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

Setting up, managing and promoting a route all takes money, so each route needs to find ways to pay for this important marketing function. These methods can include:

• Raising funds from the route members (after all, it is the members who should be benefiting directly from route activities).
• Applying for grants from government and private sector funding agencies.
• Getting sponsorship from companies who have a brand, product or service that they would like to publicise along your route.

The important thing about an income stream is that it should be regular and reliable. Sadly, grants are not generally regular or reliable, since they depend on what the funder thinks of your project and whether they have the budget to support it.

Sponsorships can be more reliable, as they represent real value that a sponsor hopes to gain by exposing their brand to the community associated with your project or route.

But what the route should be looking for is using its own resources, expertise, products, services, people, community, ideas, connections and uniqueness to generate cash – from members, the broader community, visitors, government and other stakeholders.

This Guide will describe some of the ways that Open Africa routes have raised money for their operations and projects. It will also suggest other income streams that can be considered by Route Forums, and how these can be implemented.

The main message of this Guide is sustainability: every route needs to aim at self-sufficiency, since this is the only guarantee that the work that the members’ hopes and plans can be realised. It is great to get assistance from outside funders, especially at startup stage – before a route’s activity has started to bear fruit through extra income for members. But if the route is really serious about the plans it wants to implement, it cannot always be waiting for outside help to make these things happen.

Why is it important to identify income streams?

The main reasons for trying to find different income streams is to put the route on a solid financial footing, so that it can plan ahead and know that the money will be there to meet the basic costs of running the route. It is disheartening to make plans and raise members’ expectations about what the route will do, only to have everything come to a halt when your funding proposal is turned down.

Rather keep your plans more modest so that they can be internally funded by members; then grow this income as the route’s work starts to bear fruit.

What is an income stream, and how do we generate them?

An income stream is simply the flow of money that a business can generate; your route is essentially a business – although it does not aim to make a profit, it does have costs so it needs an income to meet them. As noted, grants are not a very reliable or sustainable income – so this Guide will look at income streams that can make the route more independent and self-reliant. This will allow it to do things that the members want to do, rather than what funders think you should do.

Open Africa routes have already put the following ideas into action, and they can work well under the right conditions:

Membership fees

A number of routes charge its members (the businesses or participants on the route) a membership fee, in return for some valuable benefits. Every route needs to be clear about what benefits it will offer, and then deliver these! Don’t overpromise, but make sure that there is value to be found in the fee, or you will struggle to keep and grow your membership base.

Start off by minimising the costs of running the route, so that the fee can be kept small. Raise the fee only when you can show that the benefits are real and that the route can deliver more value if it is better resourced.

Route levies

Some routes charge their members a route levy – a percentage of each sale that they make. For instance, accommodation providers would pay a levy per room; the levy may even appear on the customer’s account, and may be added to the accommodation, food and drink items. (The provider would have to show the total fee per night when advertising so that it is not an ‘extra item’ that the customer is not aware of.)

Activity operators would pay a levy per activity, and a similar arrangement could be made for crafters, restaurants and other members.

Competitions

A number of routes have been successful at raising funds through competitions. The se competitions raise money from people paying to enter and can be run in local media or further afield to draw new visitors to the route. Route members are then asked to sponsor accommodation and activities as prizes.

Marketing projects

Many of the route’s management activities will be marketing projects that aim to raise the profile of the route and its members. While these can be funded by member contributions, they can also become income streams – if you think creatively.

• Can you charge customers for the material? The Drakensberg Experience route, for instance, wanted to produce and distribute 10 000 brochures with an area map and information on its members for circulation at selected points on the N3 highway. They charged R10 per brochure, ensuring that they covered their cost and had a surplus towards the next print campaign.

• Can sponsors be brought into your marketing material? If there are larger stakeholders in your area that are also looking for publicity, they could sponsor the production costs in return for branding on the brochure. For instance, your local/district municipality, the franchisor of petrol stations on your route (Shell, Engen, Caltex, etc.), or the owners of mines in your area could be approached.

• By charging a sponsorship fee that covers more than just the costs of the design and printing, the route can earn a surplus that can be ploughed back into its operations.  

Other possible income stream ideas

• The route’s members are each involved in specialised areas of activity. The route – through its links with stakeholders such as government and big business – may be able to facilitate contracts to larger customers on behalf of its members (for instance, a provincial government department may require craft items for a special event). If the member is unable to negotiate the contract itself, and the route management makes it possible, then the route should be able to earn a commission or some portion of the income for arranging this.

• Arrange special events for the towns in your route (harvest festivals, fruit-picking, children’s activities, historical tours, etc.), and look for ways that visitors could pay an entry fee or members could earn extra income that can be levied by the route.

• Trade shows add value to your members by exposing them to possible customers in new markets. The route can arrange these on a regular basis, and can add a small management fee to be paid by each attending member. These will add up, especially if you can grow the number of members in your delegation and make it a regular event.

Who is involved with identifying income streams?

The Route Forum’s Treasurer is usually responsible for managing the route’s finances, but this is mainly a control function, and the person doing this might not be the sort of person who is good at fundraising or developing income streams. The Route Forum may therefore want a separate portfolio for fundraising, which would require someone skilled in sales and marketing. That person could also drive the search for income streams that generate regular cash flow for the route.

This person would need to work closely with the Route Forum’s Treasurer and Chairperson and may require a subcommittee to help with the workload. When trying out various projects that could earn an income, the fundraising portfolio could even appoint a project manager (perhaps a route member) for each project. This would help spread the workload and ensure regular involvement by members.

How should your route manage its income streams?

The Route Forum needs to keep a close eye on how it earns income. Whether it is the Treasurer, the fundraiser or a project manager that is running an income-generating project, they need to present clear plans to the Route Forum and have those plans approved before embarking on the work. The Route Forum should also present a financial summary at each AGM (or general meeting). 

A timetable should be in place to show what will be done when, and by whom; importantly, the plan must show how much a project expects to earn, and when that income should reach the route’s bank account. The route administration needs to help manage the invoicing and control of cash flow as this will help the Route Forum to check that money is being properly handled (especially if there is cash involved in the transactions). Similarly, this should be presented and approved at the AGM (or general meeting). 

Practical tips

• Encourage members to come up with ideas that could lead to income for the route.
• Keep members involved in this process, so that they can offer their services or products from time to time.
• Task the treasurer to keep track of costs and benefits of each income stream. Those running the project might not be fully aware of what the full costs are to the route; it is vital to know that income is more than expenditure.
• Make full use of the visual beauty of your area – while you may take it for granted, the images you see around you every day may be regarded as spectacular, unusual or special by potential customers elsewhere. Consider calendars, posters and cards as products your route can sell at retail outlets throughout your region (as long as the route is not competing with a member!).

Use of this Guide

The Route Forum can use this Guide as a thought-starter, as it explores ways of making money to cover its running costs and activities. In particular, the Route Forum’s fundraising portfolio can use it to help brainstorm possible income stream ideas; this can be done by bringing enthusiastic and creative members of the route together on a regular basis – to share ideas and begin the process of trying out various options.

Routes should also talk to their stakeholders to see what services and products they regularly require, and assess whether the route and its members are able to supply any of those as an income-generating activity.

Other Guides

Here are some other Guides that will help you on the topic of income 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
• Guide: How To Develop A Marketing Plan
• Guide: How To Attend Travel Shows

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 key role of the route is to constantly explore new ideas and projects that will attract visitors to your route, improve the experience that these visitors have, and raise the levels of income that your members can earn from this visitor flow.

This Guide will help you take a project idea and develop a Project Plan that you can present to the Route Forum for possible implementation, and propose to potential funders. It will also guide you to transform the project idea into the implementation stage, where you can implement and manage the proposed project.

One of the benefits of belonging to the Open Africa networks is that you are able to learn from the experience of other routes. Some of these routes have been operating for more than 10 years and have much experience in marketing their routes and others who have come up with innovative ways to develop new projects.

To keep up with the times and exploit new opportunities, your route needs to develop new project ideas all the time. Not all of these will be implemented – some of them might not be practical, and there will always be a limit on the resources and money you have to put ideas into action. But the Route Forum’s energy must be channelled into a systematic way of taking an idea and assessing its possible impact and viability.

This way, the Route Forum can become a funnel of good ideas – taking suggestions and concepts and then putting them through a process of testing which are the most practical, valuable and beneficial to the route.

Developing a project idea is the first stage in getting a new project started. After the idea is developed and accepted by the relevant stakeholders, there are Guides on how to develop and manage a project plan (see the list of other Guides below).

Why is developing project ideas important?

Times are always changing, and new opportunities arise with new trends and events in your area and beyond. Your route can use these to the benefit of members if everyone is thinking creatively about how to make the best of these opportunities.

An idea on its own, of course, is not enough. It must be developed to see if it could be practical, useful and affordable. And if it is, then it can be turned into a project or activity that the route can implement. A really good idea can turn into a regular project that runs continuously or is repeated at a certain time each year.

What is a project idea and how do you develop it?

The project idea will be a concept for an activity that can help the route to achieve its goals. It might be a once-off project that takes advantage of an unusual opportunity or it could be an activity that is repeated each month or each year. The FIFA Soccer World Cup was an example of a once-off event that the tourism industry was able to exploit in a number of ways, many of those businesses that benefited the most, however, were those who were able to extend the benefit by attracting World Cup visitors back again – or using the publicity of the event to gain future, sustainable business.

The trick is to be able to test an idea cheaply and quickly, and turning the good ones into practical projects that serve the aims of the route. Implementing too many ideas that fail is an expensive and unsustainable exercise.

Assess the project idea

The route needs a way of assessing a project idea before it commits the time and money that is required. Put aside some time during regular monthly meetings or arrange a separate time to focus only on one or more ideas. Bring in experts on particular things if the ideas need some specialist advice.

Examine the current reality or situation

To conduct a situational analysis is a process that routes must go through when starting up and prioritising their focus and a unique selling proposition. Such an analysis can also be used to zoom in on smaller aspects of the route area, to examine opportunities for specific projects within specific areas along the route.

This is important to ensure that every project idea has a context. It must address a certain need or opportunity that is well understood so that the intervention you plan has the impact you expect.

What will the project’s impact be?

Be clear and realistic about what the possible benefits will be to the route and its members. During the assessment, you need to estimate these impacts and measure them during implementation. This will give you more confidence about tackling the project.

So set some goals for the project. You can do this in the same way that you set the original goals for the route. Use the SMART principles: S = specific, M = measurable, A = attainable, R = realistic, and T = timely.

Is it practical and affordable?

Put some thought into how this project might be implemented. Are there any unsolvable challenges that will risk its success? In other words, how practical is it?

Also, put some figures to the different steps involved. Estimate what it will cost for the planning, the materials (or components) and the implementation. Put these into a simple budget and see if the route has the money to cover the costs; if you don’t have enough, see if there are other stakeholders who might be interested in contributing money to it.

Then identify potential (or estimated) revenue gains from the project. Explore how the idea will give something back to your members and, if applicable, the other stakeholders – who will usually be looking for something in return for their contribution.

Look carefully at the timeframe. How long do you have to plan this project and implement it? Be realistic about the sort of delays that usually occur when implementing a project – especially for the first time. Avoid pursing a project if you can see that the time is too short. Trying to rush something new is usually a recipe for disaster.

Who can put it into action?

See if the route has people employed who have the skills and experience to implement such a project. Or perhaps the Route Forum has people with the expertise that you need. You can also look to the membership of the route to find the skills and abilities required. If it’s a specialist task, you might need to get an outside expert – and the cost may be higher than you had hoped. Ensure that you factor any additional expenses into the budget.

What other resources do you need?

There may be a range of tools, supplies, partnerships, funding, meeting space, etc. that the project will need. Make a detailed checklist and see how many of these your route has access to. If you don’t have them and need to procure them from outside, add them to the project budget.

Building capacity

If a project idea looks really good but needs skills you don’t have, consider training people for the task. There is often donor funding for training – especially if it can build capacity within your route so that this project can be carried out internally and on an ongoing basis. This can help to bring more people into the route’s activities while laying the ground for them to do this work into the future and ensuring the project’s sustainability.

Evaluating outcomes

Every project need sto have some way of judging whether it was worthwhile. One way of doing this may be to measure if it brought in more income than it cost to implement– in other words, did it make a profit and is it therefore a sustainable project to continue with?

But not all projects need to show a financial return (or profit). Many activities – especially marketing – will only show their value over a long time. Plan some way of measuring these benefits, the best way in the short-term may be to ask people’s opinions – speak to those who were meant to benefit, or other stakeholders who were involved. There may even be other benefits that you did not intend, but which are important nonetheless. It is a good idea to develop several indicators that can one can measure against during the implementation phase and post-implementation.

Who is involved with project ideas?

The Route Forum needs to champion the importance of new project ideas, as it cannot be expected to come up with all the ideas by itself. Members must also be encouraged to come up with ideas – and not just the idea, but also a more in-depth proposal exploring the issues discussed above. It is unfair just to throw ideas at the Route Forum and expect it to do all the hard work of researching whether they are practical or not.

But the Route Forum can create a channel for these ideas, and can even offer workshops on how to investigate ideas and turn them into proposals. The Route Forum may even create a subcommittee, onto which they can co-opt anyone with expertise and interest, that will evaluate ideas and develop the best ones into proposals for the forum to consider.

Practical tips

• Make the brainstorming a fun exercise so that members don’t feel intimidated by your request for ideas and proposals. Working as a group has two aspects: completing tasks and building relationships. The relationship dimension is an essential part of the success of your route, so take time to get to know one another better and enjoy each other’s company.
• Keep each other inspired. Create a visual of your project design, goals and vision. Look for inspirational stories of similar projects that were successful and share them among members in the route.
• Keep up the momentum when developing an idea. Establish realistic timeframes and monitor the progress of tasks.
• Break up large goals into manageable parts and assign tasks to people based on their confidence and ability in completing them.
• Check in with group members to see where they may need support, and share their progress at every meeting.
• Determine your budget and identify all the main costs in the early planning stages.
• Based on consensus of the group, is it a reasonable investment for what you hope to achieve? Do the benefits outweigh the costs?
• Avoid developing ideas that don’t relate to your goals and objectives.

Use of this Guide

This Guide can be used by the Route Forum, but it can also be circulated to members with the request that new ideas are not only welcome but are required for the route’s success. This Guide can be a gentle way of reminding members that the route’s success depends on them, not just on the office bearers.

The need for new ideas from members can be raised at every AGM, so that members understand the need and also the process of getting an idea into the system so that the route can explore and consider it.

Other Guides

There are other Guides to help you with new project ideas for your route. These include:

• Guide: How To Develop A Project Plan For A Short-term Project
• Guide: How To Manage A Short-Term Project
• Guide: How To Develop A Project Budget

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