Grants Management
Budget - how to prepare and steps tobe taken
Budgeting: Budget is a financial plan. All of us know what is budget as we do make our financial plans in our personal life also. Planning is an important part of budget and unless it is done in a systematic and planned, the project may end up with shortage of funds or under-utilisation of funds in some or all heads. Though we are all doing budgets, this may help you in refreshing the plans/ideas. As we all know, before starting a project we do the project planning by doing the need assessment and identifying the issues and then designing the project. While designing the project we also need to look at the financial aspects of the projects such as the programme costs, staff, administration etc.etc. In the same way when we plan the financial plan (budget), we also need to look at the project in total and accordingly the financial planning (budgeting) needs to be done. I. Programme/Activities: 1) Let us look at the Identified Activities of the project2) Prepare a financial plan to successfully take up the above activities3) This could include e.g. training programmes, meetings, income generation programmes so on so forth depending upon the type of project you are taking up.4) You should have a detailed planning for each and every activity i.e. for example let us take health awareness camp: a) Number of Camps: How many likely camps during the project period b) Number of days each camp runs for: If the each camp runs for 3 days you need to do the financial plan first for a day then calculate it for 3 days. c) Number of Participants for each camp: How many likely participants for each camp and how much travel, food and lodging would cost for each participant. In some cases, some participants depends on their daily wages – may also have to compensate them etc. d) Number of Resource Persons : For each person what will be the expenditure on consultancy fee, travel, stay etc. for each day. Then multiply the same with the number of days. e) Cost of hiring of vehicles/fuel costs during the camp f) Stationery required – clearly plan item-wise and their cost g) Audio Visuals, pamphlets etc. All the things needed for organizing a camp needs to be planned. Here we have taken example of one activity of a project – like that for each activity we need to do the budgeting. II. Staff Requirements: The other most important thing that we need to look at is the staff requirement for successfully implementing the project. We need to look at: a) How many programme staff required with specializationb) How many finance, admin staff are requiredc) How many members from the existing team give a part of their time for this project –if so how much money needs to be paid.d) What is the period for which the staff are required for e) How much needed for advertisement for these positionsf) What is the likely salary for each position per month multiplied by the number of months.g) How much money needed for staff trainingh) How much money needed for staff benefits i.e. medical, provident fund, gratuity,staff insurance, bonus etc. etc. depending on the organisation’s own policies.i) If organisations have relocation (while recruiting the candidates may ask for relocation allowance to move from existing place to a new place to take up a job) allowances policies that also needs to be calculated. j) Any other things that the organization may want to include as per their organisation’s policies. III. Administration: This is one area which needs careful financial planning. Many times in spite of proper planning the administrative costs go up because of various reasons which may be beyond organizations control. As an example, when we prepare the budget we may put the office rent as the amount we may be paying at that time. If there are no written documents after few months the landlord may want to raise the rent or vacate the building. Other e.g. consumption of electricity or maintenance of vehicles etc. some of these heads could be: • Rent • Travel • Electricity • Water • Office Upkeep • Vehicle fuel • Vehicle maintenance • Salaries • Recruitment • Printing and Stationery · Internet/postage/Courier Also other important point that needs to be discussed is whether all these come under Administration or some of them could be part of the programme costs as many donors may not like to approve admin costs beyond a certain percentage. This we could discuss further: IV.Other things that need to look at while preparing a budget Once you have done the draft budget preparation, please also look at the following: · Check the formulas (if you are using a computer)· Check the number of units and the months etc.· Look at the previous years financial reports and see whether it went as planned or under/overspending in any heads. If so, keep them also in mind while preparing a new budget • Add 5 to 10% the overall budget to take care of inflations and unseen expenses • Cost should always be estimated higher than the current rate and put 10% higher to meet inflation etc. • If you are sending proposal for continuation of an existing programme check if the activities proposed this year are more than last year, then you also need to look at the administrative costs involved. V. What happens when you have done a proper project planning starting with need assessment stage and finally when you have done the budgeting you found that the amount is much more than the donor likely to approve. * Since the donor wont give that much of money, you may think of start cutting the budget here and there. By doing this, the whole time put in planning a project get affected. * The best thing would be to do the whole process jointly with the representative of the donor agency. * Otherwise without changing your proposed activities, you could approach other donor agencies for joint funding. Or request the existing donor to recommend to any other donor for full funding or joint funding.
~ ngoportal
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Financial & Grants Management
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