Organizing Financial Documents

When preparing to write grant proposals, you should have access to detailed financial records of your organization. This includes records for each program, as well as a budget for the organization as a whole. These budgets should be broken down into many clear categories. This is important not only from the point of view of the organization itself to see how efficient it is, or to see what the real costs of services are), but also from the point of view of potential funders.

In interacting with funders, organizations are regularly asked to provide a cost per student. Funders also want to be assured of the bookkeeping and accounting abilities of any organization that they fund and want to be able to see exactly where their money goes. This is especially important in cases in which the funder puts limitations on how the funds can be used. Often funds cannot be used for overhead or administrative functions and can only be spent on direct service. Funders also usually hope that the programs they support will be institutionalized, and they like to see the other types of funding that support the organization.

Below are ideas for organizing financial documents to adequately reflect the proposed services for the year. Included are a sample budget, information about in-kind contributions, and charts for tracking sources of funding. Below are some suggested steps.

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  1. Reviewing Budgets for Completeness
  2. In-Kind Contributions
  3. Tracking Types of Funding

A. Reviewing the Budget for Completeness

This guide is not designed to provide specific information about designing program budgets. For that information, you should turn to other sources.

Resources about Creating Budgets

Although budgets should be written in advance of any grantwriting, when you are getting ready to raise funds or write a proposal, you should review the budget to determine how complete it is. In reviewing program and organizational budgets, do not leave any expenses out, whether they are covered by cash or by In-Kind Contributions. Think about the following questions:

  • Does the budget reflect the organization’s core services, program commitments, and expansion plans? If not, it may be useful to meet with the staff or board that developed the budget to ensure that the necessary expenditures are added.
  • Are there any expenses that have been forgotten? The budget framework below may help identify missing line items.
  • What are the administrative costs? Most adult literacy programs should have administrative costs between 8 to 15 percent of the entire organizational budget. If your administrative cost is greater than this, your proposal may scare off potential funders who think that the organization is devoting too many of its resources to administration. If your administrative cost is less than this, your organization is probably shifting money around to make ends meet. Most grants have a limit on the amount that line items can be adjusted and moved, and this could put your organization in a tight spot.

The following is a template for an Organizational Budget Framework. Your organization may have more specific items in its budget, but the more details, the better.

Organizational Budget Framework
EXPENSE

Direct Costs: Personnel

 

Salaries (List each staff person by FTE)

 

Fringe Benefits

 

Taxes

 

Subtotal

 

 

 

Other Direct Costs

 

Computer Hardware and Software

 

Equipment (including Copier Lease)

 

Evaluation

 

Food

 

Insurance

 

Instructional Materials

 

Internet Service

 

Maintenance Service (including cleaning)

 

Office/Program Supplies

 

Postage

 

Printing

 

Physical Plant Supplies (e.g. lightbulbs)

 

Rent

 

Staff Development and Training

 

Telephone/Fax

 

Travel

 

Utilities (e.g., Rent, utilities)

 

Volunteer Recognition

 

Subtotal:

 

Total of Direct Costs:

 

Indirect Costs

 

Total Costs:

 
El Poder Learning Center - English Literacy Budget
EXPENSE

Direct Costs: Personnel

 

Salaries ($18/hr, 6/wk, 52/wks)

5616

Fringe Benefits

0

Taxes

858

Subtotal

6474

 

 

Other Direct Costs

 

Computer Hardware and Software

100

Equipment (including Copier Lease)

100

Evaluation

600

Food

500

Insurance

0

Instructional Materials

600

Internet Service

200

Maintenance Service (including cleaning)

1200

Office/Program Supplies

500

Postage

50

Printing

100

Physical Plant Supplies (e.g. lightbulbs)

100

Rent

1200

Staff Development and Training

300

Telephone/Fax

150

Travel

0

Utilities (gas, electricity, etc.)

156

Volunteer Recognition

0

Subtotal:

5856

Total of Direct Costs:

12330

Indirect Costs (at 10%)

1233

Total Costs:

13,563

B. In-kind Contributions

An in-kind contribution is a non-cash donation that can be given a cash value. Three main types of in-kind contributions are time (from volunteers or advisors), materials (such as paper, pens, or computer parts), and space (such as a classroom in which to work). Your organization needs an accurate count of the in-kind contributions it receives, not only for funders (who often request a certain level of matching in-kind funding), but also for the organization’s own budget.

In-kind contributions typically help cover essential parts of the program (such as tutoring), rather than optional services. If a crucial in-kind contribution disappeared, your organization would have to pick up the cost. For this reason, you need to include in the budget the activities that in-kind donations make possible.

The cash equivalent for volunteer time varies by region and by task. The general cash equivalent for one hour of volunteer time per person in 2007 was $19.51. In California for 2006, it was $21.97, the fifth highest of the 50 states and DC. (See http://www.independentsector.org
/programs/research/volunteer_time.html). It is important to remember that the calculation is based on the type of work done, rather than on the regular salary of the volunteer. Thus, a doctor and lawyer would create the same cash equivalent as a janitor if they were all stuffing envelopes.

In-kind office space is calculated by the per-square foot value of the building, as determined by a local realtor. For example, at $2.00/sq. foot, a donation of classroom space of 150 square feet would equal $300 per month. An in-kind donation of space can be broken up into smaller units, but each unit cannot be used for more than one program or initiative. Even if the classroom is used for more than one program, the whole in-kind amount cannot be claimed for each program.

In-kind materials can be calculated at their current retail value if they are new and must be depreciated if they are older.

For more information about in-kind contributions, refer to the following Web sites:

Tracking In-kind Donations

The following is a chart that details sample in-kind contributions.

Cash Equivalence
Source Program Volunteer Materials Space Total
           
           
           
           
  Total of All Sources        
Sample In-kind-Contributions – El Poder Learning Center
Cash Equivalence
Source Program Volunteer Materials Space Total
Computer Society of El Poder Computer Center $3456 $1000 $0 $4656
Regal Paper Company ESL Classes $0 $750 $0 $750
El Poder Community College Students Children’s Literacy $1000 $0 $0 $1000
St. Mark’s Church ESL Classes $0 $0 $4500 $4500

 

 Total of All Sources $4456 $1750 $4500 $10906

C. Tracking Types of Funding

In general, there are seven main types of funding sources:

  • Individuals (including those donating in-kind volunteer time)
  • Businesses (including national corporations and local companies)
  • Government (at the federal, state, and local level)
  • Foundations (including national and specialized local programs)
  • Associations, clubs, unions (including national and community-based groups)
  • Special events (including dinners, sales drives, car washes, etc.)
  • Fee-based services (including fees for classes or individualized assistance)

Special events and fee-based services are not within the scope of this guide. The other five types of funding come from making connections to funders, and working with each one of the types of funders noted above has advantages and disadvantages. For example, businesses that provide funds usually do not require lengthy reports, and the application for funds is straightforward. Organizations that develop a good relationship with a corporation often receive a steady stream of funds. On the other hand, corporate donors are looking for PR, and oftentimes the PR coverage is disproportionate to the actual amount of funds donated. In addition, the connection to a corporation is typically made through an individual, and changes in the internal structure of a corporation may also bring reduction or cessation of funding.

Applying for government funding is time-consuming. Applications are scrutinized down to the margin size, and all aspects of the proposal must be detailed (especially the evaluation protocol). However, some government grants are for multiple years and for millions of dollars. There is a trade-off between the level of funding and the amount of paperwork that is required.

Funders also vary in the type of restrictions that are put on the way that donations can be used. Government grants are typically targeted to certain programs, and oftentimes funds cannot be used for organization-wide expenses. Corporate givers and foundations may allow funds to be used for “capacity building” rather than for direct service.

For a more complete description of the advantages and disadvantages associated with each type of funding, visit the following website:

Your organization should have a clear sense of where its funding comes from. Changes in the lending atmosphere or political climate might signal possible changes in access to funds. Government funding streams might be cut, philanthropic organizations might change their area of focus, and individual donors might run out of funding. Your programs should have diverse funding streams that allow them to survive shifts in any one funding source. Following are sample charts to track funding sources.

Chart for Tracking Funding Sources
Funder’s Name Type of Funder Amount Program Restrictions
         
         
         
         
         
Sample Chart of Funding Sources – El Poder Learning Center
Funder’s Name Type of Funder Amount Program Restrictions

State of California Department of Education

Gov

$20,000

ESL Classes

For LEP students, not native-born English speakers

A Phone Company

Corp

$10,000

Computer Center

For hardware and software, not staff time

A Coffee Company

Corp

$5,000

Basic Literacy

None

Hubbard Family Foundation

Foundation

$15,000

Children’s Literacy

Support for parental empowerment

After completing a chart that tracks the type of funding your organization receives, you may find it helpful to create one that displays the percentage of the budget that each funding source represents.

A chart of this nature will help clarify the types of funding sources your organization is most reliant upon. In the sample chart for El Poder Learning Center, government and corporation funds make up the bulk of the center’s funding (70% combined) for the 2004 fiscal year.

Breakdown of Funding Types
Type of Funding Amount Total Budget of Organization Percentage of Budget
Government      
Corporations or Local Businesses      
Foundations       
Individuals      
Associations, Clubs, Unions      
Sample Breakdown of Funding Types – El Poder Learning Center
Type of Funding Amount Total Budget of Organization Percentage of Budget
Government $46,9000 $117, 400 40%
Corporations or Local Businesses $35,220 $117, 400 30%
Foundations $17,610 $117, 400 15%
Individuals $11,740 $117, 400 10%
Associations, Clubs, Unions $5870 $117, 400 5%

When trying to raise funds, your organization has to ask itself several questions:

  1. What are the advantages and disadvantages of individual donors?
  2. What kind of balance between funding sources is appropriate?
  3. What kind of balance is risky?
  4. What potential shifts in funding priorities do you see attached to each type of funding source?

Of course, there are no set answers to these questions, and grant writers must keep their ears to the ground. In the section, “Identifying Potential Funding Sources,” several databases and Web sites are cited. By keeping up-to-date about what funders are saying, you can focus your efforts on working with the most appropriate and reliable sources of support.

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