Developing budgets for your project or for even your organization is one of the most time-consuming tasks. Often we think that a budget is a simple format attached to a project proposal and you need to fill it according to the activities and strategies proposed in the project. However, when you start opening up a proposal backwards, you will realize that the budget is a critical component of the project.

1. As project activities influence the
budgeting of your project, it is
important to gain greater clarity about
them. If you know the specifications
of your project activities, then
budgets can be developed more
easily and more frequently. We will
understand this from the following
example.
Developing budgets for your project or for even your organization is one of the most time-
consuming tasks. Often we think that a budget is a simple format attached to a project
proposal and you need to fill it according to the activities and strategies proposed in the
project. However, when you start opening up a proposal backwards, you will realize that the
budget is a critical component of the project.
This is a very important question because a
project proposal is a lengthy document
comprising of several different components.
There is an introduction part, a background
story, an explanation to justify the project,
there are of course goals, objectives and
strategies. But what is that single page in the
proposal to which every donor would turn
and look into before giving a final decision.
Activity budget, as the name suggests,
covers the costs required for implementing a
project activity. For example, if your project
strategy is about building the capacity of civil
society leaders in your area, then you usually
organize workshops as part of the activity.
Organizing workshops has costs involved:
There are costs towards hiring resource
persons, booking a venue where participants
can gather, their transportation cost, food,
lodging and materials and handouts.
Donor agencies emphasize on covering
activity costs. In fact, some donors can
only fund activities. However, for larger
project proposals, there will be
overheads and staff costs on top of the
activities that are listed out. To implement
activities you are required to have human
resources, an office and other
operational mechanisms. These costs
often fall under the line-item budget.
In some project proposal formats, you may
have come across ‘staff time’ or the number
of ‘man hours’ required in the project. Large
donors are very meticulous about these
details and require minute calculations for
the money they are going to give to
organizations. So they expect budgets to be
clear to the last detail.
Overhead costs refer to those expenses
that are required by the organization to
run its operations and they do not cover
any direct expenses of project activities.
However, they still form a part of many
project budgets. Overheads can include
office rent, telephone expenses,
accounting fees, salaries to the
organizational staff, repairs, supplies,
travel etc.
Often you must have come across in RFPs
and other donor proposal guidelines that
only 90% of funding will be given for the
project. So where will the 10% come from?
This 10% is referred to as the matching
contribution towards the project. It does not
mean that the donor agency is refusing to
take responsibility for this 10% but rather it
wants to ensure that there is a certain
presence of partnership and a sense of
ownership about the project and other
stakeholders become part of it.
What does the donor look for in a proposal?
What are the types of budget?
How can I use Project Activities to prepare my project’s budget?
What are the other costs that can be mentioned in a project budget?
How to calculate staff time in a project budget?
How can I include overhead costs in my project budget?
What is a Matching Contribution and from where can my NGO get it?
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Created By: FundsforNGOs
What are the types of budget?
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