How to create a nonprofit operating budget

How to create a nonprofit operating budget

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Your nonprofit operating budget outlines your expected revenues and expenses for the fiscal year, providing a roadmap for financial planning, mission planning, and decision-making.

Let's dive into the details of a nonprofit operating budget—what it is, what to include, and how to put it all together.

What is an operating budget for a nonprofit?

An operating budget for a nonprofit is a financial plan that projects the organization's revenues and expenses for a specific time period, usually a fiscal year. Having an annual nonprofit budget helps you make informed decisions about program funding, staffing, and other operational needs, so you can use your resources effectively and protect your financial stability.

What's included in a nonprofit operating budget?

Nonprofit operating budgets typically include expected revenue as well as various expense categories that reflect the organization's day-to-day activities and operational needs. Here are some common categories found in an annual budget for a nonprofit organization.

Fund development

Let's start with fundraising. Include revenue you expect to generate from fundraising events, grant proposals, individual donations, corporate sponsorships, and other sources of funding.

As you walk through your event list, add the amounts you'll need to make each one happen. Your nonprofit budgeting needs to cover those expenses.

Nonprofits have to walk a fine line between funding their fundraising and funding their mission efforts—be sure to think through this balance carefully. Finding sponsors for your events can help you earmark a larger portion of your fundraising for your mission program expenses.

Staff salaries and benefits

This category includes all the costs of hiring and retaining staff—including salaries, payroll taxes, health insurance, retirement contributions, and other benefits. Nonprofit organizations need to budget enough for these expenses to ensure they can attract and retain qualified staff while remaining financially sustainable.

Marketing and advertising

To spread the word and generate community interest, most nonprofits put some of their budget toward marketing and advertising strategies such as social media campaigns, email marketing, print materials, public relations efforts, and so on. This helps raise awareness for their mission while ensuring sustainability and success in achieving their goals.

Rent and maintenance

Be sure to include these expenses if the organization needs to rent or maintain a physical location for its operations. If your nonprofit can operate remotely, you may be able to save a considerable amount of money in this category.

Equipment, software, and supplies

Does your nonprofit use small equipment, software subscriptions, or office supplies? Be sure to include enough in your budget to cover these needs.

Training and development

This category includes things like educational materials, workshops, and conferences. Do you teach new fundraisers how to raise money for your cause? Or train volunteers about your mission? Be sure to include these efforts in your budget.

Meetings, meals, and entertainment

Apart from fundraising, nonprofits may occasionally feed volunteers or entertain potential donors as part of their development efforts. Remember to include enough in your budget to cover these activities.


Travel may be necessary if staff members or volunteers attend conferences, meetings, or events related to your mission. It may also be budgeted for outreach efforts, site visits, or other programs that require travel. When including travel in your nonprofit operating budget, think about plane tickets, lodgings, car rentals, Uber fees, and/or driving mileage.

Contracted services and fees

These services include things like accounting, legal, marketing, website maintenance, fundraising, or other specialized services that the organization may need but doesn't have the expertise or resources to handle in-house. Including contracted services in the budget lets you plan and allocate funds for these essential services.

Communications and utilities

This category may include cell phones, internet, electricity, water, and other utilities for daily operations. If your nonprofit needs TV streaming, cable, or satellite service, include that here too.


Including insurance in a nonprofit operating budget helps protect your organization from unexpected financial risks. This can include covering liability for employees or volunteers, property insurance for buildings and equipment, and insurance for events or activities that your nonprofit hosts.


This category can help your organization cover unexpected repairs, unplanned staff meals, and other odds and ends. Having a miscellaneous budget line offers flexibility in your budget, helping you cover unforeseen costs as they arise.

Nonprofit operating budget template
Download our operating budget template for your nonprofit

How to create a nonprofit budget in 5 steps

By following these five steps, you can create a nonprofit operating budget that sets you up for financial stability and growth.

Step 1: Start with last year's budget

When creating your nonprofit operating budget, use the past as a benchmark for your expectations and goals in the coming year. By analyzing your previous year's budget, you can get a clear understanding of your organization's financial needs and how they may have changed over time. This can help ground you in setting realistic goals for your expenses and fundraising efforts.

Step 2: Think about operating expenses and overhead

Many nonprofits are challenged by the understandable desire not to spend much on their own operations. The argument goes like this: the less money you spend on operations, the more you have for your mission.

It's not wrong, but it's not the whole story.

It's also true that the less you spend on your operations, the less you can do to hire and retain good people, attract donors, and support your fundraising efforts. Be sure to consider overhead expenses as investments in your operations and growth, not just costs.

Step 3: Set department budgets

To ensure that your nonprofit is adequately funded, be sure to set a separate budget for each department within your overall financial plan. By allocating funds to specific programs and initiatives, you can track and manage expenses more effectively and ensure that resources are distributed appropriately.

Step 4: Track your financials carefully

Even the best nonprofit budgets aren't worth much if you don't have a good way to stay on top of your spending. For better budgetary management, many nonprofits use tools like BILL Spend & Expense that let them set budgets ahead of time and keep departments within spending limits automatically.

Step 5: Generate financial reports for transparency

In communicating with your board members, nonprofit leaders, and supporters about how donations are being used, transparency is key. Generate regular reports that outline your nonprofit's financials and the impact of your programs. Sharing this information helps build trust and accountability.

Be sure to include all the payments that have gone toward your mission programs—including international payments.

Free operating budget template for nonprofits

This free operating budget template can simplify the budgeting process. It can help you organize revenue and expenses, track performance, and make data-driven decisions to support your mission and your organization's financial sustainability.

Get your nonprofit budget template here.

To protect your budgets, add BILL Spend & Expense to your nonprofit tech stack.

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The information provided on this page does not, and is not intended to constitute legal or financial advice and is for general informational purposes only. The content is provided "as-is"; no representations are made that the content is error free.