Question

What are the types of budgets used in grant funding? Why are these types of budgets used?

Answer 1

Usually there are two types of budgets used in grant funding:

1. Annual operating budget: Also known as organization budget
2. Program budget: Also known as project budget

Why are these types of budgets used?

Annual Operating budget:

1. Operating budget is a statement of expected revenues and costs. It includes also potential sources of revenues and all the costs the organization is likely to incur. It includes costs of all types (fixed, variable, direct, indirect, overheads, administrative etc)
2. In a way it also indicates where the money is coming from (sources of funds) and where is the same getting deployed (usage of funds).
3. This gives an idea where the organisation is expecting a surplus or a shortfall next year and prepares the organization to take action accordingly, today itself. This alerts the management where external funding is required.

Program (Project) Budget:

1. This elaborates the resources required across various projects / programs / activities next year.
2. This elaborates how resources have been committed across each project / program / activity
3. This is also a type of statement of sources and usage of funds but specific to a particular program or project.