A financial plan, just like any other business, is a vital tool for nonprofit organizations. However, while a business plan focuses on the products that the business will provide, a charitable organization’s financial plan should be focused on the money. It should detail what type of revenue sources are anticipated and the total amount anticipated for each source. It should also include the cost of recurring expenses, one-time expenses for a special event, and any capital or ongoing expenditures. It should also include any contingency plans that the charity has in place in case primary market opportunities fail.
The budgeting process is usually an employee’s job, but it is often examined by board members and approved at a full board meeting. The budget is used to track the progress of projects, the effectiveness of fundraising, as well as the overall financial situation throughout the year. It is crucial that a nonprofit periodically review its budget, compare it to the actual financials and make any changes that are needed.
Nonprofits generally have higher expenses than people and must be very cautious to ensure that their projected numbers of income and expenses up-to-date. Utilizing a budgeting tool such as the free budget template Jitasa provides, can help organizations keep their financials up to date by making it easy to compare actual figures with projected ones. Calculators and financial ratios can also be useful to nonprofits to make informed boardroomwhich.com/best-practices-for-board-meeting-minutes/ decisions about how to allocate funds.