A budget is a guess about money you don't have yet. So start with the money you've already spent. It's the most honest number you've got.
Start from this year's real numbers
Pull the last twelve months of income and spending from your books, line by line. If your year isn't over yet, use the months you have and fill in the rest with the same months from last year. Then make four columns: the line, last year, this year so far, and next year. Leave the last one blank for now.
Write down what you already know will change
The rent goes up in March. A grant ends in June. Your part-time coordinator goes full time. Put a number on each one, with a short note on where it came from, like "insurance quote, Sept 12." Those little notes save a long board conversation later.
Split income into promised and hoped-for
Promised money is in writing: signed grant letters, pledges that run several years, contracts. Everything else is hoped-for. Budget the hoped-for part from what actually came in last year, not from the goal on the whiteboard. If last spring's event raised less than you hoped, use what it raised.
Count what programs really cost
Rent, insurance and bookkeeping aren't just "the office." They're part of what every program costs. Split those shared costs across your programs in a way you can explain in one sentence, by staff hours, say, or by square footage. Want a head start? The National Council of Nonprofits points to Propel Nonprofits' templates for working out what a program truly costs.
You don't have to break even
Yes, really. The National Council of Nonprofits shares Propel Nonprofits' view that a budget doesn't have to break even, and that aiming for exactly zero is one of the biggest things keeping nonprofits from building reserves. A small planned surplus is how a rainy-day fund grows. Candid says many nonprofits aim for cash reserves that cover three to six months of expenses. If that feels far off, budget a first step toward it.
Give your board time
Staff usually prepare the budget, and the full board usually adopts it at a board meeting, according to the National Council of Nonprofits. Send the draft a month before the vote, with a one-page summary on top: total income, total spending, the three biggest changes from this year, and the one or two numbers you're least sure of. Naming the shaky numbers yourself builds more trust than having someone else find them.
If your year starts January 1, a November draft gives your board a December vote, and gives you a calm New Year's.
Then use it
A budget only helps if someone looks at it after the vote. The National Council of Nonprofits suggests comparing it with what actually came in and went out during the year, and updating it when things change. Put a 15-minute budget check on one staff or board meeting each quarter. If something drifts, you'll catch it in April instead of November.
Keep reading
- Where can I find examples of nonprofit budgets? (opens in a new tab), from Candid Learning
- Budgeting for Nonprofits (opens in a new tab), from the National Council of Nonprofits
This guide is general information, not accounting advice.
Sources
- National Council of Nonprofits, "Budgeting for Nonprofits" (opens in a new tab)
- Candid Learning, "How much should my nonprofit have in its operating reserve?" (opens in a new tab)
- Candid Learning, "Where can I find examples of nonprofit budgets?" (opens in a new tab)
Updated October 9, 2026