Glossary
Budget & Forecasting

Capital Budget

By: Alec Hollingsworth
Updated:  
June 16, 2025

DEFINITION:

A capital budget is a financial plan for major, long-term investments like buildings or equipment in a nonprofit organization.
A capital budget is a financial plan that outlines an organization's projected expenditures for acquiring, upgrading, or maintaining long-term assets such as buildings, equipment, or technology. Unlike operating budgets that focus on day-to-day expenses, capital budgets are concerned with major investments that have lasting value and typically require substantial funding. Nonprofits use capital budgets to plan for significant projects, ensuring that resources are allocated efficiently and that funding sources—like grants, donations, or loans—are secured in advance. A well-prepared capital budget helps organizations evaluate the feasibility and impact of large projects, prioritize spending, and align capital investments with their mission and long-term goals.

Key Takeaways

  • Focuses on large, long-term investments
  • Separate from day-to-day operating budgets
  • Helps prioritize and fund major projects
  • Ensures accountability and transparency

Why It Matters

Capital budgets help nonprofits plan and fund major projects, ensuring resources are used strategically for long-term impact.

Real World Example

A community health nonprofit is planning to build a new clinic. To do this, they develop a capital budget estimating the total cost for land, construction, medical equipment, and furnishings. The budget also details funding sources, such as a capital campaign, grants, and loans. By projecting these expenses and revenues, the nonprofit can determine if the project is financially feasible, set fundraising goals, and provide transparency to donors and stakeholders. Throughout the project, they use the capital budget to track spending and adjust plans as needed, ensuring the project stays on track and within budget.

How Aplos Helps

Aplos supports nonprofits in creating and tracking capital budgets by providing tools to manage project-based funds, monitor expenses, and report on progress. With Aplos, users can separate capital and operating budgets, ensuring transparency and compliance during large-scale projects.
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Frequently Asked Questions

What is the main difference between a capital budget and an operating budget?

A capital budget plans for long-term investments like buildings or equipment, while an operating budget covers routine, ongoing expenses.

Why do nonprofits need a capital budget?

Nonprofits use capital budgets to plan, prioritize, and fund major projects, ensuring they have the necessary resources and transparency for success.

How does Aplos help with capital budgeting?

Aplos allows nonprofits to create, track, and report on capital budgets, keeping large projects organized and finances clear.

What types of projects require a capital budget?

Examples include new construction, major renovations, significant equipment purchases, or technology upgrades.

Can capital budgets include grant funding?

Yes, capital budgets often include grants, donations, and loans as sources to fund major projects.

Related Terms

Capital Campaign
Federal Withholding
Offerings
Donor Advised Fund
State Franchise Tax
1099‑NEC

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