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

Professor:

• Dr. Raymond Terry

Date: Thursday, March 28, 2012 Location: Howard University – Allied Health Sciences Course: Grant Writing Guest: John Brittell

Grant Writing: The Budget Component

09/22/09

Financial Component of Proposal Development

The Budget Narrative

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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

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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

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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?)

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Budget Sample

What should be included in a budget?

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Budget Summary - in U.S. dollars

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 YEAR 1 YEAR 2

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

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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

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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

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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

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Budgeting vs. Planning

• Budgeting: the costing or estimation of

prices for any particular activity

– NOT simply a representation of your

• rganizations needs

– Must also represent reality, should be your current set of accounts

• Planning: forecasting an organization’s

path towards delivery of a service.

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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

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Formulating a Budget

• Create a Plan of Action (purpose)
• Gather Consensus (within the
• rganization 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.

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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 2. Tell the ‘line item’ story in words 3. 15 min

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EXECUTIVE BUDGET – xyz Organization Items # Staff Unit Price (Ugx) SubTotal (Ugx) Leveraged Funds Funds Requested from MIHV Leveraged Funds Funds Requested 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 Interns 1.0 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 26,400,000 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 7,920,000 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 3 Administration 5% 4,000,000 4,000,000 4,000,000 4,000,000 Subtotal Non-Personnel 10,700,000 10,700,000 10,700,000 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

BUDGET NARRATIVE EXERCISE 2

YEAR 1 YEAR 2 Funding Source Funding Source

Exercise 2: Possible Solutions

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1 2 3 4 5 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. 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. 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. 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. 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.

Budget Narrative Basics

• Explanation of the Budget – in both alpha

& numeric terms

• Fully identify the project's goals and
• bjectives.
• A Budget Narrative takes Activities and

gives them Numeric Values

• ALWAYS compliment budgets!

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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?

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Exercise 3

• EXERCISE 3: Budget Narrative Macro

− Break into teams − Use sample info from next 2 slides – Your Job:

1. Write full budget narratives for your Exercise 1 budget 2. Tell your grant’s story in relation to the budget 3. 15 min

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Exercise 3

If this is your budget…

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Budget Summary - in U.S. dollars

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 YEAR 1 YEAR 2

Exercise 3: Possible Solution

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• 1. The total program budget is $2,016,948.86, of which MIHV will provide $406,050.01

(20.13%) in cost share match and its partners Malaria Consortium will provide $83,899.05 (4.16%) and MACIS will provide $19,500.00 (0.97%) for a project total of 25.26% in cost share match. MIHV is requesting the balance of $1,499,999.80 from USAID, of which $1,196,649.30 (74.65%) is for direct costs and $303,350.58 (25.35%) is for indirect costs, which is consistent with MIHV’s most recent Negotiated Indirect Cost Rate Agreement (NICRA). See attachments. A total of $1,581,891.73 (92.31%) of the direct cost budget will be dedicated to field expenses while $131,706.55 (7.69%) will be for project-related headquarters expenses (of which $102,501.55 is MIHV cost share).

• 2. The budget is presented in two sections – the narrative below and a spreadsheet. The

headings used are consistent with the USAID forms 424 and 424A. Unless otherwise noted, the following amounts are for the first year only; subsequent year totals are incorporated into the spreadsheet.

Budget Templates

• Examples of different Budget Formats

– Budget Template A (Traditional) – Budget Template B (Functional) – Budget Template C (Unconventional—connects activities with cost lines) – Budget Template D (USAID specific)

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Budget Template A

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Budget Template A (Traditional)

YEAR 1 YEAR 2 Funding Source Funding Source Items # Staff Unit Price (Ugx) SubTotal (Ugx) Leveraged Funds Funds Requested from Donor Leveraged Funds Funds Requested from Donor PERSONNEL Subtotal Personnel BENEFITS Subtotal Benefits NON-PERSONNEL Quantity Subtotal Non-Personnel PROGRAMMING Subtotal Programming GRAND TOTAL Recurring Costs One-Time Expenditure

Budget Template B

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Budget Template B (Functional) Budget Summary

MONTH, YEAR TOTAL AMOUNT LINE ITEM Leverage Request

• A. Personnel
• B. Fringe benefits
• C. Travel and Transportation
• D. Equipment
• E. Supplies
• F. Contractual Services
• G. Construction
• H. Other Direct Costs

TOTAL MONTHLY BUDGET

Budget Template C

26 Budget Template C (Unconventional – Connects Costs to Program Activities)

GOAL OBJECTIVES LIST ALL EXPENSES (Line Item & Amount) TOTAL REAL COST SOURCE OF FUNDS BUDGET NARRATIVE 1 2 3 4 5 6 (Internal/External) (Write in Words What is happening) OUTCOME 1.0 Activity 1.1 Task 1.1.1 Task 1.1.2 Task 1.1.3 Activity 1.2 Task 1.2.1 Task 1.2.2. Task 1.2.3 TOTALS

Budget Template D

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3/26/12 PROGRAM TITLE 1 1

• $
• $

810.00 $

• A. Personnel Costs

• n what

• $
• $
• $

• $
• $
• $

• $
• $
• $

• $
• $
• $

• $
• $
• $
• B. Non-Personnel Costs

• $
• $
• $
• $

• $
• $
• $
• $

• $
• $
• $
• $

• $
• $
• $
• $

• $
• $
• $
• $

• $
• $
• $
• $

• $
• $
• $

• $
• $
• $

• $
• $
• $

DATE BUDGET PRINTED

HOST ORGANIZATION DATE BUDGET SUBMITTED Total Costs per Visitor per Week

PROGRAM DATES NUMBER OF VISITORS BUDGET TEMPLATE D (USAID) LENGTH OF PROGRAM (weeks) COUNTRY

Why Don’t Budgets Always Work?

• Too much planning; little fieldwork
• Limited Understanding True Needs
• Lack of Experience
• Mismanagement of Resources
• Planners not always program/field staff

– Planners are not the ones implementing programs!

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Why Don’t Budgets Always Work?

“...there is a kind of confession in your looks which your modesties have not craft enough to colour.”

~ William Shakespeare, Hamlet, Act 2, Scene II

• A funder can tell when you are not

giving the full story

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• Tell your story
• Be clear about what you want
• Be clear about what you are spending

their money on

• Ask questions

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Key Messages

John Brittell

MBA/MA International Finance 2013 The George Washington University The School of Business & The Elliott School of International Affairs (202) 549 – 2539 brittell@gwu.edu

Contact Info

Thank You

& Best Wishes!