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Understanding a Budget Format in a Proposal

Introduction

Budget is the most important part of any proposal. The budget depicts a clear picture of all expenditures involved in carrying out a research project. Any research project, right from its very inception, requires several activities involving the financial aspect. Therefore, it becomes necessary to focus on the budget and to ensure that it is clear and all the expenditures proposed are justified. Though, developing a budget is not much tedious task, provided the concepts regarding all expenditures involved are clear.

Components of Budget

To develop a budget, is a step by step procedure. A budget is majorly categorized into four parts viz. Staff, Recurring expenses, non recurring expenses and institutional overhead. Recurring expenses are those which are variable and which keep on occurring throughout the entire project duration. Non recurring expenses are those which are one-time in nature or which do not occur at regular intervals. Various activities or particulars in a budget are categorized in recurring or non recurring expenses. At the end of the budget, a particular amount is provisioned as institutional overhead charges.

The table below depicts a picture of basic layout of a research budget. Changes in the particulars and break up of the duration of study of the budget can, however, be made as per the needs of the study.

Budget Format

Budget Format for NGOs

While initiating to develop a budget, as per the needs of the project, it is first ascertained how much manpower is needed. The category of personnel i.e. director, assistant director, project associate, project officer, research associate(s), research officer/ fellow(s), field investigator(s), supervisor(s), consultant(s), computer operator, data entry personnel, etc. are to be figured out. It helps in the estimated expenditure on the remuneration of the overall project human resources. The category of personnel to be appointed is shown separately under the ‘staff’ head. A detailed description is also given in terms of their number, tenure of their drawing the remuneration and the amount of monthly remuneration. This is done for all categories of staff. The ascertainment of personnel required to be appointed constitutes a major and most important part of the budget. The number of people to be appointed should be as specific as possible. The monthly remuneration of the project personnel for the entire duration of the project is determined this way.

After the determination of staff, contingencies in terms of recurring and non recurring expenses are drawn. Recurring expenses, as the name itself indicates, are periodic or regular in nature. They include expenditure to be incurred on stationery, telephone, etc. Non recurring expenses frame the next important aspect of the budget. In non recurring expenses, travel forms an integral part as it is the next major expenditure after staff compensation. In the determination of travel expenditure, it is important to calculate the total number of days required for data collection. The expenditure to be incurred on collection of data is calculated as per the number of personnel required to be in field for particular number of days. The travel reimbursements and dearness allowances on per day basis or anything else admissible as per the rules of the organization is also included. Total travel cost is calculated keeping in view these aspects.

Training sessions, workshops, meetings, etc. are also proposed in a new budget. Since such sessions are not a periodic event, they fall in the category of non recurring expenses. Printing charges are also a part of this category as it usually deals with final report printing.

Last segment of the budget is institutional overhead. These overhead charges go directly to the institution carrying out the proposed study. This is provisioned so as to meet several costs on the part of institution such as furniture, electricity and other running costs. The institutional overhead ranges between 6 to 16 percent of the total cost of the project. The range may, however, be flexible on the basis of type of organization, the funding agency or the total cost of the project.

Conclusion

To develop a budget is not a difficult task. The prime and only matter of concern is that concepts regarding all expenditures should be clear and it should define all minute details involved. Detailing of all expenditures not only facilitates the work on the part of fund seeker but it also lets build a better understanding of the donor agency. More transparent the budget, fairer will be the chances of it being accepted.

What should not be done with a Budget – for NGOs?

…Continued from the Main Page

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

 

Why budgets are so complicated for NGOs?

…Continued from the Main Page

Developing budget is always a complicated task for NGOs especially when they need to develop a proposal and satisfy every entry given by the donor agency in the budget format. Sometimes it is easier to write a proposal than developing a budget to request funding.

Budgets will continue to become more complicated. However, if you keep your financial system clear, the task of developing it also becomes simple.

A typical budget developed by an international NGO for the European Commission

Budget Example 1

Budget Example 2

Budgets have become complicated because the increased need for transparency and accountability. Let us not forget that donor agencies are also required to submit their expenditure for proper audits and they have to maintain proper books.

Another important factor to be observed here is that as budget formats become more and more difficult, the expenditure on administration has also been tightened. Donor agencies are less interested in supporting overhead costs of an organization. Besides, the less you propose for your office infrastructural needs the better chances you have for getting the requested grants from the donor agency.

Completing the Proposal

The last parts of the proposal in the NED Grant Application comprise of the organizational background, interim assessment (applicable only for those applicants seeking a renewal of a previous grant) and the budget.

The organizational background has to summarize information about the work of the NGO: its history, outreach, composition, legal status, board of directors, areas of focus, current donors and references. Much of this information has been covered in the Proposal Cover Sheet earlier. This only need to be described here in short paragraphs within a length of one page.

The interim assessment section is only for those organizations which are seeking an extension of the support already received from NED.

The budget format is also simple enough to understand. NED has given sufficient information to guide applicants in writing the budget. Additionally, it has also provided sample budgets for easy reference. Budget guidelines can be further downloaded from this link (budget line items)  and this link (budget line items examples).

Completing the Proposal: NED Grants Program Application

The last parts of the proposal in the NED Grant Application comprise of the organizational background, interim assessment (applicable only for those applicants seeking a renewal of a previous grant) and the budget.

The organizational background has to summarize information about the work of the NGO: its history, outreach, composition, legal status, board of directors, areas of focus, current donors and references. Much of this information has been covered in the Proposal Cover Sheet earlier. This only need to be described here in short paragraphs within a length of one page.

The interim assessment section is only for those organizations which are seeking an extension of the support already received from NED.

The budget format is also simple enough to understand. NED has given sufficient information to guide applicants in writing the budget. Additionally, it has also provided sample budgets for easy reference. Budget guidelines can be further downloaded from this link (budget line items)  and this link (budget line items examples).

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