A nonprofit budget template built for restricted revenue

A nonprofit budget template should show four things: revenue by source, with anything restricted marked as restricted; expenses by function, split across program, management and general, and fundraising; the surplus or deficit those two produce; and a month-by-month comparison to actual once the year starts.

Most stop after the second, which is how a budget looks finished in October and needs rebuilding in February.

This one starts with the fourth problem: ten revenue sources, each flagged restricted or unrestricted, and eighteen expense lines, each mapped to its Form 990 Part IX line. Then the months, and the cash.

Money given for a purpose is committed before your board allocates anything. Put it in the same column as unrestricted income and the surplus at the bottom overstates what you actually control. A board reads $130,000 and approves a hire, when most of that $130,000 was already spoken for.

The workbook refuses to make that mistake quietly. Every revenue line carries a flag, and if you leave one blank it reports the dollar value of what is unflagged rather than passing the sheet as clean.

The worked example shows the arithmetic. It is a $6,000,000 organization with $5,870,000 of expenses and a $130,000 surplus. Then the detail: 73% of its revenue is restricted, which means most of that surplus carries conditions.

That is the point where a spreadsheet usually stops helping, so there is a fifth tab for it. Restricted cash and unrestricted cash sit in separate columns with running balances, and the sheet names the month unrestricted cash goes negative. Restricted money in the account is not payroll money.

Form 990 Part IX asks every expense to land in one of three columns: program services, management and general, or fundraising. Line 25 totals all three, and every 501(c)(3) and 501(c)(4) completes the whole grid, not just the total.

Two things follow for your budget. First, the split has to be decided while you plan, because a split invented in April is a split nobody can defend. Second, the method has to be written down once and applied the same way all year.

The workbook carries the Part IX line number next to every expense line, so the file arrives in the shape the return needs. It also computes the three percentages and checks whether any cost has been left outside the three columns.

Payroll is where most of the judgment sits. Allocate it by a documented basis, keep the worksheet, and do not move the basis mid-year without a note explaining why.

The workbook's first tab is these six steps, in this order. Nothing else is required to use it.

1. Set the revenue. Last year's actual and this year's budget for each source, each line flagged restricted or unrestricted. The restricted total is shown separately from the start.
2. Set the expenses. Each cost against the three Part IX columns. Columns and percentages total automatically.
3. Read the summary. Surplus or deficit, restricted share of revenue, three functional percentages. This is the page for the board packet.
4. Watch the year. Budget by month against actual, with variance in dollars and percent, so a soft month shows up before it becomes a soft quarter.
5. Protect the cash. Restricted and unrestricted cash tracked separately, with running balances.
6. Steal the shape. Read the filled example before you touch a blank sheet, then overwrite it with your numbers.

Read the example tab before you start, because a filled sheet answers questions a blank one cannot.

The planning example is a $6,000,000 organization: $5,870,000 of expenses, a $130,000 surplus, 73% of revenue restricted, and a functional split of 79% program, 14% management and general, 7% fundraising.

Next to it sits a real published year, figures exactly as filed, organization unnamed: $10,075,693 of revenue against $20,261,695 of expenses. The $10,186,002 deficit was funded from reserves, which took net assets from $29,742,075 to $19,395,228.

Read those three together. Revenue alone looks respectable, the deficit explains the year, and the net asset line explains what it cost. A budget showing only the first two would hide where the money came from.

The filing also reports 62% program, 12% management and general, and 26% fundraising. Hold that 26% in mind for the next section.

There is no correct percentage. Any page that hands you one is describing a different organization's funding model and calling it a standard.

The spread is not close. In 149 published returns with $4M to $25M of expenses, fundraising ranged from nothing to 20% of total spending. The middle half sat between 1.1% and 6.4%. And 46% of those organizations reported no fundraising expense at all.

Part VIII is the revenue half of the return, and it separates income in ways your budget should copy. The workbook maps every revenue line to its Part VIII line: 1a federated campaigns, 1c fundraising events, 1e government grants, 1f all other contributions, 2a to 2f program service revenue, and 11a to 11d other revenue.

One limitation is worth knowing before you plan. Line 1f merges individual, foundation and corporate gifts into a single figure. If your board asks how much came from foundations, the return will not answer it, so track that split in your own books while the year is running.

Part X then reports net assets with and without donor restrictions. Audited statements use that same language, so a budget built on "restricted" and "unrestricted" reconciles to both documents without a translation table.

A workbook holds the plan. It does not hold the pipeline behind the plan.

Three signals that you have outgrown it:

• Revenue depends on applications you have not won, so the budget is a guess dressed as a number.
• Restricted awards arrive with deadlines and reporting conditions that live in someone's inbox.
• The board asks what happens if the two largest proposals fail, and an honest answer takes a week.

mission360 keeps the funding side that feeds this budget:

• Grants360 finds and tracks grants, with funder briefings built from 990-PF filings.
• Donor360 records gifts, recurring gifts and lifetime giving, tracks receipt numbers per gift, and syncs both ways with Salesforce and HubSpot.
• Revenue360 forecasts revenue from the pipeline.