Preparing a Budget for a Nonprofit

For any organization, profit or nonprofit, it is important to establish a operational budget. The operational budget is the foundation for your work and how it will be carried out over the next year or even several years. You will be able to establish benchmarks for your organization, gauge the financial health from year to year, and determine what the organization’s priorities should be.

When developing your budget keep in mind the following:

  • Establish the budget period. Is it one year or multiple years? Determine how many years your budget needs to cover. If it needs to be more than a year at a time establish the intervals and reasoning for the multiple year budget.
  • Analyze financial performance and program achievements from the prior year. This gives you the opportunity to adjust your focus for programs that are doing well or other that may need a boost.
  • Set program and organizational goals. Once you determine what the performance was for last year, you can project what the performance should be for the coming budget period.
  • Estimate expenses. Every expense should be analyzed including fixed costs such as tax, rent, utilities, etc. and variable costs that fluctuate based on number of clients and environmental factors, and incremental expenses that only occur when a particular action is taken. The variable costs are the most challenging to predict, but they can be based on the last budgetary period or on a short/long range plan established by the organization.
  • Estimate anticipated revenue. Base what revenue off last budgetary period and then adjust for an increase or decrease based on prediction for the upcoming period.
  • Plan for needed cash flow and develop cash reserves. It is important to have the necessary cash for the day-to-day operation of the organization. Having a healthy cash flow and cash reserves can be beneficial for more than emergencies.
  • Adjust to align expenses and revenue. Make any adjustment necessary to maintain a positive budget and healthy cash flow for the organization.

When your budget is established, it is easy to see how the money flows through the organization and areas where refinement is necessary. The most important part to keep in mind is how much money you will raise. It is easy to say you will raise a lot of money, but it is important to be realistic when setting your goals and projections.

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College Loans: Paying Them Off

Now that you are a college graduate, you have many things to think about; finding a job, maybe a new place to rent, and paying off student loan debts. With all the talk about student loan interest rates in Congress, it is important for student have a plan for paying off loans after college. Nearly 12 million students will take out loans to help pay for college, and with 37 million students currently with outstanding debt, the total student loan debt is reaching towards 1 trillion. Having a plan to help reduce student debt loan is vital for any college graduate.

Most college students do not fully understand the financial burden student loans will be on their future. Around 75% of them will make sacrifices, either personally or financially, to repay the loan. Some tips that will help make it easier to repay student loans debt are:

  • Understand You Options. It is important to know the different options of payment, including standard repayment, graduated repayments, extended repayment, and income-based repayment. Research which payment would work best for you and contact you lender for financial help. If you cannot pay there are options for you including deferment, forbearance, and loan cancellation. Many of the option will require an application and financial proof, so working with your lender is very important.
  • Keep Track of Paperwork. Keeping accurate records including promissory notes, correspondence from lenders, notes on phone calls and other loan related paper. If you lose any paperwork, you may have problems providing information to your lender if you need to seek a deferment, forbearance, or loan cancellation.
  • Grace Period. Most student loans have a 6 to 9 month grace period before official payments start. Use this time to find a job, make a budget and start tracking your monthly expenses. Make sure to budget in paying student loans, so you are not surprised when the payments begin.
  • Student Loan Interest Deductions. If you pay $600 or more to a single lender, our interest is deductable. At the end of the year you will receive Form 1098-E from your lender showing the exact amount of interest paid over the year.
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