Project Leaders are sometimes intimidated by the thought of developing a budget but it is actually simple and makes good business sense. A budget is basically a list of anticipated revenues and expenses for a project over a specific period of time. This article provides guidance and a template for creating a budget.
A budget is also a planning tool designed to help you think through and get a handle on all aspects of your project that will cost money or bring in revenue. Below are the two most common types of budgets your project may need to create.
The most common budget is an annual operating budget, which lists anticipated expenses against a realistic amount of revenue for a fiscal year. (Community Partners’ fiscal year is from July 1 through June 30.) Total revenues should always equal or exceed total expenses in an annual operating budget.
An operating budget starts with revenue, and then shows each expense type. This includes fixed costs, such as monthly payments for salaries, rent, and internet, and variable costs, such as planning an event or purchasing software or travel.
A program budget is an estimate of the true costs of one specific program or activity area of your project, and the revenues you anticipate to meet those costs.
Expenses will be direct costs--any personnel and non-personnel costs that you wouldn’t have if you didn’t have the program--and indirect, also known as administrative costs or overhead.
Your revenue consists of any grants, contract payments, contributions, or earned income earmarked for the project, such as a restricted grant, ticket sales, or program participation fees.
The program budget (also sometimes known as a project budget) is often requested by funders and should only specify expenses associated with one program within your project.