Introduction

These Guidance Notes provide very practical information which will enable you to prepare, monitor and revise budgets that you will need in order to plan activities and what fundraising will need to be carried out in order to carry out these activities.

What are they?

Budgetsare awritten plan or estimate of future income and expenses of an activity covering a definite time period.

Why do them?

A budget is a valuable accounting and planning tool. It helps in making decisions to allocate funds and report to donors. It also helps guide future fundraising efforts.

The process of preparing an annual budget helps an organisation plan its activities and understand what funds need to be sought in order to carry out the priority activities and plan for future development, and make decisions if there will not be sufficient funds to carry out all activities.

How and when to do them?

Budgets need to be prepared alongside planning for either projects or annual plan (please refer to the PEN Guidance Notes on annual Centre work plans).

Key Steps:

Step One:

-Identify who will coordinate the budgeting process and which staff, board members, Centre members and committees need to be involved;

-Set timelines and key deadlines;

-Determine and schedule any training or key meetings.

Step 2:

-Clearly communicate responsibilities, expectations and deadlines to everyone involved;

Step 3:

-Ensure that the budget is set in the project and annual planning process

Step 4:

-Research and gather information about income and expenses based on Centre’s aims, objectives and planned activities

-Construct budget details by project;

-Communicate regularly with others working on the budget and projects to avoid duplication of effort and to share information and assumptions.

Step 5:

-Have one person compile all information, review it for consistency and redistribute to everyone involved;

-Leave plenty of time for review and revisions.

What to include:

1. Annual Budget:

The Annual Budget outlines the anticipated income and expenditure to carry out all the activities in the Centre’s annual plan. The template below is a guideline only

Income

-Projected income from grants. List who the Centre plans to apply to for funds and for how much, as well as whether the funds are restricted or unrestricted. Restricted funds are given in order to carry out a specific project and can not be used for any other purpose. Unrestricted funds can be used for any of the Centre’s activities or put towards administration and other overheads.

Expenditure

-The annual budget should include all the activities the Centre is planning to carry out. It can also include a number of projects or plans for development that the Centre would like to carry out if sufficient funds are found.

-Estimate the cost of each item of expenditure as realistically as you can.

-It helps to make notes of how each figure was arrived at and any items you were not sure about.

-The budget should include a summary of project costs for each planned project. These need to be prepared in advance of the annual budget.

-The budget also needs to include fixed costs, which do not change such as stationery etc. If the Centre does not have an office, it still incurs stationery and communications costs that should be accounted for in the budget.

-All PEN Centres are advised to include Congress attendance in their annual budget and plans, as funding available for this through International PEN is extremely limited.

-If the projected income is less than the planned expenditure, the Centre will need to decide what it wants to do about it, whether activities can be scaled down, postponed or cancelled or split into phases.

-The Centre also needs to plan its activities based on when income is expected.

Annual Budget Template

Income
Membership Subscriptions
Grants (note whether they are restricted or unrestricted)
Income from events / Publication sales
In kind support (e.g free use of venue from partner organisation)
Expenditure
Project Costs - per project
Staff / Artists costs
Travel / Transportation
Venue Hire
Accommodation
Refreshments
Publicity
Promotional / Print Materials
Project management fee
Sub total
Congress attendance costs
Travel
Registration fee
Extra nights accommodation
Visa
Stopover
Per diems
Sub total
Fixed Costs
Communications - telephone, e-mail, fax etc
Post
Stationery
Annual Audit
International PEN Dues
Office costs where applicable, rent, electricity, rates etc
Sub total
Grand Total

2. Project Budgets:

-See project costs in annual budget template. The template is a guideline only. A project budget outlines the anticipated income and expenditure for carrying out a particular activity or project.

-Project budgets need to balance, particularly if being sent externally.

-It is useful to include unit costs in a project budget to explain each item, for example 4 people x 2 school trips x $20.00 to explain Travel that amounts to $160.00. This helps calculate expenditure more accurately and gives a fuller picture to potential Donors of the activity planned.

-It is important that expenditure items in the budget are proportionate. If there is an unusually high percentage of expenditure on publicity or food, the budget may not be accepted by a Donor.

-Including a project management fee in project budgets allows the Centre to include the core costs of running a Centre in project budgets. Many donors will not accept to pay core costs but will accept a project management fee of up to 15%.

Monitoring and revision

The budget is a very important tool for financial management. Small organisations should compare projected with actual income and expenditure at least every three months. It may be that income has not been as high as forecast so savings will have to be made, or some activities have not happened leaving money available to be spent on other activities. The budget should only be revised to take account of major changes.