Budgeting must be made a priority. Otherwise, it doesn’t happen. It’s never too late, though, to get started. Below are 5 tips to help you begin a budget or to improve your current budgeting process.
Prepare Before the Year Starts
The best way to budget is to start early. Last-minute budgeting often leads to rushed estimates that may not reflect reality. Ideally, begin budgeting meetings or work sessions a few months before your next fiscal year. However, if you’re already a few months into your year, start by budgeting for the second half of the year.
Get the Team Involved
A mistake some nonprofits make is to have only one person prepare the budget. The more employees a nonprofit has, the greater the need for multiple individuals or groups to weigh in during the budgeting process. Otherwise, a budget buster may be lurking.
If you’re the only employee for your nonprofit, getting multiple perspectives is much harder and may not be needed. But, we still encourage you to have it reviewed by someone else.
Determine the Anticipated or Goal Income
For an accurate budget, determine your anticipated income for the year. This step cannot be skipped. Without an income number, it’d be like planning a vacation with no destination in mind.
Begin with existing income sources and determine if those will hold steady into the next year. Also, consider income-producing projects you plan to tackle or donors you want to speak with. These anticipated amounts should be included as you prepare a budget.
Forecast Anticipated Expenses
After you’ve determined your income, consider expenses. Are there expenses that can be cut, or is your income going to continue to support the costs you have currently? If you don’t purposely plan for expenses, there will be costs that cause your budget to go off the rails.
Recalibrate the Budget Throughout the Year
Once your budget is prepared, plan to revisit your budget periodically (e.g., monthly, quarterly, etc.). A budget that isn’t analyzed is not useful. See if your income or expenses are following along with your budgeted amounts, and if not, you may need to adjust. This step also makes budgeting for the next year much easier.
Get Budgeting Help from Morgan & Associates
If preparing a budget, analyzing income and expenses, or just determining where to start seems daunting, let Morgan & Associates help. We have years of experience assisting nonprofits and are available to help you too.