Organizations create budgets for a variety of reasons. The bank might require a budget prior to lending money, your board of directors may require a budget to ensure your planning on spending money in alignment with your purpose, or you may want a budget to make sure you will have the resources needed to accomplish your purpose. In this webinar we will show you: • Tips and tricks for creating a meaningful budget • How to update the budget as circumstances change during the year (sometimes called a rolling forecast) • How to report on variances to budget.

1. TIPS ON BUDGETING
FOR YOUR NONPROFIT
Presented by Alex Acree

2. MEET ALEX ACREE
WELCOME!
• Alex, an Aplos veteran, has
spent the last 6 years
creating countless resources,
videos, and aiding our
nonprofit and church users in
managing their accounting.
He started as our Head of
Customer Support and is now
running our Services
department, which takes care
of managing the books for
organizations as well as
setting up accounts for new
users.

3. NONPROFITS AND CHURCHES ALIKE CREATE
BUDGETS FOR A VARIETY OF REASONS…
• The bank might require a budget prior to lending money
(external)
• Your board of directors may require a budget to ensure you are
spending money in alignment with your purpose (internal)
• You may want a budget to make sure you will have the resources
needed to accomplish your purpose (both)

4. TODAY WE ARE GOING TO…
• Walk through what a budget is.
• Work through how to begin developing a budget for your
organization.
• Show some tips and tricks for creating a meaningful budget.
• Discuss how to update a budget as circumstances change during
the year (rolling forecast)
• Cover how to report on variances to a budget.

5. ACCOUNTABILITY RATHER THAN PROFITABILITY
Nonprofits and churches handle their money using fund
accounting, which has a focus on accountability rather than
profitability.
•In line with this, the budgeting practices within an organization
mainly focus on the stewardship of resources, rather than
profit margins, but both are important.
•Think of having a specific purpose for every dollar you
receive… the more details you can build into your budget, the
more helpful your budget will be.

6. COMMON TERMS IN BUDGETING
• Annual Budget - typically refers to a 12 month period of coving the “fiscal year” of an organization
that is presented to a bank of board of directors. Think “set-it and forget it.” The budget doesn’t
change during the year, but you typically do need to answer questions through the year as to why
actual results are different than budgeted.
• Rolling forecast - typically a monthly budget that is updated at a recurring periodic interval. At
Aplos, we have a rolling forecast that is updated after the close of every month. Part of our closing
process is to update the lapsed months with actuals, compare the actuals with the budgeted
numbers, and then update the future forecasted numbers with more accurate estimates based on
everything that has happened to date. This is the most operationally helpful budget as it stays up-to-
date throughout the year.
• Zero-based budgeting - this is a budgeting methodology where you start with no spending and have
to justify every dollar spent to include it in a budget. It is often more helpful with specific categories
of expenses than using it for the entire budget (external marketing is an area where zero based
budgeting makes a lot of sense.)
• Variance Analysis or Budget to Actual - a comparison of the actual results during a period of time
compared to the budgeted results with explanations of significant differences. This is a very helpful
use for budgets as it can help you understand what are the drivers of a financial condition for your
church or nonprofit. This reporting can also help in catching fraud as material differences will be
investigated as a part of this process.

7. SPECIAL NOTE
For the purposes of this webinar we are going to focus on creating a
monthly budget with the related impact to cash flow and balance sheet.
Funds will mostly be ignored in this discussion for the sake of time, but if
you multiple funds that you need to budget for, think of each fund as a
miniature version of this same process (i.e. if your church or non-profit has
3 funds, you will essentially create 3 separate budgets and aggregate the 3
for the master budget).

8. WHAT IS IMPORTANT TO HAVE WHEN
PREPARING A BUDGET?
• Detail = be a hoarder
• Collaboration = involve who’s involved
• Financial Data = get all relevant reports…

9. WHAT FINANCIAL DATA?
1. Balance sheet for the most recently reconciled month
2. Income statement by month for the current fiscal year, through the most recently
reconciled month
3. Income statement by month for at least 1 prior FY, if possible
• If not possible, judgements with be more difficult due to the lack of comparability.
• You can include more than 1 year, 2 is a good amount if possible
• Balance Sheet for the most recent reconciled month.
4. Balance sheet as of the end of each previous FY being compared (if possible)
5. Any updated income/expense categories you want to use in the coming fiscal year
6. Any considerations to factor in to the budget…
• Grant Guidelines
• Board goals/designations
• Cash flow needs
• Obligations

10. EXCEL IS GOING TO BE YOUR BEST FRIEND…
• Export everything and start combining in excel
• If you’re not comfortable with excel, now is a great time to learn.
• I will do my best to explain things as we go, but it is very likely
we’ll cover things over your level of excel usage.
• It’s also very possible you’re a lot better than me in excel… don’t
rub it in.

11. TIME FOR
EXCEL…

12. REPORTING ON THE BUDGET YOU’VE
CREATED
1. Enter the new budget in to your accounting software (make sure
to account for month variability)
2. Aplos allows for income/expenses to be entered (can also budget
into further detail by fund or tag)
3. Good practice to review budget reports on a monthly basis

13. TYPES OF BUDGET REPORTS
• Year-to-date
• Current month vs. Last Month
• Current month vs. Last Year
• Can also run comparative to last FY period if possible/applicable

14. WHAT TO LOOK FOR
• Meeting income/expense goals?
• Meeting cash flow projections?
• Over/under on either?
• Variance accurate/reasonable?
• Do budget totals need to be adjusted to reflect anything?

15. TODAY WE…
RECAP
• Walked through what a budget is.
• Worked through how to begin developing a budget for your
organization.
• Showed some tips and tricks for creating a meaningful budget.
• Showed how to update a budget as circumstances change during
the year. (rolling forecast)
• Showed how to report on variances to budget.

16. SHAMELESS PLUG
• Mentioned Aplos Throughout
• Majority of good budget development happens outside of your
financial system
• Aplos can help track fund and tag budgets, which will help your
organization keep accountable and healthy in any area needed.

17. QUESTIONS?