The Annual Financial Plan
for Your Association
What the plan must contain, how to structure it, and what happens when you get it right. A practical reference for association boards and administrators working under Croatian nonprofit financial law.
Understanding the legal basis
The Law on Financial Operations and Accounting of Nonprofit Organizations (Zakon o financijskom poslovanju i računovodstvu neprofitnih organizacija) requires every nonprofit to prepare an annual financial plan before the start of the fiscal year for which it applies. This plan is not a formality. It is a legal document that defines how your association plans to receive and spend money.
Define Your Income Sources
The plan begins with projected income. For most associations, this includes membership fees, grants from public bodies or foundations, donations from individuals or businesses, income from activities (events, services), and other sources specific to your organization. Each category should be listed separately with a realistic projected amount for the coming year.
Map Your Planned Expenditures
Expenditures should reflect the programs and activities your association plans to carry out, as well as the administrative costs of running the organization. Program costs and administrative costs are separated in the plan because the law treats them differently in some reporting contexts. Being specific here matters: vague categories make the plan less useful as an actual management tool.
Ensure the Plan Is Balanced
A nonprofit financial plan should show how projected income covers projected expenditures. This does not mean every category must be perfectly predicted. It means there should be a coherent relationship between what you expect to receive and what you plan to spend. Significant imbalances should be explained and justified.
Get the Correct Approvals
The financial plan must be adopted by the body specified in your association's statute, typically the general assembly or the management board depending on your organizational structure. This approval is a formal legal act. Keep a record of when it was adopted and by whom.
Plan Revisions During the Year
If your income or expenditure situation changes significantly during the year, the plan should be revised through the same approval process. Revisions are normal and expected. An association that runs a grant-funded project that was not anticipated at the start of the year is a common scenario that requires a plan amendment.
Connect the Plan to Your Records
The financial plan is the document you planned against. The book of receipts and expenditures is where you record what actually happened. At year end, comparing the two shows how your actual operations matched your projections. This comparison is part of the reporting process and helps the organization learn from each year.
This guide provides general informational content about financial planning requirements for nonprofit associations in Croatia. It does not constitute legal or accounting advice. Your specific situation may have aspects that require consultation with a legal or financial professional. Contact us if you have questions about how these requirements apply to your association.
When the deadline is already close
It happens. The association is in the middle of its activities, the previous treasurer has moved on, and the new board member now responsible for finances has just discovered that the annual plan needs to be in place. Or already should have been.
This is one of the most common situations we work with. The first step is always to understand exactly where things stand now. Then we work through what needs to happen in what order. A late plan is better than no plan, and a plan with documentation of when and how it was adopted is better than an informal arrangement.
- Identify current documentation and records
- Understand what the statute says about plan approval
- Prepare the plan document in the required structure
- Support the approval process