Budget Management and Planning the Financials – NGO Financial Management Policy

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Further to planning budgets for specific activities by an NGO, below are the details outlined on how to manage the budget and what guidelines to be taken into consideration:

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13.2 Budget Management

a) A Budget is an estimate of the amount of money to be received and to be spent for a specified purpose in a given time.

b) Budgets set a framework for reporting and analysis.

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c) Budgeting  never  stands  completely  alone,  but  rather  flows  out  of  the managerial process of setting objectives and strategies and of building plans. It is especially and intimately related to financial planning.

d) While accounting, separate sub-codes to be created for every activity under the main grant code, so that the utilization of the budget can be monitored activity-wise.

13.3 While Planning the Financials

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a) The whole team needs to be involved in budgeting process.

b) Objectives   of   the   program  along   with   activity   plans   must   be completed before starting the budgeting process.

c) Changes  in  strategies  for  the  forthcoming  year  based  on  the  past experience have to be unanimously decided by the team and the budget should be accordingly formulated.

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d) List  out  the  resources  required  to  achieve  these  activities  and  cost them.

e) All line items in the budget must flow from planned activities.

f) Budget should be as detailed as possible with justifications and break up of costs matched against each activity.

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g) When budgeting for subsequent years/phase, cost increases due to inflation, exchange rates etc would need to be kept in mind.

h) All expenses have to be reviewed against the budget on a monthly basis.

i) The  project  management  shall  verify  the  quarterly  reports  against  the budget, analyze causes for variance and take appropriate action.”

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