The basics of building a nonprofit budget
Budgets can be one of the most intimidating aspects of grantseeking and nonprofit management, especially for new projects or organizations. Most of us don’t have accounting degrees after all! The good news is that budgets aren’t as complicated as most people fear. Don’t know where to begin? Don’t worry, we’re here to help you start building a nonprofit budget.
What is a proposal project budget?
Proposal project budgets are the budgets you submit to a funder as part of a grant application. Think of these budgets as a way to describe your project’s story to grantmakers with numbers, instead of words. Many funders say that the proposal project budget is the first part of the application they look at so they’re a great way to make your case for funding.
A proposal project budget consists of two basic elements: 1) the estimated costs of your project and 2) the anticipated income needed to meet those costs. Your expenses will be direct costs— any personnel and non-personnel costs that you wouldn’t have if you didn’t have the project—and indirect costs, also known as administrative costs or overhead. Your income consists of any grants or contributions plus any earned income earmarked for the project, such as ticket sales or fees for services.
What do funders look for in project proposal budgets?
Funders want to see project proposal budgets that convey credibility and impact. The nonprofit budget should explain the components of the project, what’s required to make it happen, and how much support you’ve already secured. Funders like to see sustainable budgets with diversified income sources, rather than solely relying on one funder for all support.
Learn more about what funders look for from Network Engagement Manager Tracy Kaufman in our free training, What do funders look for in grant proposal budgets?
How should I start?
What are the other budgets I might need?
Remember, project proposal budgets are just one kind of nonprofit budget that an organization may need. Others include:
- Organization-wide operating budgets that account for everything your organization spends to administer all programs and activities. For small nonprofits, the project proposal and organization-wide budgets might be the same.
- Capital budgets are used for construction or big, one-time spending projects that often take more than a fiscal year to pay for.
- Cash flow budgets (cash flow forecasts) are planning schedules that track when you expect money to come in and go out of your organization.
- Opportunity budgets are expansion planning tools that you can use whenever extra funding becomes available.
To learn more, visit Candid’s knowledge base for the full article on creating a project proposal budget.
The information provided in this article offers general guidance on how to create a project proposal budget. Candid recommends consulting with an accountant or financial consultant for detailed assistance.