Funding Advice Bureau SYFAB guide to... Budgets for small groups and projects Budgets for small groups and projects A budget describes your organisation in monetary terms. It is a plan that shows your income (money coming in) and expenditure (money going out) . Your budget is your financial plan for the future, and your accounts look back at what has already happened. Your organisation will produce an annual budget for the whole organisation. You will also need to include a budget each time you write a funding application that costs out the work you are fundraising for. Depending on the funder and what you are applying for, you may have to produce a separate budget for your funding bid that just covers the costs of the project or activity you are raising money for. But if you are a very small organisation that covers all of its costs from just one or two grants, you could include your organisation budget with your application. In this sheet, we run through the basics involved in producing a simple budget for your organisation. The section ‘Presenting fi nancial information to funders’ has some brief advice on budgets for funding applications. Why have a budget? You need a budget because it helps you to do the following: • manage your money • identify your expenditure (costs) • identify what money you need to raise to cover your costs • control your expenditure • monitor your fundraising • write project budgets for your funding applications. In fact, it is impossible to run an effective group without one, no matter how small you are. It is the treasurer’s role to write your budget but the whole of your committee is responsible for the fi nances of your group, so everyone needs to understand the budget and agree with it. When you write your budget, it will be based on what you know at the time. Some of the figures may have to be included as estimates if you don’t have all of the information yet. For example, if you are fundraising, you won’t know yet how much you will raise in the coming months. All of the figures should be as accurate as possible, so put plenty of time and thought into planning it. Things can often change during the year; you may have unexpected costs or spend less on some things. You need to look at your budget regularly in your committee meetings and make any adjustments that are necessary. Preparing It can take a lot of time and effort to draw up a budget. It may take several months to get all the figures together and for your group to agree them. So, start work on it as soon as you can. Expenditure When working out how much money you will spend during the coming year you need to take account of the following: • Make sure that your figures are as accurate as possible. Don’t just guess costs or use old figures – you might end up not having enough money. Get estimates from a few different suppliers, use catalogues, and talk to other groups running similar projects. • Make sure you don’t under cost your work as this could lead you into financial problems. But, just as importantly, don’t over cost the work because funders will reject any applications you make based on fi gures that are too expensive. • Make sure you don’t miss out any ‘hidden’ costs for example, insurance, maintenance, repairs, travel, training. • If you are applying for money for more than one year, don’t forget to include inflation, replacement of equipment and any repairs. Capital and revenue costs Capital costs are items of expenditure that are tangible and physical for example, equipment, a building, new windows for a building, a minibus or a computer. Revenue costs are items of expenditure that are ongoing for example, rent, heating, volunteer expenses. Some funders will only fund capital or revenue, not both. Separating capital and revenue headings in your budget can help you decide where to apply to for each item. Income Your expenditure list sets out your spending requirements. You need to produce a similar list of all possible sources of income. Be as realistic as possible when estimating how much money you will get from each source. Bear in mind that your income budget is only an estimate of what you are likely to raise. It is much harder to predict than your expenditure budget. But it is a way of setting targets. Start with the total amount you need to raise and then break it down into a series of smaller amounts; identify where each of these amounts can be raised from. Keep a regular check on your budget, as you may need to revise your fundraising targets if money is not coming in, or more has come in from a particular funder. Now look again at all your figures • Have you left anything out? • Are you planning to spend more than you think you will get in? If so, how will you meet this shortfall? • If any of your funding fails to come through, what are you going to do about it? Are there other options or contingency plans you can put in place? What to include in your budget This is a list of the sort of heading you will need to include in your budget, followed by a very simple example budget. INCOME Grants for revenue Grants for capital Membership subscriptions Donations Fees for services Fundraising events Bank interest EXPENDITURE Revenue: Salaries, employers national insurance and pension contributions Rent Heat & light Postage & printing Publicity Stationery Telephone Transport & travel Repairs & renewals Equipment maintenance Cleaning Insurances Volunteer expenses Travel Training Book-keeping and payroll Recruitment (staff and volunteers) Capital: Office equipment Computer equipment Income Local authority small grant 2,000 (grant secured) Lottery small grant 2,500 (grant applied for, waiting for decision) The XYZ Trust 1,000 (application not yet submitted) Service user fees 400 (projected based on 8 users/week at £1 each) Fundraising quiz nights 100 (projected 20 teams overall at £5 entry) TOTAL £6,000 Expenditure Rent 1,000 Heat & light 300 Insurance 300 Stationery 100 Phone 200 Post 150 Printing and photocopying 100 Publicity 200 Training 300 Volunteer expenses 800 AGM 300 Travel 500 Repairs and maintenance 300 Computer 500 Office furniture 700 TOTAL £5,750 Reviewing the budget You should use your organisation budget as a guide during the year to check whether you are spending your money as you had planned. Your treasurer should compare the budget to your income and expenditure and report back to the group regularly. Depending on your group’s current activities, you may want to check the budget once a month. By doing this, you will know if you are over spending, under spending or spending in unexpected areas. It will also help you to review your fundraising attempts (if necessary). About nine months into the financial year, you should start preparing the next year’s budget. You should, by then, have a clear idea of how accurate your budget is and what adjustments you will need to make for the coming year. If you plan to make changes in the way you operate, for example, increasing your activities or moving premises, make sure that you cost these changes into the new budget. Presenting financial information to funders Funders always ask you to include financial information with your application. They will generally ask you to include your most recent accounts (the summary of your actual income and expenditure in the past year), and for a budget for the work you are raising money for. This project budget is a clear summary of planned expenditure involved in the particular project or activity that you need funding for. If you are not asking the funder to pay for the whole project, you should also include information on the planned sources of the remaining income. Keep evidence of how you worked out your figures (written quotes, catalogue prices and so on) in case funders ask you how you decided how much you need. Make it clear which elements of your project you are asking that particular funder to fund (if it’s not the whole amount). Show what other sources of income you expect in addition to their funds. If you are seeking funding for revenue costs give a brief description of how you hope to raise money to keep the project going in future years, or what will happen when the work finishes (an exit strategy). Further help You may be able to get help from your local Council for Voluntary Service (CVS). Some of them run community accountancy projects. South Yorkshire CVS contacts: Voluntary Action Barnsley Telephone: 01226 320100 Website: www.vabarnsley.org.uk Doncaster CVS Telephone: 01302 343 300 Website: www.doncastercvs.org.uk Voluntary Action Rotherham Telephone: 01709 829 821 Website: www.varotherham.org.uk Voluntary Action Sheffield Telephone: 0114 253 6600 Website: www.vas.org.uk Further reading Voluntary but not Amateur (Chapter 8) Ruth Hayes and Jacki Reason Writing Better Fundraising Applications (chapter 5) Michael Norton and Mike Eastwood The Charity Treasurer’s Handbook Gareth G. Morgan Available from Directory of Social Change (DSC) and other book sellers and possibly your local library too. Directory of Social Change Tel: 0845 077 7707 Website: www.dsc.org.uk You could also use Budget Yourselves – free software available from FunderFinder Website: www.funderfinder.org.uk/budgetyou.php South Yorkshire Funding Advice Bureau The Workstation 15 Paternoster Row Sheffi eld S1 2BX Tel: 0114 249 4343 Email: enquiries@syfab.org.uk Website: www.syfab.org.uk We can provide this information in other formats on request. Please get in touch to discuss your needs. Our information is produced for local community and voluntary groups. No permission is needed for limited reproduction if SYFAB is acknowledged. Large scale reproduction or inclusion in publications for sale must have written permission from SYFAB. SYFAB welcomes your comments and criticism. You can talk to any member of staff, or contact us by post, phone, fax or email. Registered Charity No: 1061118 Reg. 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