How to Prepare a Budget – 2

How to prepare a budget

III. Administration: This is one area which needs careful financial planning. Many times, in spite of proper planning the administrative costs go up because of various reasons which may be beyond organizations control. As an example, when we prepare the budget we may put the office rent as the amount we may be paying at that time. If there are no written documents after few months the landlord may want to raise the rent or vacate the building. Other e.g. consumption of electricity or maintenance of vehicles etc. some of these heads could be:

  • • Rent • Travel • Electricity • Water • Office Upkeep • Vehicle fuel • Vehicle maintenance
  • •Salaries • Recruitment • Printing and Stationery · Internet/postage/Courier

Also other important point that needs to be discussed is whether all these come under Administration or some of them could be part of the programme costs as many donors may not like to approve admin costs beyond a certain percentage. This we could discuss further:

IV.Other things that need to look at while preparing a budget

Once you have done the draft budget preparation, please also look at the following: ·

  • Check the formulas (if you are using a computer)·
  • Check the number of units and the months etc.·
  • Look at the previous years financial reports and see whether it went as planned or under/overspending in any heads. If so, keep them also in mind while preparing a new budget
  • Add 5 to 10% the overall budget to take care of inflations and unseen expenses
  • Cost should always be estimated higher than the current rate and put 10% higher to meet inflation etc.
  • If you are sending proposal for continuation of an existing programme check if the activities proposed this year are more than last year, then you also need to look at the administrative costs involved.

V. After you and your  team  have done  a proper project planning  starting from need assessment stage and accordingly you have also done the budget.  However, you realised that the final draft budget that you and your team has prepared is more that what the funding agency likely to support.  In such situations what you should be doing..

  • Since the donor wont give that much of money, you may think of start cutting the budget here and there. By doing this, the whole time you and your team put in planning the  project get affected.
  • The best thing would be to do the whole process jointly with the representative of the donor agency.
  • Otherwise without changing your proposed activities, you could approach other donor agencies for joint funding. Or
  • request the existing donor or the donor to whom you are submitting the main proposal, to recommend to any other donor for full funding or joint funding.

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