Budgeting is extremely important for nonprofit organization’s to be successful and to accomplish their goals. A nonprofits budget needs to be as accurate as possible, failure to list any use of funds considered inappropriate by donors, memberships, and fundraising can affect both the organizations budget and reputation. Budgets serves as a financial plan showing how the organizations funds are being spent. Budgeting for nonprofits serves several purposes such as examining performance, effectiveness, efficiency, controlling operation costs, how to fund programs, and, ensuring that employees understand the goal. Budgets enable nonprofits to determine their current financial health, where they need to be financially, and what they need to do to …show more content…
According to Campbell & Haley 2006, business plans provides management the opportunity to step back and look at their organization. Budgets can be used as a planning tool to reduce expenses, increase revenue, and avoid future shortfalls. Expenses can cause nonprofits to go in debt because if it is spending more money than what is coming in it will cause a deficit. If nonprofits incorporate planning in their budget, it would allow them to avoid overspending. For example, if a nonprofit wanted to create a fundraising event, they will need to know how the cost will affect the budget and then plan accordingly. The plan also helps ensure that the nonprofit is staying on track financially. An effective budget can increase the outcome of having a strategic plan for the …show more content…
Nonprofits do many projects which require money and can therefore be used as a communication tool to implement the ideas amongst employees. The budget will allow management to show other employees the company’s financial status and how they can execute the project. Ensuring that all employees understand the dynamics of the budget and how it aligns with the mission and goal will help keep the budget under control (Besel & Karl, 2011). The budget also helps with communicating with donors. Management can use the budget to cut expenses, and make more profit. The budget should be easy for donor and staff to understand so that everyone will have a clear understanding on how the funds are being