South Yorkshire Funding Advice Bureau Information Sheets Last updated January 2004 All our information is produced in a standard sized typeface, but we can produce it in other formats on request South Yorkshire Funding Advice Bureau The Workstation 15 Paternoster Row Sheffield S1 2BX Tel: 0114 249 4343 email: enquiries@syfab.org.uk Website: www.syfab.org.uk Funding Advice Line 0114 276 5460 Registered Charity No: 1061118 Reg. Company No: 3030641 Budgets for small groups and small projects A budget is a financial plan showing income (money coming in) and expenditure (money going out) for the year ahead. It helps you to identify what money you need to raise to cover your costs. It also helps you to control your expenditure, monitor your fundraising, and manage your money. No budget is ever 100% accurate. It is your best guess of what money you think you will need at the time of drawing up your plan. Things can change during the year; you may have unexpected costs or even spend less on some things. You need to keep an eye on your budget and review it from time to time. The more time and thought you put into planning it, the more accurate it is likely to be. Preparing It can take a lot of time and effort to draw up an accurate budget. It may take several months to get all the figures together and agreed by your group. So, start work on it as soon as you can, don’t leave it until you have to fill in the grant application form. This is especially true if you are a new group or the project you are applying for money for is a new venture for you, as you will have to work out all your costs from scratch. Working out your budget See the checklist at the end of this sheet for a list of budget headings you can use to list your income and expenditure. 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 the work as this could lead you into financial problems. But, just as importantly, don’t over cost the work as this may mean that funders reject your application. • Make sure you don’t miss out any ‘hidden’ costs like insurance, maintenance, repairs, travel, training, heating, lighting, rent and so on. • If you are applying for money for more than one year you need to take account of inflation, replacement of equipment and the like. Capital and Revenue Costs Capital costs are one-off purchases such as items of equipment and buildings. Revenue costs are items of expenditure that are ongoing such as rent, heating bills and travelling expenses. Most funders divide their grants into capital and revenue. Divide your expenditure budget up in the same way to help you decide where to apply for what. You could produce an expenditure list like this one for a tool library trying to raise money to computerise its membership records and accounts: Expenditure list Capital items £ Computer hardware Computer software Furniture (desk and chair) Peripheral equipment Installation costs Software consultancy Transfer of existing records Revenue items Stationery Equipment insurance Income Your expenditure list above sets out your spending requirements. You now 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. (see checklist on the back page). 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, identifying where each of these amounts can be raised from. Keep a regular check on this side of 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 your grant fails to come through, what are you going to do about it? Are there other options or contingency plans you can put in place? Reviewing the budget Budgets aren’t simply a means of getting a grant. They also act as a guide during the year as to whether you are spending your money as you had planned. Your budget will warn you if you are over spending or under spending or spending in unexpected areas. Your group or committee should look at your budget every month to check spending against income and to review your fundraising attempts if necessary. Your budget may need to be revised. 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, say, increasing your activities or moving premises, make sure that you cost these changes into the new budget. Presenting your budget to funders You need to present a clear and detailed budget to funders. If you are writing a letter of application attach a separate budget sheet rather than putting lots of financial detail in your letter. Make sure your figures are broken down into separate items of expenditure - it isn’t good enough just to say ‘we need £5,000 to keep our service going’. 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 needed. Make it clear which elements of your budget 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 revenue funding for one year then give a brief description of how you hope to raise money to keep the project going in future years. Checklist suggested budget headings INCOME Council grants - for revenue - for capital Grants from trusts Grants from companies Membership subscriptions Donations Legacies Sales of publication Fees for services Fundraising events Bank interest EXPENDITURE revenue Rent Heat & light Postage & printing Stationery Telephone Transport & travel Repairs & renewals Equipment maintenance Cleaning Insurance capital Office equipment Computer equipment 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 Tel: 01226 242 726 Doncaster CVS Tel: 01302 813 333 Voluntary Action Rotherham Tel: 01709 829 821 Voluntary Action Sheffield Tel: 0114 249 3360 Useful books Raising Money for Good Causes: A Starter Guide by Jane Sutherland & Mike Eastwood, Directory of Social Change, 1998 Voluntary but not Amateur by Jacki Reason, Ruth Hayes & Duncan Forbes, London Voluntary Service Council, 2000 Writing Better Fundraising Applications by Mike Eastwood & Michael Norton, Directory of Social Change, 2002 The Charity Treasurer’s Handbook, by Gareth G. Morgan, Directory of Social Change & CAF, 2002 Budget Yourselves - free software from FunderFinder - www.funderfinder.org.uk/ freeware.php Directory of Social Change, 24 Stephenson Way, London NW1 2DP Tel: 020 7209 5151 Fax: 020 7391 4804 email: books@dsc.org.uk online: www.dsc.org.uk/charitybooks © SYFAB 2003 All rights reserved. Our information is produced for local community and voluntary groups. No permission is needed for limited reproduction if the Bureau is acknowledged. Large scale reproduction or inclusion in publications for sale must have written permission from the Bureau. The South Yorkshire Funding Advice Bureau welcomes your comments and criticism. You can talk to any member of staff, or contact us by post, phone, fax or email - see the front page for details.