Financial Planning & Budgeting

Organization receives specific grants to implement activities but it may not be necessary that the entire allocated grant will be spent for a certain activity. Thus financial planning and budgeting is required.

Financial Planning & Budgeting

Budgets & Approvals

It is necessary that for every activity taken up by us to be interpreted in financial terms and get the approval of the concerned competent authority. Such interpretation takes the form of budgets detailing each and every components of the activity so that a clear evaluation of the total activity and the components thereof can be made by before approval. Such budgets normally become necessary, for the following activities:

• Meetings & conferences.
• Special events.
• Remuneration of Staff & Consultants.
• Capacity Building & other Training Programs
• Office Running Expenses
• Promotional events
• Travel

However, most of the times the expenses incurred on these activities are part of our programs budget and specific grants are allocated for such expenses, and would require only a simple sanction. It is therefore necessary that the budget for such activities is prepared at the time of preparation of the plan itself. The process to be followed is

• Budget for each activity to be prepared giving break up of sub-activities and related costs.
• The budget has to be verified and certified by the finance/accounts manager to ensure that the costs are realistic as compared to the activities, and the budget captures all the required costs for such activities only.
• The necessary approval of the budget for incorporation into the Plan. Wherever there are procurement of supplies and services for such activities, the formalities with regard to multiple quotations, evaluations, etc. have to be followed.

Budget Management and Planning the Financials

Budget Management

• A Budget is an estimate of the amount of money to be received and to be spent for a specified purpose in a given time..
• Budgets set a framework for reporting and analysis.
• Budgeting never stands completely alone, but rather flows out of the managerial process of setting objectives and strategies and of building plans. It is especially and intimately related to financial planning.
• While accounting, separate sub-codes to be created for every activity under the main grant code, so that the utilization of the budget can be monitored activity-wise.

While Planning the Financials

• The whole team needs to be involved in budgeting process.
• Objectives of the program along with activity plans must be completed before starting the budgeting process.
• Changes in strategies for the forthcoming year based on the past experience have to be unanimously decided by the team and the budget should be accordingly formulated.
• List out the resources required to achieve these activities and cost them.
• All line items in the budget must flow from planned activities.
• Budget should be as detailed as possible with justifications and break up of costs matched against each activity.
• When budgeting for subsequent years/phase, cost increases due to inflation, exchange rates etc would need to be kept in mind.
• All expenses have to be reviewed against the budget on a monthly basis.
• The project management shall verify the quarterly reports against the budget, analyze causes for variance and take appropriate action.

• Download Complete Policy Manual