Developing a Budget

Key Terms:

• Budget: a detailed breakdown of how much everything will cost. Includes income and expenditure, with evidence of costings based on quotes.
• Income: all the money that comes in to your organisation.
• Expenditure: all the costs involved in running your project / organisation - everything you spend.
• Capital: cost of larger items that have more than one year's useful life and could be sold in the future e.g. computers, land, furniture, equipment.
• Revenue: the running costs of your project / organisation on a 'day to day' basis e.g. salaries, telephone bills, rent, stationery.
• In kind: contributions towards project costs e.g. volunteer time.

What Groups tell us:

• "The treasurer's gone on holiday and no one else understands how she came up with the figures. Now the funder's asking questions!"
• "After we started the project we found we hadn't applied for enough, but the funder wouldn't give us any more."
• "I know I'm on the management committee, but I'm just not interested in money issues."

What Funders tell us:

• "We need evidence that there's a need for this project and that it will be cost effective."
• "Have all the necessary costs been included, or is there a risk that the project won't work?"
• "It looks like the budget has been left with one person and done in a rush. It doesn't fit in with the rest of the application."

Are you ready for funding?

• Working out all the money your group will need for its activities is called drawing up a budget. A budget sets out your group's plans in money terms and should relate to achieving your aims and objectives. If your organisation runs a number of projects, it is important to develop a budget for each of them. This will enable you to apply for enough funding to run each project effectively, and to keep track of how much each is costing you.
• It can take considerable time to gather accurate figures to inform your budget - possibly up to 3 months to find the figures and then get agreement from your group. Team work really helps here - shared around, the task will be much easier. Don't hang around waiting for grant application forms, as you may well have to fill them in quickly.
• Consult the person / people in your group with the most experience of this area of work. Someone in your group will need to have basic accounting skills, just like those that are needed to keep on top of your household finances - how will you bring in the money you need to meet your spending requirements; how much do you need to save; when will you need this money to be available to meet your spending patterns. Remember that all your committee members are responsible for the finances of your organisation. You may need to bring in a new committee / staff member to support them in this and to oversee your budget.

So, how do we put together a budget?

• In putting together your budget, make a list of everything you will need, and find out as accurately as you can what each item will cost. If you have a range of projects that you run, develop a budget for each project, and gradually build up to your organisation's overall budget.

Things to remember when developing accurate costs:

• If you're planning expenditure for more than one year you need to take into account price rises. Don't forget to add on inflation at the current rate. For example, in calculating salaries you will need to add in cost of living rises which are applied annually, and any increments due to staff, if your organisation pays them.

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