A nonprofit budget is a planning document that predicts revenue and expenses and allocates resources for your organization. It provides a detailed look at what your organization can expect over a specific time period.
There are two types of budgets that should be created annually. It includes an operating budget and a capital budget.
An annual operating budget is an estimate of the total revenue and expenses for the year. It breaks down your revenue by different funding sources and your operating expenses by program and overhead costs.
A capital budget projects the expenses and revenue associated with multi-year, long-term projects. It covers capital and other major expense campaigns.
Throughout the year, these budgets are what you review regularly to monitor the process of your various projects, fundraising success, and your financial standing. This means your budget isn’t something that you create but never look at again. It needs to be at the center of your financial activities.