Lesson 1 – Overview

Nonprofit Budgets Overview

A budget represents what your nonprofit expects to spend (expenses) and earn (revenue) over a time period. They are useful for projecting how much money you will need for a major initiative, for example, buying a facility, hiring a new employee, etc. They also help track whether you are on plan or not. There are yearly (annual or operating) budgets, cash budgets, capital budgets (for major assets, such as equipment, buildings, etc.) and proposal budgets (for fundraising), etc.

Similar to the breakdown of the chart of accounts into functional areas and programs, a nonprofit’s budget must also be broken down by the same areas.