Jitasa Nonprofit Blog

Nonprofit Year End Planning: Budgeting Processes to Remember

Part 2 of a 2 part series.  Read Part 1 Last week we covered the components of an effective budget.  To achieve a truly great budget for your nonprofit there a few processes you should focus on during its development. The first includes the human component of team building. To achieve a budget truly suited to your organization, be sure to include the necessary members of your organization. That means the budgeting process should be a team effort involving the board of directors, treasurer, finance committee, executive director, program directors, and fiscal staff.

Although there are various approaches to the budgeting process, below are a few of the basic budgeting processes that should be implemented when preparing a budget.    

Determine programs and projects for the budget period:

Don’t get ahead of yourself. Sit down with management and other important members to determine which programs and projects should be included. Numbers cannot be put on paper until pertinent programs and projects that are expected and desired for the coming year have been determined.

This will ensure that nothing is forgotten or neglected within your budget.   

Review current year actual income and expenses and project actuals through year-end:

In part one  of the budget series, we addressed the importance of a realistic budget, “Often times, managers over or under estimate expected revenues and/or expenses, leading to cash shortfalls, and improper allocation of resources. This results in your budget becoming an ineffective planning tool.”

This makes analyzing current year actuals very important. Make the basis of your budget for the upcoming year complete by adjusting the current year’s numbers up or down to cater to the future assumptions of next year.  

Budget income and expenses:                                          

Begin with income and make conservative estimates for the revenue you may earn and the contributions you may receive.

When anticipating expenses, start with line items concerning payments to people, such as salaries, benefits, consultant fees, etc.  Then, identify all non-personnel expenses, beginning with fixed operating costs, such as rent, utilities, telephone, insurance, etc.

This will ensure that all operations fundamental to your organization are included in your budget and accurate to your mission.

Develop a draft budget for review and modification:

If you are budgeting at the program/project level, combine all budgets into one organization-wide draft operating budget. Review and modify the budget, as necessary. It is important to note it may take more than one round of revisions before a final draft is ready to be presented to the board of directors for approval.

Revisions should include checks for financial accuracy, grammatical errors, and to ensure nothing has been missed.

Present the final draft of the budget to the board of directors for review and approval:

Take the time to prepare your budget presentation prior to presenting to the board. For tips on presenting to your board, read Interacting with Your Board Members .

Once the budget has been approved by the board of directors it becomes the final budget for the coming year.

Monitor budget activity:  

The finalized budget should be entered into the accounting system and monitored on a continuous basis.

An effective operating budget is a necessary planning tool for all nonprofit organizations.  If you would like assistance in preparing your operating budget, view Jitasa’s  board solutions.

Melissa Stockberger, Senior Accounting Specialist for Jitasa


Clifton Gunderson LLP. “Best Practices for Nonprofit Budgeting and Cash Forecasting.” Cliftoncpa.com. 2008. Web. November 19, 2013.

Jitasa Flames

Jitasa’s bookkeeping and accounting services are affordable and cater to every nonprofit.

Learn More