Starting and growing a non-profit takes a lot of resources, and it involves a lot of different
types of expenses. But what about once you're past that start up phase - what are the types
of expenses you might expect to maintain or sustain the organization year to year
as you go forward? That's what I'm going to talk about in this video: What are some of those
typical annual costs you can expect to have for a non-profit organization once things are
up and running to keep things running smoothly. Welcome or welcome back! My name is Amber Melanie
Smith. I'm a non-profit founder and executive director of the nonprofit that I started.
I make videos here on YouTube to share all of the things that I've learned, all the mistakes that
I've made, all of the tips and strategies that I've picked up that have helped me
sustain my organization over time. So don't forget to check out my other videos if you are
interested in topics like starting a non-profit, fundraising, making a social impact in other ways,
social enterprise, etc. Also don't forget to give this video a like - it helps this channel grow, it
helps YouTube share this video! And subscribe to my channel of course. And if you're interested in
learning more about me and some of the work that I do as well as getting some resources to help you,
check out my website FounderToFullTime.com. So this topic of annual expenses I find to be really
helpful to understand even when you're in the start up phases of a non-profit organization,
because you want to know what it's going to take to keep your organization going year after year.
So I won't be specifically talking about the costs associated with starting up a new non-profit,
but I do have another video for that if that is the topic you're interested in check that out
it is starting a non-profit startup cost to budget for and if you have not yet had much
experience creating a non-profit budget, I have another video for that. Check out my other video
how to create a budget for beginners. I hope that helps you lay the groundwork so that you can
plan for the future all right so let's get into some of these typical annual expenses i
want to start out with a disclaimer that these typical costs are going to vary
widely based on your nonprofit's specific scope and mission for example if your non-profit has um
it's dealing with an issue surrounding uh housing or shelter or
perhaps as even an animal rescue you might have different types of facility costs than other
nonprofits or for another example organizations dealing with advocacy or justice or legal
missions might have different types of expenses or even medical causes might have different types of
expenses related to the types of professionals that you need to hire and recruit and pay in
order to complete your mission so in summary these costs are going to vary so just keep that in mind
what i'm going to talk through is just some of the typical costs that most non-profits are going to
have to account for in their annual budgets each year the first category i'm going to talk through
is direct costs these are the expenses that are directly tied to the delivery of your nonprofits
programs the first type of cost i'm going to share is equipment materials or supplies related to
your nonprofit specific projects or programs and these are probably the category that will
vary the most widely non-profit to non-profit to give you a sense of what i'm talking about here
i'm going to share a couple of examples from some typical types of organizations so for hunger or
food insecurity non-profits some possible equipment or supply costs might include
actual food refrigeration or storage systems packaging shelving gloves sanitation trucks
there could be a number of things that you need in order to perform whatever your specific mission is
related to food insecurity animal rescues as an example you've got pet supplies you've got
housing for the pets you've got you know crates and food for the pets and all sorts of supplies
you might imagine would go with uh housing uh rescued animals health clinics you've got medicine
diagnostic equipment things that you might find in a nurse's office education organizations this
might be thing like things like technology that the students are using or even school supplies
the next cost and this of course also depends on your mission is you might have costs for
those facilities the rent or the mortgage on the actual building that you're using to
house people or store food or house animals whatever it might be the next cost that's a direct
cost is staff that runs your programs a common misconception is that any kind of staff no matter
what they are doing is considered an overhead cost but that is not true if staff is working on
programs they are spending their time on programs that is a program or direct expense examples
might include a program director or a volunteer coordinator or depending on what your organization
does it could include roles like teacher or doctor or social worker and then another direct cost is
technology technology specifically used for things to run your program so this could be
the volunteer management software that recruits the volunteers who runs your programs it could
be databases or inventory management systems where you're tracking your inventory of supplies
the previous thing that i mentioned so those are just some of the key direct costs that your
organization can expect to have year after year so outside of those direct costs you also have what's
called indirect costs indirect costs are also very important and even though these indirect costs
might not be the costs associated directly with program delivery they are required for you to pay
them in order to keep your organization running and compliant with the law and i smile a little
bit as i talk about that because there's a common misconception i've talked about in some of my
other videos about overhead and this idea that overhead is bad and you shouldn't have very much
of it but unfortunately nonprofits have to have these expenses to keep their lights on in order to
not get shut down by the government so um you know there's a lot of dialogue in the nonprofit world
over the past several years about how to help people understand what overhead actually is
and how it's a necessary required part of running an organization to keep things going
all right so envirant let's talk about some of those indirect costs the first is staff
specifically that are dealing with the administrative or fundraising aspects of your
organization so this might include your executive director administrative assistant fundraiser grant
writer HR or operations manager roles like that now you might be asking what happens if you have
one staff person who is splitting their time among lots of different things sometimes even
program or direct cost related things that is a very common thing i know that i have that in my
own organization and you simply estimate the time spent between the different activities and that's
how you'd classify that person's salary another indirect cost is employment or payroll taxes
speaking in particular from the united states you know whenever you have any kind of paid staff you
as the employer are expected to pay a portion of those payroll taxes the employee pays a portion
and the employer pays some too and you'll also want to look up based on what state you are in
what the specific rules and percentages around that may be because it might vary so to be able
to predict and budget for these costs check that out it's usually some percent of the
total annual salary of of your combined staff another indirect cost is fringe benefits these
are benefits that your paid employees get such as health insurance dental insurance
retirement contributions etc. the amount that you would be expected to budget for will vary based
on how many staff members you have what kinds of fringe benefits are you providing and of course
what level of contribution are you as the employer providing for example are you paying for half of
the health insurance or all of it or some other percent so it could be a couple hundred dollars
per month per employee really depends on what you got going on another indirect cost is your rent or
office space if you have that this could be anywhere from a couple hundred to several
thousand dollars a month depending on the size of the space the number of people you have using the
space and of course where you are located another indirect cost is insurance and you might actually
be surprised to learn just how many kinds of insurance non-profits typically need to have
to name a few you've got short and long-term disability you've got workers compensation
you've got general liability you've got directors and officers insurance to protect your board of
directors from liability if something bad happens with your organization you've got volunteer
accident insurance i think that might be all of the ones i had in mind in other words it can be
a lot so just be prepared for that and each one of those could be a couple hundred to several
thousand dollars per year and again based on your organization's mission you might have other types
of things like insurance on a facility that you are using or that you own technology is another
indirect cost and there are lots of different types of technology that i'm referring to
obviously your website you've got your domain name that you pay for and your hosting fees for that
then you've got other software you would possibly have a fundraising platform or a donor
CRM so you can track your donor relationships and facilitate making those asks every year
you might have a program evaluation system you might have a project management tool that your
team uses to stay on top of tasks efficiently another technology like accounting like
QuickBooks or something to manage your bookkeeping speaking of accounting another indirect cost is
accounting and bookkeeping services if you are not doing this yourself you might be outsourcing
this so that is an expense but even if you are doing your own bookkeeping in house you might pay
an accountant to do the annual tax filings that you're required to do as a non-profit then
inevitably you're going to have some costs associated with your fundraising activities
whether you are hosting events or seeking individual donations which could include a cost of
you know sending out mail or even more technology that you need to bring in those donations
could be lots of different types of expenses under the umbrella of fundraising finally you've got
your legal permits and required annual filings and i mean the fee to actually file them not just the
fee to pay someone to do that for you but the actual filing costs in the united states this
includes depending on the state that you're in you might have a charitable solicitation license that
you need to renew this allows you to continue to have permission to ask people for money so
it might vary state by state make sure you look up what the specific things you need to file in your
state if you're living in in the united states check what those things are in your state so that
you can be sure to stay in compliance failure to stay in compliance could result in penalties
or fees or worst case scenario having your whole organization shut down so it's really important
to stay on top of these things and make sure that you're sending in the filings when you're supposed
to so those are typical annual direct and indirect costs i'm also going to give a couple more things
an honorable mention here because i think that it would just be really smart for organizations to
invest in these things year to year the first is some kind of professional development or training
item in your budget making sure that your staff is always in the know about more
effective and efficient ways to do the great work that they're doing
that they are learning constantly and bringing that knowledge back to the work another thing
might be memberships to other organizations or associations in your community community
that might help you further your mission one example could be your local chamber of commerce
if your nonprofit can join the chamber then it can possibly network with other businesses
or other non-profits that can lead to greater awareness about your cause or possibly increased
donations and finally and this might go under fundraising expenses that i mentioned previously
but investing a little bit of money every year in what's called donor stewardship which is how you
develop and strengthen and maintain your relationship with your current donors after
they've made the first donation so that hopefully they will continue to support your cause year
after year so that might just include some simple costs like um stamps or thank you notes things to
you know keep you top of mind to communicate with these folks okay so i think that that
basically covers um most if not all of the the just typical annual expenses you might see on
a non-profit's budget across most non-profit organizations did i miss something that you have
in your budget i'd love to hear about it share in the comments below as i mentioned before if
you're looking for a little bit more information or trainings i've got some available on my website
foundertofulltime.com. I also have a newsletter that i send out with additional resources and
sometimes even grant opportunities that i come across it's all for non-profit leaders
and change makers the link to subscribe to that is in the description in this video as well so
feel free to check that out and join if you're interested finally and you probably know it's
coming if you've seen my other videos but i have a facebook group called change the world or bust
where we've got a couple thousand folks in there from all around the world talking about how we're
all making an impact so i encourage and invite you to join in on that and i hope to see you there and
i hope to see you next time. Thank you so much for watching and hope you have a great day!