Sticking to your NFP budget is important as there are strict rules and regulations which apply, ultimately preventing representatives from overspending without board approval. An NFP’s revenues and expenses are heavily controlled through the financial management processes and should be adhered to at all times.

Your budget lies at the heart of your financial decision-making. As revenues come from contributions, dues or grants, they dictate which activities will be supported. The board and the non-profit charity donors want to be assured that spending has not exceeded authorised amounts. Therefore your budget is your map to guarantee you stick to the roads and don’t get lost.

Financial Sustainability

Budgetary planning and regular financial reviews lie at the heart of economic viability. Creating the budget, while the responsibility of the Volunteer Treasurer and other financial staff members, is examined and approved by the overall board or finance committee to ensure it meets the needs of the charity. Without it, long-term financial sustainability can be impaired.

Flexibility in Budgeting

There should be a little flexibility in the map as the financial positioning of the NFP may shift causing changes to be made. Periodic reviews compare it to actual expenses and earnings to determine whether amendments need to be made mid-year. Flexibility in your budget can guide it through difficult times and unexpected cash flow issues.

Short and Long-Term Strategic Goals

An NFP’s budget is crucial so it can meet its short and long-term strategic goals. This is especially helpful when the availability of cash comes down to the timing of funding and needs to be planned out strategically to have the biggest impact.

Financial Controls

Financial controls are one way to keep your costs in line with your spending. These spending limits stop your NFP from overspending and make sure that all decisions made by the financial team are in your charity’s best interests.

Maintain Focus on your Mission

Your budget will help you maintain your focus on the mission statement and help grow the organisation for the better. Budgets and regular financial reviews will ensure that you are using your resources as best as you can and maximising opportunities along the way.

Accountability

Sticking to your budget enables you to maintain accountability attracting grant money and donations from interested parties who can clearly see where the money is going and how it is being used. This transparency is important and will help those wishing to contribute, to make their decision.

If your aim is to have an NFP which is successful and meeting all of its goals, then sticking to your budget is imperative. It will also help you strengthen and improve your operations especially during uncertain times when budgets can be cut or donors reduced. They should be a part of every non-profit’s annual plan, with some degree of flexibility, to meet the standards and improve on efficiency year after year.