Financial Planning and Budgeting for NGOs

Introduction:

This module provides practical guidance on financial planning and budgeting specifically tailored for the NGO sector. Participants will learn the significance of creating accurate, comprehensive, and well-justified budgets through hands-on experience with detailed project budgets and various financial planning and budgeting tools. Effective program management hinges on the close collaboration between program and finance teams to ensure that NGO budgets align with the organization's strategic goals. This comprehensive course delves into these intricacies, enhancing participants’ understanding of NGO financial management.

The course emphasizes the financial planning and budgeting process while equipping participants with tools to develop robust NGO budgets that align with organizational objectives. By the end of the course, participants will have improved their financial acumen, enabling them to manage budgets effectively and pursue certification in NGO financial management.

Objectives:

After completing this course on NGO Financial Planning & Budgeting, participants should be able to:

• Prepare an accurate, complete, and justified project budget using activity-based budgeting.
• Develop budgets in various donor formats for funding requests.
• Create incremental budgets for different phases of program implementation.
• Explain how core accounts support the budgeting process.
• Manage multiple donor-funded programs using funding grid techniques.
• Identify at least ten different types of budgets and three strategies for setting them up.

Training Methodology:

• Guided Tutorials
• Collaborative Project Work
• Real-Life Budgeting Simulations
• Financial Planning Software Training
• Benchmarking Exercises
• Strategy Development Sessions
• Panel Discussions with NGO Financial Experts
• Budget Review and Feedback Sessions
• Sharing Industry Best Practices
• Field Visits or Virtual Tours of NGO Financial Operations

Course Outline:

Unit 1: Essential Financial Planning Principles and Ideas

• Explore the financial planning process.
• Establish the foundation for effective financial planning.
• Reflect on previous budgeting experiences.
• Understand the Chart of Accounts.

Unit 2: Activity-Based Budgeting Introduction

• Utilize the Project Breakdown Sheet and Budget Worksheet.
• Budget by activity.
• Treat budget activities as resource elements.
• Complete and analyze the Project Breakdown Sheet.
• Present and review the budget.

Unit 3: Developing a Phased Budget

• Introduce the concept of indirect cost budgeting.
• Understand phased budgets, consolidated budgets, and full cost recovery.
• Implement the Complete Project Costing Method.
• Develop a phased budget from a consolidated budget.

Unit 4: Donor-Format Budgets and Cash Flow Projections

• Consider program management alternatives for multi-donor-supported programs.
• Prepare program management budgets.
• Project anticipated cash flows.
• Create donor-format budgets.
• Utilize a financial grid.

Unit 5: Financial Monitoring and Evaluation

• Overview of financial monitoring and evaluation.
• Understand the importance of monitoring budget implementation.
• Monitor expenses and revenue.
• Evaluate financial performance against target budgets.
• Adjust budgets based on monitoring and evaluation results.

Conclusion:

By the end of this training, participants will have gained essential skills for financial planning and budgeting within an NGO context. They will understand the importance of these practices for the sustainability of NGOs and be equipped to effectively implement their organizations’ budgets, with insights into best practices for financial management.