How to create a smart project budget for think tanks

5 December 2017

[This article is part of a series of reflections from trainers of several capacity building activities within the OTT Consulting project: Strengthening the sustainability of ILAIPP and its members.]

As any project manager will tell you, a successful budget is one of the most crucial elements of any project. Your budget can bring about the overall success, or overall failure of your project. A successful project budget will not only help you run at your most efficient and effective as a think tank, but it will also help in your reputation with donors. This in turn will help you secure future funding. But how can you develop a budget that can withstand the test of the project itself?

Firstly, the importance of planning

As Benjamin Franklin famously once said, ‘by failing to prepare, you are preparing to fail’. If you plan your budget well, then you will find that it will hold up under any project. You won’t get to the end of it with either lots of money underspent, or strapped for cash.

So, what can you do to plan well? Well, one way of planning effectively is to have a standard budget template that has all the categories set out for you.

A budget template will help to make sure you don’t miss anything off. It will create a check list of items you need to include in your budget, making sure you don’t get caught out by any hidden costs.

Another way to plan well is to make sure you know how much capacity your staff have before you commit to a project. One way of doing this is to set up an internal tracker that staff complete, showing how much capacity staff have over the year.

This will make sure you don’t commit your think tank to something it doesn’t have the time to do. There are no shortcuts in budget planning. By planning your budget well, you will make sure that you don’t miss anything, and nothing should (hopefully) catch you by surprise.

Secondly, learn from past experiences

Those who do not learn from the past are destined to repeat it. Taking stock and looking back will play a big part in helping you create a smart project budget.

Firstly, look back at your previous budgets to see whether you over/under ran. By knowing where you went wrong the first-time round, this will help you work out how to create a better budget the second-time.

Secondly, look back at project timesheets. I know that most people have a love/hate relationship with them, but timesheets are a project managers best friend. They will help you calculate more accurately how much time a task took, so that you can use this information for future budgeting.

Timesheets will also help you create a cost card. Having a cost card can help you allocate appropriate days to different tasks in your budget. It will help you determine how much actual time it will take to do different tasks, which will ensure you don’t underbudget on staff time.

And finally, make sure all this information is stored in a central, easily accessible place. We all know too well that donors often require a quick turnaround on proposals. Having all your templates, previous budgets, cost cards etc. in a well-managed, accessible place (for example at ODI we use SharePoint), will help make sure you aren’t searching around for information, or putting incorrect data into budgets. By looking back, you will make sure you don’t make the same mistakes twice. The more you learn from past budget experiences, the better equipped you will be to set up more successful budgets for the future

And finally, understand your donor

By understanding your donor and what they want, you will find that you will have more success with your budgets. For example, understand that donors often prioritise value for money, so aim to give them as much information as possible in your narrative as to why you budgeted the way you did.

This is particularly true regarding your fee rates. Make sure to explain why your fee rates are structured the way they are. This will help the donor understand exactly what you are offering them, and how the money is being used.

Also, take your time to understand your donor. Read through all the information you can get on what the donor really wants, and speak their language. For example, donors are increasingly wanting to see more dissemination as part of a research project. It’s no longer acceptable to just do a piece of research and put it on the shelf. So, make sure in your budget narrative you talk about research uptake and impact costs, not just printing or editing costs. By speaking their language, donors will know you are on the same page, and that you can offer them what they want.

Budgets are a great way of demonstrating to a donor why you are the best organisation to deliver what they want. A successful project budget will not only help you build your reputation as a think tank, but it will help you with future organisational budgeting and delivery.

By planning well, learning from past experiences, and taking the time to understand your donor, you will create a successful budget that can stand the test of any project.