Nonprofit Budget Analysis

A nonprofit organization will rely on different types of budgets in order to properly run their organization. For instance, an Operational Budget will help an organization run its daily operations with the goal of pin pointing and avoiding any financial pitfalls. Despite the fact that most budgets are developed in advance on a yearly basis, monthly or quarterly tweaks to projections help keep a nonprofit more in line with reality. An Operating Budget will keep tabs on actual expenses, help forecast future expenses and also allows for investments to build (Lee Blackstone, n.d.).

Another popular type of budget is called a Captial Budget. This type of budget with track things such as assets, liabilities, net assets as well as goals for each of

"As business owners set goals and outline specific plans for achieving business objectives, they often use quantitative and qualitative analysis before making business decisions. Capital budgeting tools provide the necessary analysis information for each goal or objective in the financial planning process" (Vitez). Another way in which a Capital Budget can assist in planning is when it helps drive an action plan for revenue generation (Gregory-Mina, 2014). Many nonprofits are faced with the problem of talking about revenue ventures without the proper planning that is needed to get there. With an action plan of revenue model, a nonprofit will have the proper documentation needed to create the framework of a long-term plan. An action plan is not limited to revenue; however, it is an area in which nonprofits are in constant struggle to

It provides accountability in regards to spending and resources. It can also establish accountability and help curb improper spending. Keeping this type of budget up to date requires ongoing involvement (Lee Blackstone, n.d.).

A Capital Budget, in the context of a management tools, places accountability on what is to be managed in the organization. An organization might want to pursue all opportunities and projects, however with limited resources it is not possible. The budget will help determine where the resources are best spent (Investopedia, n.d.).

An Operational Budget can also function as a great communications tool. Without question, good communication can make or break a nonprofit organization. The organization's Operational Budget can serve as means to communicate between the organization and donors. If the budget can provide ample information and is realistic it demonstrates honesty within the organization (Barreto Dillon, n.d.).

A Capital Budget can also facilitate communications within an organization. As a document that outlines not only the financial standing of the organization, it will also convey a path forward from the various decision-making members of the organization. This budget also provides board members a reference point when making decisions on behalf of the