Example UK Charity Fundraising Budget Template

An example UK charity budget template to create your fundraising budget, for charities and non profits, or download a budget template in Excel from the Finance & Resources questionnaire.  Worked examples, templates and 4 simple techniques to create your charity funding budget.

How Not To Create A Charity Fundraising Budget

Never ever, increase charity fundraising budget forecasts to meet targets, and it happens a lot.  That’s not being bold, or ambitious, it’s planning to fail.

The Charity Sector Data Store Ability To Deliver metric tests this and is at amber; that is the majority of charities assess they are not doing this well.  The lowest performing area is income generation.  You can health check yours in 30 mins to find opportunities to secure more funding, a huge range of resources to help you, and access the 100+ funder lists and Funding Finder database by Registering Now; everything is free.

A fundraising budget forecast is just numbers in a spreadsheet, not real money, and you can’t pay wages with a  spreadsheet.  If they don’t add up, you need to make real world changes.  Things you can do - submit more good quality bids to increase confidence, transfer funding from another part of the organisation's budget, review  the project’s costs/activities to take out higher cost/lower value aspects, bring paid-for costs in-house, or delay the start date to give you more time to fundraise, or make implementing the project contingent on the funding being secured.

Another option is to include a contingency percentage into a project's costs.  Or build-in contingency options.  If we don’t get the full funding, we’ll cut ‘a’, and ‘b’ in the project plan. Obviously, as long as that’s not something you’ll be delivering for a funder.

Charity Fundraising Budgets: Caution Versus Ambition

Ask yourself just how badly wrong would your fundraising budget have to be for you to say - 'we can't deal with this'. That's your risk tolerance.  Your budget needs to be sufficiently robust and prudent to ensure that doesn't happen.

• If you have good reserves, plenty of cash to pay bills, good forecasting and the board are comfortable taking calculated risks, you may wish to be a bit more ambitious in your forecasting.  If it goes wrong, you can cope with the consequences.
• However, if reserves are low/non existent, cash flow could be problematic, your forecasting isn't that good and/or your board may not be comfortable making difficult decisions quickly, probably not.

Need to convince your trustees that matters?  If you get to the point where you no longer have a reasonable expectation of being able to pay your bills, as these fall due, you're insolvent.  If the charity is not closed at that point, you may well be wrongfully trading and that can have serious professional and financial consequences for the trustees personally.

How Accurate Were Previous Fundraising Budgets?

Before you begin your income budget, how good is financial management?  Have previous fundraising forecasts been on budget?

If not, think about why these were wrong, by how much and what you need to change to improve that.  Causes can include a new fundraising initiative that everyone talks about, but isn’t actually implemented, over-optimism in setting income targets and/or not adequately resourcing fundraising activities.

And, if you're fortunate enough to have multi-year grants, only include the element relating to this year, in this year's accounts.

Charity Fundraising Budgets - Planning & Management

Charity Budget Planning - for events, appeals etc, how robust is the overall budget planning and management?  Have these been done on the back of a fag packet and how likely is it that those spending the budget will manage this and stick to it?   If not robust, improve the effectiveness of your financial management, or reduce the expected income surplus accordingly.

Track Record - do you have a track record in running this type of fundraising that gives you confidence in the figures?  If not, do you know someone who has that could give you advice on what might be realistic?

Budget Risk – in case the weather, or a virus or something else unexpected happens, do you need a Plan B?

Other Resources - here is some guidance on predicting major donor and legacy income.

Managing Fundraising Budget Risk

The classic challenge in predicting trust and other funding asks.  We know we’re asking for £50k, but how likely is it that we’ll get it?

Prospects – how many potential suitable funders have you identified?  Use that to estimate how many bids are potentially doable.  If you don’t have enough, find more. The CEF has the Funding Finder Database and 50+ funder lists.

Engagement – there’s no right number, but a success rate of 1 in 10 for cold bids and 1 in 3 for warm bids is often quoted for trust fundraising.  How many warm funders do you have, what’s your normal success rate (if you know that) and what could you do to engage more?

Quality -  always counts.  Do you have an emotionally engaging and credible pitch for your funders, that meets their requirements?  Here’s a CEF resource on how to write a compelling case for support and here’s a 3 min CEF video on the 4 steps to funding success.

Capacity – if you managed to get out 15 bids last year and this year’s target is 30, presumably you now have the extra help you need to do that?  If not, scale back your ambition.  If the board/management insist, I can give you access to the fundraising freelancer register.  I run this on a voluntary basis, so I don’t get paid, nobody gets promoted and it’s free for you to access, but you do have to pay the freelancers.

Timescales – it takes time to write bids, for trusts it may be months to get a decision and, even if you are successful, it may take time to send you the money.  Ensure that you make provision for this.  If a bid is long past it’s expected date, it’s likely a no, but they don’t always tell you; take it out of your forecast.

Changes – sometimes forecasts are not updated in the accounts, even when they are clearly no longer credible.  Ensure you have a process to review your forecast regularly, that this is then reflected in the accounts and action is taken to address any gap.

Assessing Your Fundraising Budget Bids

Using the above, estimate the numbers and types of funding bids/pitches, how confident you can be about being successful, the amount for each, when you will realistically be able to submit these and when the funding for each might be available.  There’s no right or wrong way, but here’s one way to assess your fundraising budget bids.

Charity Fundraising Budget Techniques 1 and 2 - Historical & Probability (Weighting)

Historical - The easiest way to create a forecast is to take last year’s and adjust it for any changes in the number of bids, amounts and timings.  This can work well, but works best when you have a track record and quite a few funders.  If we forecast £35k last year and banked £37k, and none of the above factors has changed, a forecast of £35k again, seems reasonable. If there have been changes and these will make a difference, adjust up or down accordingly.  New fundraiser, up and COVID, down.

Probability – what the accountants call Expected Monetary Value (EMV). Multiply the amount by how likely you think it is you’ll get it; simples.  Here’s an example.

This technique can work very well, but you really need to have quite a lot of bids and for these to be a reasonable range of amounts, so no one bid can unreasonably skew the forecast (Bill).  The EMV is £100k and that's a huge amount of money in your forecast, but you'll either get the £10m, or far more likely £0.  If you include the £100k in your forecast, that's very likely to cause you big problems.

Charity Fundraising Budget - Technique 3 - Using Good Judgement

Your common sense and knowledge make you the best forecasting tool you have.  And if nobody else is going to thank you for that, I will; thank you. If the numbers don’t feel right, usually they aren’t, so always sense check any forecast.

The obvious problem with the table above is Bill.  I’d take him out and, if I didn’t have many bids, I might bundle Trusts 1, 2 and 3 together and put £3k in the forecast.  Not an exact calculation, but a prudent estimate, based on what I have.  If I knew Trust 5 well and they’d given good positive feedback, I might make the estimate 50%, because they’re an even better bet than a warm trust.  For my 10 cold trust bids, 1 in 10 looks reasonable, so I’ve left that.

What I wouldn’t do is get sucked into debating whether a trust is 45% or 50%.  Statistics is extremely boring, but for every assumption you make, there’s a level of uncertainty, this increases very significantly as you make more and you’re making lots of assumptions.  Debating the fine detail of every item is fairly pointless, because the overall margin of error in your forecast is so wide that the impact is probably irrelevant.  Use the time saved to begin writing another bid.

So, how are you supposed to deal with that?

Charity Fundraising Budget Technique 4 - Estimating & Managing Risk

One way to do so is to carry out what the accountants call flexibility analysis and normal people call best/worst case.  However, the best case is always what you bid for (or more!) and the worst case £0.  This isn’t particularly useful, so I use Very Good and Very Bad, as follows:

• Very Good. This isn’t the best possible outcome but, whilst unlikely, is achievable.
• Very Bad. This isn’t the worst outcome but, whilst unlikely, could happen. Often, this is £0.

Here’s what that might look like.

I’d still leave Bill out as that’s not realistic and it’ll make a very nice surprise when the cheque arrives.   For the 3 trusts, I might get 2 of the 3, the event and appeal could be up or down, the secured funding doesn’t change, and I might get 3 of the 10 cold trusts.

The 4 Fundraising Budget Techniques - When To Use Each Type

If the fundraising income budget is based on how much people need/want to spend, rather than how much you might realistically achieve, that’s just wishful thinking; usually a fail.

How optimistic you can be in making your forecast, depends on how far out you can afford it to be before you say - 'we can't deal with this'.

You can reduce the risk of this by improving the underlying processes and/or reducing the forecast numbers to be more prudent.

And choosing a forecasting technique that works for you.  Think about your track record and how complicated/risky your forecasting is.

Technique 1 - If I use historical forecasting and nothing’s changed, a target of £35k would look reasonable.

Technique 2 - If I used probability to calculate the bids, I’d get £145k and almost certainly a lot of disappointment in due course.

Technique 3 - If instead, I also exercised my judgement, I’d get £45k, but would first check on what basis I might realistically expect a significant increase on last year.

Technique 4 - If I then applied risk analysis, I’d still get £45k, but with a potentially very good outcome of £62k and a very bad one of £19k.  Neither of these outcomes is very likely and £45k sits roughly between these 2 figures, which seems not unreasonable.  However, if instead of £45k my forecast was £55k, that would suggest a high degree of risk and I’d almost certainly want to reduce this.

Plan prudently, but stay hopeful.  My very talented fundraising director in a previous role (Helen Walker), once brought in £2.1m nobody ever dreamed of including in the forecast.  That’s what makes fundraisers special.

Obviously, you spotted...

The adding up error.  Attention to detail matters, so have someone check your work.

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