When you run a non-profit organization, there might be times when the donations come pouring in and you’re able to do everything you dreamed of to help your chosen demographic. On the other hand, there may be times when money is tight and you have to cut back. The answer is to distribute your funds in such a way that you don’t fall short at any particular time. You can do this with the help of your accountant.
Evaluating Your Financial Situation
Most non-profits have certain long term sources of funding. Maybe you’re getting your funds from another, bigger company that functions on a for-profit basis. Or maybe you have certain donors who give you certain big amounts every year.
The first thing you want to do, possibly at the beginning of the year, is to sit down and figure out how much money you’re going to have coming in that year. Is it going to be the same as the year before? Or will it be less or more?
Spending Evenly Throughout the Year
And once you know how much it’s going to be, you can spread it out throughout the year. For example, maybe you know that you’re going to get, let’s say, a million dollars in funding from all your various sources. Then it’s probably not a good idea to spend $750,000 in the first three months of the year and only leave $250,000 for the rest of the year. You’ll need to spread it out and spend it evenly. You can sit down with your accountant and figure out your monthly budget and then spend according to that.
Yes, you might suddenly have more money come in after half the year is over because you found a new donor. That’s a good thing because then you’ll have extra money for any side projects you might have been planning. But even if you don’t, then at least you’ll have your initial budget. You’ll never run out of money entirely if you stick to that.
Contact us for more tips for coming up with a non-profit budget.