NGOs receive specific grants to implement activities but it may not be necessary that the entire allocated grant will be spent for a certain activity. NGOs usually have their own internal valuation systems to judiciously allocate resources for different activities. For this reason, it is important to undertake financial planning and budget. So what is the procedure for this? Below are the steps outlined for carrying out this process:
Financial Planning & Budgeting
Budgets & Approvals
It is necessary that for every activity taken up by us to be interpreted in financial terms and get the approval of the concerned competent authority. Such interpretation takes the form of budgets detailing each and every components of the activity so that a clear evaluation of the total activity and the components thereof can be made by before approval. Such budgets normally become necessary, for the following activities:
- Meetings & conferences
- Special events
- Remuneration of Staff & Consultants
- Capacity Building & other Training Programs
- Office Running Expenses
- Promotional events
- Travel
However, most of the times the expenses incurred on these activities are part of our programs budget and specific grants are allocated for such expenses, and would require only a simple sanction. It is therefore necessary that the budget for such activities is prepared at the time of preparation of the plan itself.
The process to be followed is
- Budget for each activity to be prepared giving break up of sub-activities and related costs.
- The budget has to be verified and certified by the finance/accounts manager to ensure that the costs are realistic as compared to the activities, and the budget captures all the required costs for such activities only.
- The necessary approval of the budget for incorporation into the Plan.
Wherever there are procurement of supplies and services for such activities, the formalities with regard to multiple quotations, evaluations, etc. have to be followed.