a whole, launch a major campaign, or rework various aspects of your organization for more effective processes.

If a fundraising consultant sounds like a good idea for your organization, you’ll need to conduct a few different steps to get the most out of it:

  • Determine what services you need and how improving elements of your organization will impact your overall budget.
  • Think about what type of consultant will make the most impact on your organization: remote or in-person.
  • Factor in the cost of the consultant themselves. Make sure you have a clear idea of the consultant fees and how those will impact your budget.

To get your research started for a fundraising consultant, check out the top firms linked here. You should also ask around to other nonprofits and see who they’ve worked with and talk to the consultant about their previous clients.


A lot of factors go into your nonprofit’s budget. Make sure you stay on top of your nonprofit’s taxes, goals, fundraising, and more to factor all of these important elements into your annual financial plan.


This post was contributed by David Ebner at File990

David is a marketing executive, public speaker, and author who specializes in the effectiveness of storytelling in marketing. When he’s not writing about nonprofit software, he enjoys volunteering at educational programs around his home.

Nonprofit Budgeting Tips to Exceed Your Financial Goals