A financial plan, like other businesses is an essential tool for non-profit organizations. While the business plan is centered on the services the business will provide the financial plan of an organization for charitable purposes should be centered on the financials. It should outline what kind of revenue sources are expected and the exact amount projected for each source. It should also include annual costs, one-time expenses for special occasions and any capital or ongoing expenses. It should also include any contingency plans that the charity has in place in case primary market opportunities fail.
The budget is usually created by the staff, however it is often reviewed and approved in a board meeting. The budget is used to monitor the progress of projects, the effectiveness of fundraising, and the overall financial situation throughout the year. It is essential for a nonprofit to review its budget regularly, compare it with actual financial statements, and determine what the differences are in order to make changes as needed.
Nonprofits have a tendency to have higher expenses than private individuals, so they must be mindful to keep track of their projected spending and income figures. A budgeting system such as the Jitasa free budget template can aid organizations in staying on top of their numbers by allowing them to compare the actual and projected numbers. Additionally, leveraging financial ratios and calculators will help nonprofits make better-informed decisions regarding how to distribute their funds.
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