Creating a financial plan for the fiscal year can help nonprofits figure out the funds they will have available and keep their programs on track. There are a number of things managers at nonprofits can consider when creating their budgets.

Match expenses with revenues

Nonprofits, like any other business, have a number of fixed costs that they will incur in the upcoming year. Some of these costs include salaries and wages, rents, telephone, internet connection and the production of promotional items. They also have incoming cashflow from donors and other money-making ventures. Having expenses and revenues matched with each other will give nonprofit managers a better idea of their funds when creating financial reports.

Account for unexpected costs

One of the more difficult things nonprofit managers will have to do when budgeting is set aside money in case unexpected events occur. Nonprofits often have inconsistent funding, showcasing the need for extra cashflow to supplement a contingency plan created when budgeting. If operations are more predictable, nonprofit managers will need a smaller amount of money set aside in this budget category, and vise versa.

Have a realistic view of projected revenue

Many nonprofits tend to project more revenue than they actually bring in, which demonstrates how being conservative can only benefit nonprofit managers. Smaller nonprofits are more likely to fall short on their projections because they tend to have fewer committed funds. When pursuing funding options, nonprofits should try their best to get as many committed funds as possible.

Consider staff members throughout budgeting

Working in a collaborative environment with all employees is often a smart practice for nonprofits preparing a financial plan. Staff members can have some ideas for budgeting that the management team did not consider. They also can come up with some programs that can help the nonprofit bring in new revenue streams.

Include indirect costs

While nonprofits have several fixed costs that remain the same every month, there are also several indirect costs that nonprofit budgeters need to factor into the equation. A few potential indirect costs include the cost of an accountant, auditor, property and liability insurance, rent for at least central or support staff. Budgeting for these indirect costs is important because nonprofits don't want to be blindsided by these bills.

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