Grant Writing: The Budget Component Professor : Dr. Raymond Terry - PowerPoint PPT Presentation

Grant Writing: The Budget Component Professor : Dr. Raymond Terry Date : Thursday, March 28, 2012 Location : Howard University – Allied Health Sciences Course : Grant Writing Guest : John Brittell

09/22/09

Financial Component of Proposal Development The Budget Narrative 3

Learning Objectives • After this session, you will be able to: – Perform 3 exercises to develop a budget • Develop budget in teams (10 min) • Write sample narratives (15 min) • Develop macro-view budget narrative (20 min) – Be exposed to various budget templates 4

Exercise 1 • Develop Operations Budget – Break into teams – Select one project to focus on – Draft a budget using the following criteria: • Maximum # of line items = 10 • Funding Request = $100,000 over 2 years • 10 min 5

Budget Sample Review Sample Budget • Primary Lines • HQ vs Field • Benefits (identify them; what %?) • Cap Ex vs Operations (1-time vs recurring) • NICRA – Negotiated Indirect Cost Rate Agreement • Overhead (what is a good limit?) 6

Budget Sample What should be included in a budget? Budget Summary - in U.S. dollars YEAR 1 YEAR 2 TOTAL USAID TOTAL Cost Share TOTAL AMOUNT LINE ITEM USAID Cost Share USAID Cost Share A. Personnel 77,410.00 59,000.00 91,210.00 94,720.00 259,830.00 249,181.60 509,011.60 B. Fringe benefits 14,743.80 12,980.00 17,227.80 20,838.40 49,199.40 54,819.95 104,019.35 C. Travel and Transportation 12,497.54 5,934.46 19,232.00 7,840.00 50,961.54 20,624.46 71,586.00 D. Equipment 600.00 30,500.00 0.00 14,600.00 600.00 45,100.00 45,700.00 E. Supplies 3,560.00 600.00 1,560.00 600.00 6,680.00 1,200.00 7,880.00 F. Contractual Services 2,900.00 1,500.00 5,400.00 3,000.00 13,700.00 0.00 21,200.00 G. Construction 0.00 0.00 0.00 0.00 0.00 0.00 0.00 H. Other Direct Costs 210,566.69 51,489.80 287,761.76 42,034.35 815,678.28 138,523.05 954,201.33 I. Indirect Costs 81,697.48 0.00 107,076.26 0.00 303,350.58 0.00 303,350.58 TOTAL PROJECT COST $403,975.51 $162,004.26 $529,467.82 $183,632.75 $1,499,999.80 $509,449.06 $2,016,948.86 7

Budget Basics What should be included in a budget? • Brief descriptions of activities with numeric values • Quantities of staff, activities, materials, etc. • Unit Values of each activity/line item • Total Value of each activity/line item • Summaries of all activities/line items and their values 8

Line Items What should be in a line item description? • Personnel Expenses: Salary, Fringe Benefits, Insurance, Taxes, etc. • Operation Expenses: Rent, Utility, Communications, Transportation, Postage/Printing, Office Supplies, Equipment/Furniture, Capital Expenditures, etc. • Administrative Expenses: Overhead/Buffer, Change Orders, Staff Development, Consultant Fees, etc. • Program/Project Expenses: whatever else represents the full program/project costs 9

Direct Costs vs Indirect Costs • Direct Costs – Costs for activities or services that benefit specific projects – Easily traced to projects – Charged to projects on an item-by-item basis – Examples: Project Staff, Project Travel, Project Supplies • Indirect Costs – Costs for activities or services that benefit more than one project – Precise benefits to a specific project are often difficult or impossible to trace – Examples: Utilities, Rent, Audit/Legal Fees, Admin Staff, Equipment 10

More to Consider… • Leverage: What are some examples? – What is the right amount? The more the merrier…no general % – Volunteers: NOT included as staff; ARE included as leverage! • Your Resources − Do you have assets to use for the project? How can you make the funder know that you are SERIOUS about the project? • What does FTE mean? − “Full Time Equivalent” • Incorporate administrative/indirect costs at a specific rate (%) – A real budget must account for the other costs which come up during implementation 11

Budgeting vs. Planning • Budgeting: the costing or estimation of prices for any particular activity – NOT simply a representation of your organizations needs – Must also represent reality, should be your current set of accounts • Planning: forecasting an organization’s path towards delivery of a service. 12

Exercise 1A • EXERCISE 1A: Budget Revision − Issue: the economy has taken a downward turn and funding cuts are immanent; your boss has just asked you for budget projections with 20% reductions. – Your Job: 1. Identify which lines to cut and explain why 2. Recalculate your budget 3. 10 min 13

Formulating a Budget • Create a Plan of Action (purpose) • Gather Consensus (within the organization and with stakeholders) • Allocate Budget Resources • Review & Edit Internally – Does the budget reflect the Plan of Action (purpose)? – Does it say what you want it to do? • Present the Budget Externally – Verifying and involving external input is key to an improved budget. 14

Exercise 2 • EXERCISE 2: Budget Narratives − Break into teams − Use info on next slide – Your Job: 1. Write full budget narratives for each line item selected Tell the ‘line item’ story in words 2. 3. 15 min 15

BUDGET NARRATIVE EXERCISE 2 EXECUTIVE BUDGET – xyz Organization YEAR 1 YEAR 2 Funding Source Funding Source Funds Requested Funds Requested Items # Staff Unit Price (Ugx) SubTotal (Ugx) Leveraged Funds from MIHV Leveraged Funds from MIHV PERSONNEL Program Manager 1.0 6,000,000 6,000,000 6,000,000 6,000,000 Operations Manager 1.0 2,400,000 2,400,000 2,400,000 2,400,000 Health Volunteer 2.0 0 0 0 0 Interns 1.0 0 0 0 0 Consultancy 1.0 18,000,000 18,000,000 18,000,000 18,000,000 1 Subtotal Personnel 6.0 26,400,000 26,400,000 0 26,400,000 0 BENEFITS Taxes 10% 2,640,000 2,640,000 2,640,000 Health & Medical 15% 3,960,000 3,960,000 3,960,000 Transportation 5% 1,320,000 1,320,000 1,320,000 2 Subtotal Benefits 30% 7,920,000 7,920,000 0 7,920,000 0 NON-PERSONNEL Quantity Rent 12 150,000 1,800,000 1,800,000 1,800,000 Utilities 12 50,000 600,000 600,000 600,000 Office Equipment 1 500,000 500,000 500,000 500,000 Transportation – Staff 12 25,000 300,000 300,000 300,000 Training 4 200,000 800,000 800,000 800,000 Meetings 4 250,000 1,000,000 1,000,000 1,000,000 Bank Fees & Insurance 1 200,000 200,000 200,000 200,000 Capital Expenditure 1 1,500,000 1,500,000 1,500,000 1,500,000 Construction 0 0 0 0 3 Administration 5% 4,000,000 4,000,000 4,000,000 4,000,000 Subtotal Non-Personnel 10,700,000 10,700,000 0 10,700,000 0 PROGRAMMING 4 Net Distribution 5 3,500,000 17,500,000 13,500,000 4,000,000 13,500,000 4,000,000 Sensitization 5 1,000,000 5,000,000 5,000,000 5,000,000 5 Medicine Distribution 5 500,000 2,500,000 1,500,000 1,000,000 1,500,000 1,000,000 Subtotal Programming 25,000,000 20,000,000 5,000,000 20,000,000 5,000,000 GRAND TOTAL 70,020,000 65,020,000 5,000,000 65,020,000 5,000,000 16

Exercise 2: Possible Solutions 1 XYZ Org w ill require a team of 6 Management, Administrative, & Program Health personnel to contribute to the project over tw o years. We anticipate an annual expense of 26.4M UGX, of w hich w e w ill be supporting 100% of this cost as a contribution to the project for long term sustainability. 2 XYZ Org believes in supporting its employees for improved performance and output. As such, w e provide a 30% on salary benefit package that costs 7.9M UGX per annum. XYZ Org w ill be leveraging 100% of these funds as support for the successful implementation of the project. 3 XYZ Org w ill incurr a minimal Administrative overhead cost of 5% of the total budget, totaling 4M UGX. With our organizations reserves increasing over the last five years, w e w ill manage 100% of these costs internally, increasing our leverage for the project. 4 XYZ Org w ill be delivering 8,000 Moquito Nets to 10 Parishes in X Subcounty expending a total of 17.5M to fight malaria in our communities. We w ill require 23% of these funds to be supported by MIHV, in total 4M Ugx, to cover community education expenses associated w ith net use. The remaining 77% of funds w ill be sourced from our internal accounts to further leverage the projects success. 5 XYZ Org intends to distribute community based malaria medicines to it's catchment area of X S/C. In doing so, w e w ill incur an added cost of IEC translated materials to go along w ith the medicines. We anticipate funding 60% or 1.5M UGX for IEC; We are requesting MIHV to meet the remaining expenses of translation and production of IEC materials in the amount of 1M UGX or 40% of the total Medicine Distribution line. 17

Budget Narrative Basics • Explanation of the Budget – in both alpha & numeric terms • Fully identify the project's goals and objectives. • A Budget Narrative takes Activities and gives them Numeric Values • ALWAYS compliment budgets! 18

Budget Narrative Components What should be included in a Budget Narrative? • Identify your organization and the request. • Descriptions of specific activities/line items with their intended outcomes • Quantities (numeric values) of the line item • Total Value of the line item in relation to the request • Leverage of organization funds for the line item • Request from funder in both percent and real terms • Time Frame for using funds – Recurring or one time expense? 19