Many of the tasks that your Open Africa route will tackle will be projects – in other words, they will be activities with an aim, a beginning and an end. Short-term projects can last a few days or up to a few weeks, and will usually have only one or two objectives. For instance, it could be a brochure showcasing the route, its members and the surrounding area. Once the Route Forum has discussed the idea and a plan has been approved, it may only take a week or two to put the brochure together.

In this example, the objective is clear: a neatly printed, colourful and informative brochure that will encourage tourists to visit. There may also be another aim: to distribute the brochure to strategic places where potential visitors will pick it up.

To ensure that the project is carried out efficiently (without wasting time, money or resources) and on time, a plan is necessary. This will plot which activity will be done when, and by whom.

This Guide will explain how to prepare a plan for a relatively small project that needs to be completed in a short time. A plan is an important tool to help your route to run more professionally, efficiently and procedurally:

• It makes you more professional by ensuring that the right people are involved at the right times, to deliver a high-quality result in an orderly way.
• It makes you more efficient because you can research and decide (in advance) how everything should be done, and you can compare options until you find the best one.
• Being procedural means acting in accordance with the route’s policies and broad objectives – so that the organisation advances in the right direction and with the blessing and involvement of all members.

The main message of this Guide is that a good plan is the beginning of a good project; if the route fails to plan ahead when it implements its ideas, the result is usually a chaotic and costly activity that undermines the confidence of both the route’s members and its stakeholders.

Alongside this one, also read the Guides on How to Develop A Project Idea, How To Develop A Project Budget, and How To Manage a Short-Term Project.

Why is a project plan important?

A route works differently to a small business. As an owner of a small business, you can make most decisions by yourself and implement them in your own way. The route, on the other hand, needs management and for members to work together in a co-operative style, because the route is made up of members and is there to act in the interest of the members.

This means that more discussion is usually needed so that agreement can be reached on what activities should take place. Part of this discussion is about the planning, because members need to agree on how things are going to get done before they get done. So, a project plan is part of making sure that everyone is happy with an idea and the way it will be implemented.

It is also a good way for the route to mandate a person (or committee) to carry out important tasks in the interest of the route as a collective body. It improves the chances of success and ensures that the route works collectively towards its goals and objectives by co-ordinating everyone’s input and predicting where problems might occur.

What is a project plan, and how do you develop one for a short-term project?

A project plan is a map of how an activity will be implemented, bringing together the skills, money and other resources over a period of time to make it happen in an orderly fashion. Here we want to focus on how to plan for a short-term project – an activity that will take a matter of days up to a few weeks at the most.

Governance

A short-term project will usually consume less money than a medium-term or long-term project, and so will usually need fewer decisions to be made by the Route Forum; the more money is at stake, the more carefully the Forum must check and monitor expenditure and implementation. (For some guidance on turning an idea into an activity, read the Guide entitled How To Develop A Project Idea.)

But even a small project needs to follow a process of being considered and approved by the Route Forum or its designated subcommittee. Before it can make a final decision to allow a project and/or to commit route funds to it, it needs to see a step-by-step plan of how the project will roll out and where the money will be spent.

Timeline

Keeping the project on time will be important, especially if it only runs for a short period. What the project plan needs is a schedule – a timetable that says when each aspect of the activity will take place. So start by breaking up the project into smaller parts and placing them in order on a timeline. Give each task or activity a certain timespan during which it can be completed.

Below is a simple Gantt Chart that shows which activity takes place during which week; this example also shows who is responsible for that activity, and the available budget amount.

Budget

Breaking up the tasks also helps the project manager to research the various costs that the project will incur. These costs must be closely estimated by getting quotes from suppliers and service providers in writing so that you can hold them to these costs when the project goes ahead.

Working out the budget in advance is one of the main reasons for doing the plan; it allows the route to see what the project is going to cost before it takes a decision on whether it can go ahead.

People

When setting out the activities in a timeline, you should be able to estimate how many people are needed to get the job done in the time available. Assign a responsible person for each activity. If time is short, then you may need to get more people involved to complete it. This will then also affect the budget.

The plan is now able to help you to:

• Schedule tasks.
• Allocate tasks to responsible people.
• Monitor the project’s progress.

Responsibility and communication

The plan also needs to be clear on lines of responsibility, in other words, who is responsible for making what happen. Each task is usually given to the person or people with the relevant skills, and they are expected to complete the work in the required time and to manage those other people who are helping.

The person who takes overall responsibility is the project manager, who needs to ensure that all aspects of the project are being implemented according to plan. In a small organisation, that project manager will usually also be ‘hands-on’, doing a lot of the actual work themselves.

The project manager must also plan the lines of communication between everyone involved. For instance, everyone involved must know who to give certain information to, such as when a task is completed or when there is a problem, or when more help is required. In a small, short-term project, there may not be the time or need for written progress reports. But the manager needs to be doing much listening and much communicating.

Depending on the type of project, consider meeting (even only briefly) each morning with all involved to assess the previous day’s progress, to find solutions to any problems encountered, and to confirm what is to be done that day. If the team can only meet less often, consider meeting on a Monday morning to plan the week, and on Friday afternoon to assess progress.

Who is involved in project planning?

The Route Forum will need to oversee the planning and authorisation of projects, and may also have to appoint a project manager to take control of the planning and implementation process. The Forum’s Treasurer will usually have to help develop the budget and must then also help control the spending.

The route will also want to make use of the skills and capacity of its members, so there may also be a number of members involved. If possible, the route’s strategic partners will play a role in certain projects; they may contribute funding or they may help with implementation.

How do you apply project planning to the route?

Most of the route’s activities must be planned, and to plan them as a project is good organisational discipline. It gets everyone (the Route Forum, the members and the other stakeholders) into the habit of thinking through ideas and opportunities before rushing into them. And it encourages everyone to implement these ideas carefully and efficiently through a planned process.

Try and plan ahead so that all your route’s projects for the year are incorporated into the annual route plan (read more in the Guide on How To Compile Your Annual Route Plan).

Practical tips

• Once the project idea has been accepted and the project has been given the go-ahead, have one meeting dedicated to brainstorm the best ways of implementing the project. Build the best strategies into your plan.
• Keep the project plan as simple as possible so that everyone understands and follows it.
• When thinking through all the steps (or tasks) in the project, think about what could go wrong. Ask the “what if..?” questions, such as “What if the building materials are delivered late?” Try to build a solution into the plan. Allow some extra time if you can for these sorts of contingencies.
• Put as much of the plan as possible into a visual format – diagrams and tables (such as the Gantt Chart) – and put these up where everyone can see them. Refer to them in your regular meetings.
• Adjust and adapt your plan as conditions change – don’t abandon it. Even when you run into problems, you still need deadlines to aim for.

Use of this Guide

This Guide can be used by the Route Forum to help clarify its role when wanting to get projects off the ground. It can also be used by route management, who will often be the ones to plan and implement projects. Members will also find the guide useful, because they need to be involved and they should understand the process.

Other Factsheets and Case Studies

Here are some other factsheets in the Open African Toolkit that can help you with developing and managing projects:

• Guide: How To Develop A Project Idea
• Guide: How To Develop A Project Budget
• Guide: How To Manage A Short-Term Project

 

When looking for funding, it is vital that your route is able to find grant-givers or funders who have a focus on tourism, local economic development, enterprise support or a related field that includes the kind of work that the route is wanting to raise funds for. It is also important that you approach them in the right way and are able to present a funding application or proposal that matches their mandate and is convincing in its own right.

This guide will describe the kind of funders you should be looking for and suggest where you can look for the ones that will suit your route or project.

The main message of this guide is that you need to do your research very well so that you target only those who have an interest in your field of work (or perhaps your geographic area); this will ensure that you don’t waste time and money chasing potential donors who have no interest in funding you.

It also emphasises that you need to network as much as possible – talking to your contacts about which funders they recommend and also talking directly to those organisations about exactly what they offer and whether your project stands a chance of getting funded by them.

You will also find it useful to read the guide How To Write A Funding Proposal.

Why is identifying the right funder important?

Every funding agency is guided by certain priorities – for instance, they may fund health or education or HIV/Aids, etc. They also usually have a geographic focus (a certain country, province, region or town), and may even have a gender (such as a dealing only with women’s projects) or age focus (wanting to target youth, for instance). Each will have a limit on the size (rand amount) of the grant that they give. These priorities will lead the funder to set certain strict conditions or criteria that you must meet before your project can be considered.

So your research needs to examine all of these aspects, and find funders whose criteria your route will meet. Then you can tailor your application so that it prioritises all the things that the funder wants to know about you.

What is a grant-giver or funder, and how do you find them?

Understanding what a funding agency is and how it does things will help you to succeed with your application. There are generally four kinds of funder:

• Government
• Church
• Private (mainly wealthy family foundations)
• Corporate.

Each has their own style, advantages and disadvantages for the fund-seeker such as your route. The table below summarises the pros and cons of each type.

Type of funder	Advantages	Disadvantages
Government	Often have a lot of money. May be useful on issues of policy, access, etc. If project fits government strategy, this increases the possibility of meaningful impact.	Process of application is often bureaucratic and takes a long time. Payment is often delayed and there is very little flexibility. Application requirements can be complex.
Churches	Often share the development and ethical agendas of progressive civil society organisations. Usually have quite a lot of flexibility in what and how they fund.	Usually rely on own constituency to raise money, which means that funds may be limited and/or subject to fluctuations. Sometimes get allocations from governments and are subject to changes in government policy.
Family foundations (large)	Have large sums of money to give. Staff is usually professional and understand the issues and civil society concerns. Clear guidelines on what is funded and the process for getting funding usually provided. Willing to share international experience.	Process for application can be lengthy. Requirements for applications can be complex. Priorities may change.
Family foundations (small)	Often form close relationships and have a personal commitment to an organisation. More flexible on format and process. More flexible on what they fund.	Staff is not always as professional as that of bigger foundations. May not have much money. Personal contacts very important (this can also be an advantage).
Corporate funding (big companies)	Have large sums of money to give. Often have professional, accessible staff. Usually clear on what they want from the arrangement. No hidden agenda.	Change priorities quite often. Sometimes want direct representation on the board. Often very sensitive to anything that might alienate other stakeholders.
Corporate funding (small companies)	Informal approach. Interested in local projects. Personal connections very helpful. Agenda is usually clear.	Not that much money. Interests limited. If no personal connections, no funding!

Acknowledgement: Civicus (www.civicus.org).

Finding grant-givers or funders

Government: Most routes will be able to begin their search for funding at the local level, talking to municipalities and local businesses for financial support and sponsorship. In theory, both stakeholders have good reasons to support a tourism route:

• Municipalities have a mandate to encourage local economic development (many even have an LED officer) and help create jobs through this process; and
• Most local businesses will get some positive spin-off (new customers, for instance) if more tourists visit the area.

In practice, however, there are often places where funding is not easily available at local level, for various reasons, so routes may have to look further afield.

At provincial level, there are provincial tourism authorities (also called boards or agencies) that are mandated to support tourism in their region. Other provincial government departments (not just tourism) are also possible sources of grants and funding.

National government departments and agencies offer grants of various sorts.

Church: International church or faith-based funders, for instance CAFOD, International Aid and Dignity International are also concerned with socio-economic issues, so they could be relevant to your route and projects. However, since these funders are often based overseas, you will need to start by seeing if they have a local office you can talk to. If not, you may have to liaise with them almost entirely by e-mail.

Private foundations: Foundations are funding agencies with a particular focus on social needs or problems that are not being fully solved by the market (private sector services or products such as nutritious food may be unaffordable) or by government (services such as clean water and health care may not be up to scratch). Many foundations were started by wealthy families (for instance, the Carnegie Foundation and the Ford Foundation), while others were set up by large companies (such as the Eskom Foundation).

The larger foundations are better known, but explore the smaller foundations too, since it may be easier to develop a long-term relationship with a smaller entity if they are focused on your area of work. It is sometimes easier to forge closer links with a group that is more accessible and less bureaucratic.

Corporate: The private sector (profit-making companies) is a good source of sponsorship, varying from large multinational corporations to those smaller companies that may only operate in South Africa or even just in one province or town. While approaching the big companies, make sure you also build relationships with those smaller companies in your region. If a company is profitable and committed to local development, it could still make a substantial financial contribution to your work.

Narrowing your search

Before you get to the stage of phoning or writing to a potential funder, take these steps:

• Carefully research their focus or mandate – check that your route or project will fit into this focus.
• Check the amount of their grants (for instance, the size range may be R50 000 to R250 000) suits your project.
• Check if there are any criteria (region, gender, legal format, etc.) that exclude you from applying.
• Check what the process is for applying, the closing date(s) for applications, and any special format or forms that your application must use.

First approach

If there is no clear application process (some smaller companies, for instance, rely on proposals from fund-seekers and do not have a formal process for applicants), then make some phone calls to find the right person to talk to about a proposal. Explain on the phone briefly what you are looking for and request a meeting to pursue the idea further; if they are interested, they will meet with you.

Take a written overview or proposal to that meeting so that you can present the project verbally (you can even prepare a PowerPoint presentation on your laptop to take and present) as well as give the funder a written proposal when you leave. The written document is important because:

• It shows how much thought and planning you have already put into the idea – giving the funder confidence in your ability to actually implement the plan.
• It gives the person a document to share with their colleagues or superiors – who will usually have to be involved in deciding whether or not to allow the funding.

If you can, include some senior people from your Route Forum in the meeting. In addition to the project manager or funding coordinator (who finds the funders and sets up the meetings with them), you could include the Chairperson and the Treasurer – or any of the members who add weight to your argument that this is a worthwhile, community-based initiative.

Follow up

At the end of the first meeting, ask the funder for some follow-up dates when you can phone to check on progress with the application, or meet again to discuss anything else they would like to clarify. After your initial meeting with one person in the organisation, the funder may want to bring in others from their organisation to ask other questions and take the application to the next step.

It is vital that you give yourself the opportunity to reconnect with the funder after this first meeting; they will most likely have many applications to deal with and (especially if they are not well organised), and you often need to ‘chase’ them to get a decision. Even if they are not able to fund this particular proposal, you have already taken a valuable step towards building a relationship; don’t waste this time and energy by letting the link evaporate through inaction.

This organisation that you have approached should now become one of your route’s stakeholders and should be included on your publicity list to receive your newsletters, brochures, annual reports and other public information you send out to raise your profile.

Who is involved with grant-givers and funders?

As mentioned in the Guide How to Write A Funding Proposal, it is important for the route to have some clear guidelines on how it raises funds; a fundraising policy is a good idea. The aim here is to ensure that the route does not ruin its reputation by having any member going around to potential funders, looking for money for things that the route has not decided upon – or making ‘deals’ with funders on projects that are unrealistic, undeliverable or unknown to the route’s management.

So the Route Forum must nominate people who need to oversee what projects need funding, how much funding must be sought, and who will be approached. This could include the Chairperson, the Treasurer and any others whose role is linked with either the general finances of the route or the particular project being pursued. Perhaps you already have a finance subcommittee that could do this, or maybe you would prefer to set up a fundraising subcommittee with this special task.

If there is a project manager tasked with raising funds, they need to liaise closely with this subcommittee before they rush off to approach stakeholders for support.

How should your route manage its relationships with funders?

There are two main ways that your route needs to stay close to grant-givers and funders. The first, and most important, is the relationship with those who do give you funding; these relationships need to be closely and carefully managed, so that (a) your route abides by the contractual terms in the funding agreement. and (b) the link with the funder is strengthened, making it more likely to get funding again.

The second kind of relationship is with those who you have approached but who are not currently funding you. Consider grant-givers and funders as your stakeholders. In other words, don’t only communicate with them when you are receiving their money. Rather, treat them as part of your extended family who need to be kept informed of your activities and plans. This is a vital part of building relationships that will support the work and growth of your route.

Once your route has decided who is going to take overall responsibility for fundraising, this group (or person) needs to work out who can approach funders and where a record will be kept of what takes place at every approach. Meet every month to assess the progress and to adjust the fundraising plans if necessary.

As part of Open Africa, your route can learn from the experience of other routes around southern Africa – including the most likely sources of funding for various kinds of tourism projects. So stay in touch with other routes and read how they are getting things done.

Practical tips

• Keep a file of all proposals sent out, as well as a printed copy of each funder’s response.
• Nominate one person (treasurer, office administrator or fundraising manager) to consolidate all information about possible funders.
• Prepare a brief route profile that you can send to or leave with potential funders when you first meet them – just to give them a ‘flavour’ of what you do. The more detailed proposals can then be tailor-made.
• Prepare a PowerPoint presentation (with pictures) and show it to the Route Forum so they can sign it off (authorise it), then use this as the basis for presentations at meetings with funders. Slides can be added or removed, depending on the time available to present.

Use of this Guide

The Route Forum can use this Guide as well as anyone in the group tasked with fundraising responsibilities. It’s important for the Route Forum members to know that they need to oversee and control fundraising efforts, but they also need to support this. Funders are usually needed both for the route management (office, staff, daily activities, etc.) and for special projects from time to time.

Routes should take advantage of Open Africa’s links with training organisations – to get their staff and members trained in how to prepare proposals and find funders.

Other Guides

Here are some other Guides on the topic of funding and finances:

• Guide: How To Write A Funding Proposal
• Guide: How To Develop A Project Budget
• Guide: How To Develop And Manage A Route Budget

Contacts and other support

Greater Good SA is a knowledge hub for civil society that  has information on funding your NGO.

www.greatergoodsa.co.za/funding

Your route is likely to implement projects fairly often to promote your area and members. These will usually cost money to implement, and so a budget will be necessary to ensure that the project is affordable and can be fully implemented with the available money. The project budget will need to be separate from the budget that you use to manage the route itself, so that you know how much can be spent and when.

This Guide explains how to prepare a budget for a specific project, considering what the project will involve (what tasks need to be carried out), how long it will last, and which project tasks need to be paid for from the project budget.

The central message here is that financial management is a key part of managing projects successfully. You will need to manage the funding for every project carefully, especially when the funding is from an outside donor with whom you want to build a longer-term relationship.

A number of other Guides may be useful on related topics, such as How To Manage A Short-term Project and How To Develop And Manage A Route Budget.

Why is a project budget important?

For every project that is going to take money to implement, a budget is both necessary and important, for these reasons:

• In the early stages of the project, it helps to work out whether or not the project is affordable. Rushing into an activity before working out the costs is risky, since it may drain cash that was meant for other things, or the activity may simply fail because the money ran out before it could be completed.
• Working out a budget in advance allows you to take the idea to outside funders as a proposal – to apply for a grant or sponsorship.
• A budget helps to structure the implementation of a project, forcing you to get accurate estimates from suppliers and clarifying your deadlines for procurement and delivery.
• By summarising all the costs in a budget, it is easier to see in advance whether a project is value-for-money, as you can more clearly compare the cost with the expected impact or return.

What is a project budget and how is it used?

A project budget is a week-by-week or month-by-month forecast of how much money is to be spent on which cost items. Usually, after a project is approved, a certain amount of money is made available (either from the route or a donor), and this forms the basis of the budget. All expenditure is then drawn from this amount, and the budget ensures that the spending does not exceed the available amount.

It therefore looks similar to a route’s annual budget for operations, but will be focused on what needs to be done to complete the project.

Project plan

The project plan will outline what needs to done, setting out which tasks need to be tackled first, which tasks must follow, and which tasks can be carried out at the same time. What the project budget does is to provide the costs of each of these tasks, activities or jobs – and indicate when the money will have to be paid out to get those tasks completed.

The simple project expenditure budget below illustrates how this could be done with a small building project that will last from January to June:

 Project expenditure budget

Project to build a craft sales room	Jan	Feb	Mar	Apr	May	Jun
Design and planning	R 20,000
Earthworks and foundations		R24,000
Utilities and services		R15,000
Bricklaying, door-frames and window frames			R34,000
Roofing and flooring				R43,000
Plastering and tiling					R 32,000
Internal fixtures						R 38,000
Total payments	R 20,000	R 39,000	R 34,000	R 43,000	R 32,000	R 38,000
Consolidated payments	R 20,000	R 59,000	R 93,000	R 136,000	R 168,000	R 206,000

By adding another column called ‘Actual’ to record what is actually spent each month after the project starts, you can compare the budgeted figure to the actual figure and quickly see any overexpenditure or underexpenditure.

This is useful to get an early warning of overspending, so that the reasons can be investigated and the problem can hopefully be solved before it happens again. Below is the sample simple project budget with a column for actual figures (only January to March are shown here, so that the contents of the table are easier to see).

Table comparing Budgeted and Actual spending

	Jan		Feb		Mar
	Budget	Actual	Budget	Actual	Budget	Actual
Design and planning	R 20,000	R21,000
Earthworks and foundations			R24,000	R22,000
Utilities and services			R15,000	R16,000
Bricklaying, door-frames and window frames					R34,000	R34,000
Roofing and flooring
Plastering and tiling
Internal fixtures
Total payments	R 20,000	R 21,000	R 39,000	R 38,000	R 34,000	R34,000
Variance	R 1,000		R 1,000		R 0

Budgeting for income

Some projects may not be lucky enough to start off with a lump sum in the bank ready to be spent – the money may have to come in installments, with just part of the total required being available at the start and rest arriving later. In this case, the project budget must include an Income column, which will show how much money is available each month. The project schedule will then have to be planned according to what can be afforded each month.

Who is involved with the project budget?

With most projects, there must be a person who will take overall responsibility for planning what must be done, coordinating the input of everyone involved, and implementing the plan. This person – usually the project manager – will also be responsible for the project budget, although the route’s financial manager will also need to be involved to help develop the budget and to sign off the final budget (on behalf of the Route Forum).

The project manager could also put together a budget team made up of the key people implementing the project (who may include contractors or other outside experts). Every week, the budget team can meet to confirm that they are sticking to their specific budgets, or to raise any concerns about the financial side of their particular aspect of the project.

How is a project budget used by the route?

Any project that a route wants to tackle will have to be discussed, investigated and passed by the Route Forum before it can go ahead. The Route Forum will also have to see the project budget, to check that it is coherent, reasonable and affordable.

The Project Manager will need to present both the project and its budget to the Route Forum and to make any changes that are considered necessary. Again, the financial manager will usually be involved in helping research and write up the budget.

Practical tips

• Do the project plan first. This will give you a better idea of what needs to be done at every stage of the project, and the order in which the various tasks must be tackled. Then it is easier to see how much needs to be spent, and when it will be spent.
• Be clear on what the main costs will be. Research the rates that people will charge for their inputs, for instance, and speak to suppliers and consultants so that your estimates can be accurate.
• Be prepared to change the figures you have put into the budget. If the total cost is too high, you will need to trim costs somewhere and find other ways to get it done for less.
• It is likely that certain costs will occur that you did not expect, so allow for a reasonable contingency in the budget (an extra amount that you may or may not need).

Use of this Guide

This Guide can be used by the manager of a project and the financial manager of the Route Forum, to help ensure that the implementation of the project can be done with the resources that are available. Route members can also use this information in their own businesses, as most of them will have projects of their own to do from time to time.

Other Guides

Here are some other titles related to finance and budgeting:

• Guide: How To Develop A Project Plan For A Short-term Project
• Guide: How To Manage a Short-term Project
• Guide: How To Develop And Manage A Route Budget
• Guide: How To Open A Route Bank Account

A budget is an estimate of what you expect your route to earn and spend in the year to come. Budgeting allows you to check how your route is performing financially from week to week, or month to month. Without a budget, you would not know how much was available to spend on which activities.

This Guide explains how to prepare a budget for your route, taking into account your planned expenditure and planned income. It will also explain how to use the budget to support your priorities and control your spending.

Also look at the Guides on how to manage route finances, how to manage a project budget, and how to report on route finances.

Why is a budget important?

A budget can be seen as the financial expression of the route’s priorities and plans. Budgeting does not exist in isolation but is linked directly to what the route wants to do in the coming year and how it will achieve its aims. The budget is therefore an enabling tool, setting out how much the route will spend, when it will spend it, and what it will spend it on.

By planning a budget alongside the planned activities for the year, the Route Forum can check whether it has the resources to do what it wants to do. After all, there is little point in making plans if there are not the financial resources to carry them out.

The budget also provides a regular yardstick or benchmark against which the actual expenditure for each month can be compared. If the actual expenditure is much higher (or even lower) than the budgeted expenditure, then questions must be asked about why this is the case. It is therefore also an important governance tool for the route and its members.

What is a budget and how is it used?

A budget is a forecast or prediction of the route’s income and expenditure for the year – and it is usually split up into months. The example below shows a simple budget for three months, with a profit/loss calculated from the income minus the expenditure. A budget can also include a line for running balance to indicate how much money there should be in your bank balance; this is only a rough estimate, though, because it assumes that cash will come into the account in the month that a sale is made. This is often not the case, as customers (and even donors) do not always pay immediately or on time.

Simple budget for three months (a budget is usually done for a year, but this is three months to make it easier to see):

Budgeting for income

Depending on how your route raises its money, you can fill in the line items that are relevant to you. In the example provided, the route gets its income from three sources: membership fees, route levies, and sponsorship from large corporations. It is not always easy to know exactly how much income will be raised in each month, since it is sometimes difficult to get sponsorship confirmed so far in advance. However, the budget is meant to be an estimate and a tool, so the figures will be what the route is aiming for.

What is important is to use the budget as a goal, and then assess every month how close you have come to achieving that goal. It is not a disaster if an income target is not reached, but it does show you that something must be done about the income in order to meet the expenditure the budget has forecast. Either the income needs to be found somewhere else, or the expenditure must be reduced – if only temporarily.

In other words, the budget must be used for planning and for corrective action. It will show you where you might be going off course, so it must be looked at regularly (at least every month) by the Route Forum, which must come up with solutions if there are problems in getting enough income or in keeping expenditure under control.

Budgeting for expenditure

Working out how much the route needs to spend each month is usually an easier task than estimating the income. This is because the route should be able to plan what resources it needs (office, staff, phone, travel, stationery, etc.) to do what it has planned to do for the year.

Expenditure items usually include items such as office space rental (plus electricity, water and rates), the landline telephone (and broadband) account, a certain allowance for cellular phone calls by staff and committee members, stationery, printing and travel costs. Each route will have its own requirements, and most will try to keep these costs as low as possible (by donating office space, for example) until the route’s income is well established.

There will be unexpected expenses from time to time, but these just need to be discussed by the Route Forum and agreed before the money is spent. The budget helps here by putting a limit on what the route wants to spend each month and requiring a definite decision before anything extra is spent. This way, it is not left up to the administrator, for instance, to decide he or she can go over budget with the spending.

Applying the budget

As noted, the budget must be put to use by the Route Forum before it can be useful (don’t leave it in a file on the shelf until next year!). This means looking at the budget at each monthly meeting, and comparing the route’s actual income and expenditure with the budgeted income and expenditure.

By simply adding another column to the budget example provided, you can see that this process becomes fairly easy. Putting a Budget column and an Actual column next to each other makes it easier to compare the two numbers. The Route Forum’s financial manager or administrator can fill in the Actual figures after every month by using the income and expenditure figures on the bank statement for that month. Putting the Actual figures in a different colour can also be useful.

In the example below, the actual income and payments have been recorded for January, so this may be what the Route Forum would see when it gathers for its February meeting. The method used here is to use different colours to highlight how the Actual figure compares to the Budget figure:

• If the Actual income was lower than the Budgeted income, it represents a possible problem, so mark it in red (signifying danger!); if actual income is on budget (or better than budget), mark it in green.
• If Actual expenditure is higher than Budgeted expenditure, then mark it in red; if Actual spending is on budget (or below budget), mark it in green.

Table comparing Actual with Budgeted income and expenditure each month

	Jan		Feb		Mar
	Budget	Actual	Budget	Actual	Budget	Actual
Income (receipts or money received)
Contributions by members	R 5,000	R 4,766	R 5,000		R 5,000
Sale of sundry products	R 2,000	R 2,560	R 8,000		R 12,000
Sponsorship	R 10,000	R 10,000	R 3,000		R 0
Total receipts	R17,000	R17,326	R16,000		R17,000
Payments (expenditure or money paid out)
Rent	R 3,000	R 3,000	R 3,000		R 3,000
Wages	R 7,000	R 7,000	R 7,000		R 7,000
Stationery and printing	R 4,000	R 3,457	R 4,000		R 4,000
Telephone and broadband	R 900	R 986	R 900		R 900
Transport	R 1,500	R 1,397	R 1,500		R 1,500
Total payments	R 16,400	R15,840	R16,400		R16,400
Profit/Loss	R 600	R 1,486	-R 400		R 600
Running balance	R 600	R 1,486	R 200		R 800

Another useful column can also be added to each month: Variance. This is the difference between the Budgeted and Actual figures, expressed in rand. It is useful because it can then be clearly seen how much of a gap exists between what your route expected and what it achieved. The Variances can then be totalled up, giving the Route Forum a clear indication of financial challenges or successes.

Who is involved with budgeting?

The Route Forum’s Treasurer will usually be the one tasked with preparing the budget. They may work on this with the administrator (especially if the administrator must manage the financial paperwork) and even the Chairperson (who often is the person with an overview of everything going on). If the route has office staff, then they may also give inputs – perhaps they are having challenges because certain resources are not being fully provided for by the existing budget.

How is a budget applied to the route?

Once a draft budget is compiled, then the Route Forum needs to see it and discuss it more fully. Only once this is done can it be presented at the AGM for members to consider and approve. Once the budget has been approved in the AGM, it can then be officially implemented by the route as the framework for what can be spent.

A budget is not just a vital internal tool for planning and governance in the route, it is also a key ingredient in your funding applications. Funders and sponsors want to be assured that your route is clear about what it will spend its money on, and that you are not just guessing the amount you have requested. Remember that all funders need to account for how well their donations are spent, so the amount that you request must match the actual impact that your activity has on the route, the community and the local economy.

When you apply for funding or sponsorship, therefore, you must include a clear budget of how the money will be spent. Your case will be strengthened if you are able to show budget (and actual) figures from previous years, which show that you are competent at estimating and controlling your expenditure.

Practical tips

• Know why you are budgeting – keep in mind the importance of controlling spending and staying ‘in the black’ (spending less than the route can earn).
• Have accurate data of your route’s spending – keep good records of all invoices and receipts.
• Have a simple budgeting tool that you understand how to use – start with pencil and paper if you must. There are computer programmes that can help, but don’t use them if you find them too complicated. Rather understand what you are doing.
• Be realistic. Budgeting is like planning a diet – it’s not going to work if you expect too much too soon. Take small steps – especially when starting up.
• Update the actual amounts in the budget every month, and circulate them at the Route Forum meetings, so that the forum has an overview of financial matters. This is vital, since the solution to any problems in spending or income will have to start with this group.

Use of this Guide

This Guide can be used by the Route Forum’s Treasurer and administrator, as well as other members, to allow them to become familiar with the basics of budgeting.

Route members can also use this information in their own businesses, because all enterprises have to budget in one way or another.

Other Guides

Here are some other Guides related to finance and budgeting:

• Guide: How To Develop A Project Budget
• Guide: How To Open A Route Bank Account

Contacts and other support

Winston Churchill is quoted as saying that “those of us who plan are bound to do better than those who do not plan, even though those who plan rarely stick to the plan”. This is why we should plan – there is something inherent to the process of planning that helps us achieve better results!

This Guide provides you with insights of what should be covered in your route plan for the year and how you should ideally go about in doing the planning.

Why is your annual route plan important?

When we are busy making things happen, we rarely have the time to stand back and assess if we are indeed on the right path to reach the destination we are aiming for. This is why the route should put enough time aside every year to develop a well-considered year plan.

The process of producing an annual plan provides the route members with the opportunity to prioritise what should be done in the year ahead. It also offers the opportunity to ask if the route has the capacity to take on all of these plans. This may lead to difficult but essential decisions on what can be achieved with the resources available to the route.

The annual planning document provides a point of reference that is very useful for the following:

• It assigns responsibilities to individuals that they will be kept accountable for.
• It sets deadlines for achieving important milestones at different points in the year.
• It provides individuals with the authority to act on behalf of the route.
• It formalises a budget for the route to describe the anticipated income and allocated expenditure items.

The diagram below explains the cycle visually:

What is planning?

Planning is not an aspect that should be looked at  as a once-off. It is an on going activity. Planning forms part of a three-step organisational cycle, consisting of (a) Planning, (b) Doing and (c) Reviewing. Good/Successful business happens in cycles… Planning is followed by Doing, which is followed by Reviewing, which is followed by the next cycle’s Planning.

In this way, we see how planning fits into our activities. And as you journey through the three-step cycle, the one cycle following on the next, you get better and better at what you do and your results improve too!

In some instances, this cycle lasts for a day, or perhaps even a few hours, before you enter the next cycle of planning, doing and reviewing – but for organisations like your route, the cycle is likely to be much longer. You could, for instance, meet monthly as an executive committee to asses progress. As a executive committee, you could also do a plan for the next month, which would then be followed by an ongoing monthly assessment. In the case of your annual plan, it could take a full year before you review and refine your plan for the next year.

‘Do’ is a powerful ingredient of success. However, it is also in the doing that we can get stuck.

Your annual plan is a documented record of the planning for the coming year ahead. It is the outcome of your route planning and has huge value for guiding your route members when they are busy doing the implementation of your route projects. The planning document also helps you when reviewing, since it provides a benchmark to assess progress against. In this way, the plan is an indispensable tool, helping you along in achieving results and realising your route’s goals.

As active citizens and entrepreneurs, we are often supportive of ambitious ideas. This is also true for what we want to achieve with our routes where we can agree about the bigger intention of the route by developing a route purpose statement (See Guide: How to unite your route behind a shared purpose).

It may not always be clear how all the doing of your route members add to achieving the route’s purpose. But when you follow the Plan-Do-Review cycle, you can ensure that during your review, you always ask how effective you are in contributing towards your purpose, and in this way, you can create better results, which you will know are congruent to your route’s bigger intentions.

While your purpose serves as a guiding light to give you direction, your immediate focus during your planning should be on the activities of the next business cycle, which in the case of an annual plan is the year ahead. Your purpose remains fairly constant over the years, but the cycles of planning, doing and reviewing are likely to shift. It is therefore very important to spend enough time on your annual plan so that you take these shifts into account.

The five questions for your plan

Your annual plan is essentially a business plan with a focus on the year ahead.

When you do your annual plan, think of it in a similar way you would think of a cake recipe. To bake a cake, you follow a recipe that includes a combination of flour, baking soda, butter, milk and sugar. Without these five ingredients, it would not be a recipe for cake. But one cake recipe is different from another in how these ingredients are combined and the flavour that is added. Like with a cake recipe, we can also identify the essential ingredients to include in your annual plan to ensure that you are in fact describing a complete business plan for a thriving route.

So, what are the ingredients of a business plan?

Interestingly, the essentials of a business plan are exactly the same as the five fundamental questions a journalist must answer when writing a good news article. To provide a full account of an event, a reporter must provide the reader with answers to all five these questions. These questions are:

• What?
• Who?
• When?
• How?
• Why?

These are also the five fundamental questions a good plan answers so that it explains your Why (your intention, purpose or destination) and it shows Who will do What by When and How (your actions and the best way to get there). Like with a news story, all five of these questions need attention in the planning process to create a well-considered and balanced plan. Exactly how you deal with these questions in your plan may vary, but you must cover all five questions for each project or activity.

While we need to be thorough in covering all five questions, it is really the Why question that stands out as the foundation on which we can build our route (See Guide: How to unite your route behind a shared purpose or vision). The Why is often overlooked when we focus on the ‘busyness’ of life.  In your planning it is best to start with your Why – the organisational purpose. Your purpose will shape the answers to the other questions and provide cohesion to your plan.

Why?

The Why question is about reflection and understanding the bigger intention or purpose of your route. In your plan, you need to be clear about the reasons for your route to exist and what you have set as the bigger objectives – perhaps even bigger than what you will be able to achieve in the next year.

But even if you are sure you will not achieve these objectives during the period you are planning for, it is important to put your organisational purpose into words so that it offers you a guiding light to show the way for the next question to ask, namely, What?

What?

Clarity on the reasons for your route to exist will help you greatly in identifying what it is that the route should be planning for in the next year. Each and every activity should support your Why in very concrete ways. Many routes (specially those whose leaders are creative people) come up with many possible activities and projects. In fact, they have too many things to do and if they do not eliminate some of the ideas, will get stuck in trying to do too many things at once.

When you have too many possible activities and projects, you can easily identify those to prioritise and those you need to park or scratch from your plans:

– First, ask yourself which of these projects or activities will contribute the most to the Why you identified for your route. Those that will make the biggest difference in reaching your route’s potential are the activities and projects to put at the top of your priority list and that should receive the most attention in your annual plan.
– Second, ask yourself how these projects or activities are to be implemented and made to work. Identify those where you battle to see a clear picture of how it will happen and immediately scratch them out or park them for future attention.

The challenge in your annual planning is to identify those projects and activities to prioritise based on the outcome of the two questions above. So, when you ask: “What should we plan for?” you should be able to identify about six projects to prioritise. For most routes, this will be more than sufficient to take the route forward during the coming year.

Who?

The Who question is about connection and activity. It is about answering the questions: “Who will make this happen” and “With whom should we connect to make this happen?”

You will notice that, sometimes, asking these questions do not lead to an answer. You may just be planning for something for which there are no people to make it happen, which in itself will be an indication that what you were planning for should perhaps not have made it to your list of projects or activities for the year.

It is useful to think about the Who question on two fronts:

– First, who will be the internal people involved – the members or staff – and who will be suitable to serve as the project coordinator?
– Second, who are the external parties the route will have to connect with and get buy-in from to make this happen, and are they around and willing to participate?

Answers to these questions will guide you in you plans for creating of relationships and involvement of members, which will allow you to move onto the next question.

When?

The When question should perhaps be called the When/Where question, since it relates to timing as much as it relates to positioning. In fact, the underlying idea relates to the value that will be created by getting your timing and positioning right. If you have identified a good What and have connect the right Who, you can take big strides forward when you get things going at the right time and the right place.

Sometimes patience is needed, since everything is not yet aligned, and other times you should not be missing a beat otherwise the opportunity may pass. This is not always easy to get right in your planning, since the conditions for success may change rapidly or what was anticipated does not happen.

When things do come together at the right time and place, you will have to deliver on What was planned, for Who, to happen by When. This then becomes the time to answer the How question.

How?

The How question relates to the detailed logistics and technical requirements of delivering what was planned. All the value created in the culmination of the previous questions may come to nothing if the How question is not answered properly. This is about specifying the resources and budget needed, putting in place the systems and controls needed, and getting down to the harvesting the fruits of answering the previous questions well.

The How question is sometimes not easy to answer, especially if it is the first time for your route to plan for an activity. This is why it is important to learn from your mistakes… to get better the next time. The How question will therefore lead you into asking the Why question again, while reflecting on how well you have done. In this way the five questions interlocks with the Plan-Do-Review cycle.

Who is involved in your annual planning?

The route leadership will most definitely have the most active role in the planning process and developing the detail of the annual plan, but this does not imply that other members should be passive in the planning process.

Much time may be saved later in the year by involving as many members as possible in the planning process. For this purpose, it would not be a bad idea to organise a half-day (or full-day?) workshop to give route members the opportunity to determine the priorities for the route. If this is not possible, other ways of getting input from members, such as an assessment and suggestions questionnaire should be considered.

After the input from members is received, the executive committee needs to systemise the proposals and compile a realistic plan for the year ahead. The activities should also be translated into a budget, with both income and expenditure explained in detail. A cash flow forecast is also considered an essential element of the annual plan with the Treasurer taking special interest in these aspects (see Guide: How to develop and manage a route budget).

The final version of the proposed annual plan should be approved by the executive committee before it is provided to members for their approval. It is best to submit this plan to members at the AGM, but other General Meetings may also be suitable.

When the members adopt an annual plan and the accompanying budget, these documents become the guiding framework for the executive committee to comply with during the year ahead.

The annual plan does not always give each responsible person clear instructions on the detailed tasks at hand, since the emphasis is likely to be on the outcomes you are aiming for. An action plan is a much better tool to use when it comes to making sure that the tasks assigned to people are completed (see Guide: How to compile an action plan).

How to do annual planning for your route

The annual route plan is something that will be done every year.

Your founding document probably states when your financial year starts, which is practically also the best time for your annual plan to commence. For many organisations, this will be 1 March, since this date coincides with the standard tax year. But it may also be another date.

You should start the planning process at least one or two months before year-end so that you have ample time to complete the review, make detailed plans, and compile the annual budget.

Below is a suggested planning process, which you may adjust to your specific circumstances:

1. Make the previous year’s annual plan available to members, then engage them in an assessment of the performance of the route over the past year. This may be in the form of a survey or questionnaire, or you may want to organise a workshop for route members to offer their views and assessment of how the route is performing.

2. The review of the past year will lead members (either at the workshop or through the questionnaire) to suggest priorities for the coming year. It is important to remind route members of the the purpose statement as part of soliciting suggestions. The route purpose offers the bigger context for the priorities for the coming year.

3. The executive committee and project co-ordinators should assess the proposals and consolidate these into an integrated planning document, with priorities based on a reality check on what the route is capable of doing. Some suggestions will have to be shelved, because the route may not have the resources to complete all the suggested plans.

4. Next is compiling an annual budget based on the income expected from membership fees and other income-generating activities, as well as the expenditure associated with managing the route and each of the proposed projects. It may be required to reduce or even remove some projects to allow the budget to balance. It is also good practice to include a cash flow projection to the plan so that it is shown that the route will have sufficient funds throughout the coming year.

5. When the annual planning document is completed, the executive committee needs to adopt it at a properly constituted meeting. After it is adopted, the executive committee should present the annual plan and budget to the members for their approval at a General Meeting (which could be the AGM or another General Meeting).

Use of this Guide

This guide is ideal for offering members and executive members an introduction to planning and may be very useful in preparing members for participation in the annual planning process. It should be used along with the other Guides mentioned below.

Other Guides

• Guide: How To Develop A Project Budget
• Guide: How To Compile Your Annual Route Plan
• Guide: How To Unite Your Route Behind A Shared Purpose or Vision
• Guide: How To Organise A Workshop For Your Annual Plan
• Guide: How To Compile A One-page Plan