We have read about what NGOs can do with a budget: manage organizational expenses and income, plan project activities, fulfill donor expectations and also work towards long-term sustainability of the organization.
Now we try to understand the essential things that should not be done with a budget. For example, we tend to believe that a budget submitted to a donor agency cannot be changed. Practically speaking, this is not true to some extent. Budgets can be changed, but in many cases, it is required to take prior permission from the concerned donor agency.
Myths about Budgets clarified:
|“Budgets cannot be changed”||Budgets can be modified to some extent. You can diversify your resources and cut your costs. Of course, take prior permission from your donor agency for this.|
|“Budgets can be developed overnight”||Often in our effort to meet proposal deadlines, we develop budgets overnight. This ends up in poor planning and even rejection of proposals. Always take time to build your budget – your NGO should live with a budget always!|
|“Budgets do not have a basis”||Budgets should be developed on a certain base. They cannot be developed without any basis. In most cases, the basis should be the previous year’s income and expenditure. If applying for a project, look out for the expenses of the project’s previous year. Donor funding limitation to be also considered|
|“Budget can be developed by a single person”||Budget work is a joint exercise. It is a team work. Involving the entire team is important to produce an effective budget.|
|“Budgets have same formats”||All budgets do not have same formats. Different budgets are developed for different purposes. If you are writing a proposal, it is a different budget format and if you managing an organization, you will have a different budget format. Similarly, different donor agencies have different budget formats|