Budgeting: A 10-Step Checklist

A budget is a planning tool that reflects an organization’s programs, mission, and strategic plan. This 10-step budgeting checklist helps guide the budgeting process, which typically should begin at least three months before the end of the fiscal year to ensure that the budget is approved by the board of directors before the start of the new year.

1. Determine timeline

  • Set target date for board approval
  • Allow time for each step and for review and discussion
  • Approve before beginning of fiscal year beginning of fiscal year

2. Agree on goals

  • Prioritize program delivery goals
  • Set organizational financial goals
  • Clarify annual goals from strategic plan

3. Understand current financial status

  • Review current year income and expense compared to budget
  • Forecast to the end of the year
  • Analyze and understand any variances

4. Agree on budget approach

  • Assign roles and responsibilities
  • Agree on authority to make decisions
  • Agree on how much uncertainty can be included (how many unknowns)

5. Develop draft expense budget

  • Determine costs (expenses) to reach program goals
  • Determine costs to reach organizational and strategic goals

6. Develop draft income budget

  • Project income based on current fundraising and revenue activities
  • Project new income based on new activities

7. Review draft budget

  • Verify that the draft meets program and organizational goals
  • Review and discuss all assumptions
  • Make adjustments, based on goals and capacity, to match income and expenses
  • Review final draft for all goals and objectives

8. Approve budget

  • Present to any committees as needed
  • Present to the board for approval

9. Document budget decisions

  • Create a consolidated budget spreadsheet and file
  • Write down all assumptions

10. Implement budget

  • Assign management responsibilities
  • Incorporate into accounting system
  • Monitor and respond to changes as needed

Copyright © 2024 Propel Nonprofits

About Propel

Propel Nonprofits is an intermediary organization and federally certified community development financial institution (CDFI). We provide capacity-building services and access to capital to support nonprofits in achieving their missions including the ability to link strategy, governance, and finance and to support nonprofits throughout their organizational lifecycle.

Related Services

  • Lending

    Propel Nonprofits makes loans to a wide range of nonprofits of different sizes and fields of service to strengthen and expand programs, manage cash flow, and finance real estate projects. Our lending team determines the best approach to meet your needs, and sticks with you to address challenges.

  • Accounting & Finance

    Propel Nonprofits’ accounting and finance services are designed to equip your team with decision-level data while also building financial leadership and confidence within your nonprofit.

Related Resources

Cash Flow Primer Video

Propel Nonprofits video about cash flow to help you better understand the ebbs and flows of your organization’s cash.

Depreciation Primer Video

Propel Nonprofits video about depreciation, which can be confusing but is an accounting concept we can all understand.

Managing Restricted Funds

Article defines the two categories of restricted funds – those with donor restrictions and those without donor restrictions – and…