INTRODUCTION TO FINANCE AND

GRANTS

Learning Outcomes:
FOLLOWING ON FROM YESTERDAYS PROPOSAL SESSION…..

• Be able to write a budget including all the key elements.

• Be able to feed into a master budget
• Be better able to implement the basic essentials of grant management
• Be able to ensure donor compliance
• Be able to implement and use financial control mechanisms
 WHAT IS A BUDGET?

A financial representation of
the resources needed to deliver
quality relief services to
affected people

An informed guess about the

costs you will incur based on the
best data available: too little says
you cannot plan, too large says
“stupid and greedy”
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 7 STEP BUDGET

1. List items
2. Note unit cost
3. Estimate quantities
4. Annual / monthly costs
5. Total
6. Allocate costs to donor
7. Budget narrative

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 THINGS TO REMEMBER

Support costs - 30-40% of any budget

What are typical support costs?
1. Amount of detail - more detail = less flexibility
2. Don’t underestimate the real cost - better to
overestimate (padding) without greed
3. Don’t be afraid to ask for help - involve other depts
4. Do read the donor guidelines

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 ISSUES TO CONSIDER WHEN
ASSESSING COSTS
· Supply timelines
· Import taxes – Ethiopian import taxes on Toyota
Landcruisers in 2002 were 120%
· Permissions for use – esp. for radio comms
· Storage needs – is space available? are there special
needs and costs (i.e. vaccines)?
· Donor funding - e.g. buying new vehicles or drugs or
seeds on OFDA grants, ECHO will not fund certain
elements, ratio of personnel costs to programme
inputs etc.
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WHAT IS A MASTER BUDGET
 WHAT DOES A MASTER BUDGET
LOOK LIKE?
COSTS UNIT # PRICE TOTAL HQ ECHO DEC OFDA CERF
S (US$) COST ($) APPEAL
PROJ 1

PROJ 2

PROJ 3

PROJ 4

STAFF

ADMIN

ASSETS

OVER-
HEAD
TOTAL

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 WHY IS A MASTER BUDGET
IMPORTANT?
A planning tool showing the full budget of a
response
The full cost of the planned response by sectors
& sites allocated to donors
Budget by sectors with support cost pooled
together
A tool to identify funding gaps
 GRANTS SET-UP DON’TS
 Don’t accept ALL funds with proposed conditions attached (too small,
too complicated, short time frame )
Proposals which would require intensive processing/controls to
implement properly (Complex indicators, to detailed budgets,
complex cost sharing etc)…
 Don’t set unrealistic delivery targets (too small or too ambitious)
 Missing costs can lead to funding gaps later

 Overstated costs can result in over-funding

 Don’t accept support budget cuts too easily

 Don’t hesitate to contact the donor for changes even before

9 contract signature
 GRANTS SETUP DOS
 Know your donors implementing strategy and
ambitions level
 Know your donor’s requirements and flexibilities

 Make sure you understand your donor budget format

(categories/sub-cat) to avoid budget management issues
later on and potential disallowances
 Define and concentrate on your priority donors
 Avoid your donors heavy requirements :
 Avoid allocating “difficult costs”
 Request waiver at proposal stage
Check, Narrative / Log frame/ Budget consistency

 Think beyond the immediate response (Recovery/Assets)

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 GRANT MANAGEMENT

• Award
• Administration
• Contracts
• Accounting/Finance
• Reporting
• Assurance (audit, documentation)
• Revisions
• Compliance
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 DONOR COMPLIANCE – WORLD
CAFÉ EXERCISE
• Visibility
• Procurement
• Asset management
• Evidence of expenditure or distribution
• Timesheets
• Blacklists
• Read the contract!!!
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 FINANCIAL CONTROLS –
EXERCISE
Financial controls involve the following:
• Cash control (floats, advances, transfers, payments etc)
• Scheme of Delegation
• Coding of expenditure (grant code, activity code)
• Procurement approval
• Payment approval
• Income (inc. GIK) receipt
• Management accounts/reports
• Indirect Cost Recovery (i.e. admin fee, management fee)
• Fraud

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