Presentation to the June Membership Meeting of Grant Writers Network of Greater Houston

1. John F.X. Prior, LCSW, ACSW
Program ImprovementTeam Leader
Harris County Protective Services for Children & Adults
GrantWriters Network of Greater Houston
June 12, 2013

2. What is a Budget?
A numerical expression of an organization’s
dreams that serves as a guide or measure
of acceptable financial performance.

3. Benefits of a Budget
 Establishes goals to be achieved
 Identifies work to be done
 Projects resources that will be needed to get work
done
 Establishes timetables and deadlines
 Assigns individuals responsible for work
 Provides a tool to control spending
 Serves as a basis for evaluation

4. Ways to Use a Budget
 Track Income & Expenses
 Agency, projects, departments, or programs
 Plan Capital Additions
 Track Investment Income
 Monitor Cash Flow
 Plan Fundraising events
 Manage Income Generating Activities
 Provide Personnel Projections

5. Advantages
 Enhances likelihood that organization will be financially
successful
 Tool that translate abstract goals into determinable
information; stipulates performance goals
 Budgeting process leads organization to look at itself, set
priorities, and to narrow its choices
 Facilitates coordination and cooperation between
various programs and financial department
 Periodic budget comparison to actual performance can
identify problems and allow time for a response to
changing conditions
 Measures financial performance in relation to
expectations.

6. Disadvantages
 Tendency to emphasize cost control
 Presence of controls may stifle creativity
 Budget based on historical data only can fail to
keep up with changing circumstances
 Budgets completed by only financial personnel
can result in a plan without adequate staff input
 Not easy to implement and may require
enthusiasm among management staff to be
accepted as useful

7. Roles of Staff to Create a
Budget
 Program Staff knowledgeable about the
Project (Content Experts)
 Agency Accountant, Treasurer, or Chief
Financial Officer
 IF NOT:
 Someone knowledgeable about the project
& organization
 Person who regularly handles finance

8. Budget Components
 INCOME
 Donations & Memberships
 Service Delivery Fees
 Grants and Contracts
 Investment Income

9. Budget Components
 EXPENSES
 Personnel
 Fringe Benefits
 Travel
 Equipment
 Supplies
 Contractual
 Construction
 Indirect Charges

10. Annual Policy Decisions
 Speculative Income
 Changes in Service Fees
 Income that is expected but not yet committed (pending grants,
pledges, income from new programs/services, fundraising)
 Risk Assessment: Are there funding sources that are at risk of reduction
or elimination
 Cost Increases
 Anticipated increases to salaries, wages, or operating expenses
 Include increases for contracted services
 Cost of Generating Future Income: Costs associated in seeking new
funding sources (proposal writing, fundraising campaigns, and
fundraising events)

11. Estimating Projected Income
 Project Grants or Contract Income
 Actual income and estimates from funding sources
 Funding Source Payment Schedules
 Status of negotiations for new contracts or grants
 Ongoing or Special Fundraising Campaigns
 Past year’s experience
 Current pledge collection rates
 Net income from fundraising events
 Economy
 Fees and Services
 Past year’s experience
 Adjustments to fee amounts
 Projected service levels or caseloads

12. Personnel Budgeting
 Typically the largest portion of a budget for a
human service organization (60% - 85%)
 Identify all positions to be budgeted, full and
part-time employees
 For each position, identify
 Hourly Rate,
 Total number of Work hours for each position, and
 Total Wages
 Account for Salary Increases
 Budget for Overtime on a separate line item
 Calculate Overtime at one and one-half of hourly rate
of pay (1.5)

13. Projecting Fringe Benefits
 Standard types of costs associated with having
employees
 Social Security (FICA); 7.65%
 Medical/Health Insurance
 Unemployment Insurance
 Workers Compensation
 Retirement
 Calculate at:
 A percentage of total Wages and Salaries, or
 Based on Actual Costs

14. Operating Budgets
 Identify Projected Cost
 Evaluate trends for past costs by reviewing previous budgets
 Consider Rate of Inflation
 Contact vendors or providers and ask for estimates
 Identify Changes in Usage or Volume
 Increases in staff size, and impact on use of facilities, supplies,
travel, training, etc.
 Increases in Program Costs resulting from increased program
activities
 Decreases due to lower utilization of programs due to reduced
staffing, funding, due to changes in program activities.
 Timing: Estimate when costs will be incurred. Large one time
expenses can create cash flow problems. Consider lump sum
payments vs. smaller periodic payments.

15. Budget Narrative
 Includes detailed calculations with
estimation methods, quantities, unit costs,
and other similar qualitative detail.
 Discusses necessity, reasonableness, and
allocation of costs.

16. Functional Expenses
 Indirect Costs
 Costs not readily identified with a particular aspect of
organizational operation (i.e.: administration,
fundraising, etc.)
 Allocation Methods
 Percentage share of the total budget or total salary
budget
 Per unit cost of an activity
 Use of Space

17. Functional Expenses
 Functional Expenses
 Administrative and Operational Costs that support more
than one function
 Costs are not directly related to specific program activities
 Using Functional Expenses helps accurately reflect
true costs of program activities
 Allocating administrative and operational costs may
increase reimbursement from funding sources
 Functional Categories
 Management & Administration
 Fundraising
 Programs

18. Budgeting Do’s
 Budget for the life of the grant
 Allowable costs
 Indirect Cost Rate Agreement
 Cost of living increases
 Address matching requirements
 Focus on sustainability