Nonprofit Genie (FAQs) | Funds Management

Budgets are management tools which are used by nonprofits to plan and monitor the use of resources. Nonprofit organizations use several different types of budgets, and each type is used for different purposes.

Line item budgets display the budget of an organization by income and expense type and show the bottom line as income minus expenses. This format, while used by many nonprofits, is designed mainly for for-profit enterprises because in for-profits the main question is how much money is being made.

Source budgets allow nonprofits to plan and monitor the use of money from a particular funding source. These budgets often take the form of a proposal budget for a grant or contract. It's important to remember that a source budget is almost never a complete description of the cost of a program or project. A source budget only shows the costs that are being paid for by that particular funder.

Activity or program budgets, on the other hand, allow nonprofits to plan and monitor the use of resources by functions including programs, administration, fundraising, and membership development. Because nonprofits are mission-based, this is an essential perspective for nonprofit managers and board members, and it allows them to see the full cost of each activity within the organization.

Program by source budgets show the information from a program budget, including the full cost of that activity, alongside the source budgets of the various funding sources that help to pay for the program. This format allows organizations that use it to divide program costs among the funding sources and to understand which costs in a program are funded and which are not.

The following workshops provide more information on this topic:

Budgeting for Nonprofit Organizations

Budgeting for Grant Proposals