A financial plan is a vital tool for a non-profit organization as it is for any business. However, while a commercial plan focuses on the products that the company can provide, a charitable organization’s financial plan should focus on the cash flow. It should contain the kinds of revenue sources and the anticipated amounts for each. It should also mention any recurring expenses, one-time costs for special events and any other capital or ongoing expenditures. It should also include any contingency plans that the nonprofit has in place if primary market opportunities do not work.
The budget is usually created by the staff, however it is usually scrutinized and approved at an annual board meeting. The budget is used to keep track of the progress of projects, the results of fundraising, and the overall financial health throughout the year. It is essential for a non-profit organization to review its budget regularly, compare it with actual financials, and see where the variances are to make adjustments as needed.
The majority of nonprofits have more expenses than individuals do and therefore they must be careful to keep their budgeted income and expenses up-to-date. A budgeting system such as the Jitasa free budget template can help organizations stay on top of their expenses by allowing them the ability to compare actual and projected figures. Additionally, using financial ratios and calculators can further assist nonprofits in making better informed decisions regarding how to distribute their funds.