One of the four main building blocks of your project design is your budget. Despite the importance of money, the budget is often treated as an afterthought. And that can lead to big challenges in implementation of the project. It is helpful to your implementation and to your nonprofit to invest some love and attention in your budget to make it a good one. So let me tell you what is a good project budget.

A good project budget includes all costs needed for project implementation

This may sound a bit self-evident. Obviously, a budget must include all costs that are needed to make the activity happen. But go and have a look at one of your project budgets and tell me if that budget has everything in it that is or was needed for the project?

  • Is all the time of everyone directly involved in implementation foreseen at the correct cost?
  • If you visualize all the activities, are really all costs then presented in the budget? All coffees, teas, stamps, notebooks, pens, venues, etc.?
  • If you visualize how your team will work – does the budget contribute to any of the general costs you incur to make it possible for your team to work? Such as having an office, a desk, equipment, software? Does the project budget contribute to covering these costs in a way that is commensurate with the involvement of your team in the project?

What can go wrong in budgeting?

Very often, things are overlooked. I have seen that

  • Staff costs were included without tax and social insurance, such as PAYE and NSSF. In other words: staff cost more than budgeted.
  • Staff was budgeted for about half the time they really needed to complete the described tasks. In other words, half of the work was not covered by the project for which the work was done.
  • A leaflet was planned to be printed – without budget to write the text, have someone take pictures or make drawings, budget for the design or budget for editing the text. So yes, printing was possible but a big part of the work for that leaflet was not foreseen.
  • When a budget was approved the organization realized that to do all the work, they needed a space to work from – which was not included in the budget.

And many variations of these oversights.

How can you avoid common mistakes?

It is easier to avoid these common mistakes if you visualize the whole project, step by step, very concretely. And if you make sure that people who have implemented such activities before are included in the budgeting. That will help avoid overlooking certain costs.

I also always doublecheck against documentation and bookkeeping data of previous projects with similar activities.

It is helpful to look at timesheets of team member who did similar work before. You can then see what is realistic in terms of time investment needed. (But of course, only if people have filled out their sheets based on the reality, not on expectations).



A good project budget is a budget that follows the guidelines of the donor

Of course, you always aim to follow the guidelines of a donor for the narrative and financial part of your proposals. But sometimes the guidelines are not so clear. And you need to ask for clarification. If you are preparing the budget quite late in the process, you may not have much time left for that. Some donors also set a deadline for asking questions. So, you need to check right at the start, when you are analyzing the call and instructions, whether you understand the budget guidelines and whether there is a deadline for asking questions.

Visualize the reporting stage when budgeting

It is also helpful to think about the reporting stage already. What kind of proof will a donor expect for the budget items? What details are needed? If you cannot deliver these, can you change the presentation of the item in the budget so that you CAN report on it properly?

A good project budget is a budget that is understandable to the project team

Aside from the donor, the key user of the project budget is of course your project team. Make sure they can read the budget as if it was a story about their future activities. So they know exactly how much time they are foreseen to spend on certain activities. And so they know when activities are planned to happen. And what they look like, roughly.

Always make an internal version of the final project budget

Very often the donor format lacks information or details your project team needs to fully understand the budget and work with it properly. It is good to make an internal version, where you can add this information and all the details about calculations, sources of price information, conditions regarding procurement, etc. etc.

My key tips

  • Carefully read and analyze instructions and application format for the call for proposals you are responding to. Make a note of any deadline for sending in questions for clarification and make sure you carefully check the budget requirements and guidelines before that deadline!
  • Visualize what you plan to do and make sure that the budget includes all actions and related costs.
  • Use your own data from previous projects if you have them. (And make sure you note lessons learned in regard of the budget for previous projects, systematically)
  • Develop an internal budget for the project team to work with.

How I can help

Check out my free Ten Tips to Make Clever Project Budgets:

Here is how I can help you design better projects, including better budgets, to achieve real impact for the community or cause you serve:

  • If you would like a structured approach with easy steps and guidance by me to go from a great idea to an effective project design, that has community support and a workable budget, you can join my Course Project Design for nonprofits here:

Here is how I can help you set up your nonprofit finance and admin professionally so you can stop worrying about this:

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