A project budget simply refers to a document which specifies how the money will be allocated to implement the activities described in the proposal. The budget gives a clear picture of all expenditures involved in carrying out a project. In short, a budget is a description of the project in numbers.
While there are many ways to organize a budget, most are comprised of two main sections: income and expenses.
Income includes all sources of project funding – grants, donations, the value of in-kind gifts, the value of volunteer hours, earned income, matching funds etc.
Expenses or expenditures enumerate how and where that money will be spent. Expenditures may be itemized, summarized by category, activity etc.
It is also important to note that project budgets are just one of the many types of budgets NGOs may need to maintain. Others include operating, program, and projection budgets.
Other uses for Budgets
A budget can tell a donor a lot more about the project and NGO than just the price of goods. Donors look to the budget to see:
- Transparency – are you willing to share staff salaries, overhead costs, and other sources of income?
- Value for money – what is the value of your impact compared to your project cost?
- Capacity – does your financial history show you are able to efficiently manage a program?
- Competitiveness – how do your costs compare to other applicants?
- Following guidelines – did you read and abide by the donor’s instructions?