Budgeting for a humanitarian project

Published on 23rd March 2020

With so much happening in the world right now, there is a natural tendency to curl up and wonder if it is all worth it. The effects of this pandemic are far reaching and it is usually the most vulnerable that are faced with far reaching consequences. If your organisation is planning a humanitarian response, here are a few things to bear in mind when creating the budget.

1. Inflation
Information has a direct correlation with inflation and panic is likely to create inflation in the cost of goods and services. Do not assume a cost base that is no longer valid. Do your research and budget at the appropriate rate for even the most basic things.

2. Adequate insurance
As this pandemic poses a risk to life, please ensure that both you and your staff have the appropriate level of insurance cover available before you leap into action. You are responsible for your staff and you should show this by insuring them for the work that they do. Most donors will usually pay their fair share of this cost too.

3. The Budget split
It is usually cheaper to operate where you have a base. Charity begins at home they say. Do not be tempted to increase your operational costs because you have a sentimental attachment to a beautiful community that you do not have a presence in. Ensure that the majority of the budget is spent on programme activities. We recommend 50% at least. Staff cost should account for 20%, travel 10% and 20% split across monitoring and evaluation and equipment and supplies. You should be aware that all donors want value for money and the communities that you seek to serve will also benefit from quality programming as opposed to an uneven distribution that does not meet their immediate needs.

4. Overheads matter
One must not throw caution and reality to the wind. Your office rent will become due when the relief on business rates end. You have utility bills to pay and staff salaries too. It is therefore important to build in overhead into your budget that is as reflective of your actual costs as possible. Your business will not survive responding to the next disaster if you do not have reserves or are not sufficiently investing in research, development and innovation to make it relevant. Please get the balance right.

5. Accountability
And while the immediate focus is on saving lives and being second responders, remember that you are accountable. To your donor, the local community and to yourself. It is important to take photographs, keep receipts and follow proper procurement guidelines when you are on the frontline responding. Ensure that your policies and procedures are still being adhered to and while it is bleak right now, remember that there will be light at the end of the tunnel. It will be difficult to justify the lack of accountability or blame lack programming to the ‘emergency nature of your response’.

At FINDEV, we provide consultancy services to nonprofit organisations and are able to assist you at short notice in the preparing of donor budgets and financial reports in response to the current global pandemic.

Please contact us at Findevconsultingltd@outlook.com today.