Sections:

Civil Society Challenge Fund

Project Budget Management

The Civil Society Challenge Fund (CSCF) currently has a guaranteed annual budget of £14m. This means that each financial year (1 April to 31 March) the CSCF can spend up to this amount in support of projects which meet the Fund’s criteria. This includes the current financial commitment to ongoing projects.

DFID is governed by Government Accounting Rules. These rules are such that if, for any reason, the Fund does not spend the £14m it has been allocated the unspent balance is NOT carried over in to the next financial year. In effect, any under spend on the £14m allocation has to be surrendered to Treasury.

It is important that all organisations submitting proposals to or receiving funding from the Fund understand this and are aware of the implications.

It is important that you understand how we take decisions on how many new projects we can support each year and the impact which poor expenditure forecasting has.

Guidance for Preparing Budgets at the Application Stage

When do I have to submit a budget?

We do not ask you to submit a budget at the Concept Note stage but merely to give a rough indication of how much you think it will cost to carry out the project activities. A full budget is not necessary at this stage because we are only looking to assess whether or not your proposed project meets the basic criteria of the Fund.

It is at the proposal stage that we require a full budget.

Does the proposal budget have to be in a special CSCF format?

We do not have a CSCF budget form for applicants to use. However, we have identified a couple of real examples of well laid out budgets which you may wish to adapt – Example 1 (113 kb) and Example 2 (21 kb). Please DO NOT use these budget examples as templates.

There are a few things you must take note of when producing your budget:

  • Do not submit budgets in a Font size less than Arial 12. Such budgets will be returned.
  • Do not use shading or colour in your budget – this causes our scanners problems and can delay project agreement.
  • Do not produce a budget which breaks expenditure down by output.

What must I include in my budget?

It is important that your budget is in line with your narrative proposal.

There should be corresponding entries in your budget for all of the project activities you are proposing to undertake.

Your budget must be in Sterling (£) and not in local currency or US dollars.

You must state the exchange rate you have used in calculating your budget.

Your budget must be broken down in to DFID financial years i.e. 1 April to 31 March.

You must clearly state what you are requesting from DFID i.e. are you requesting 100% funding or some other portion.

You must break your budget down and not have large unexplained budget lines e.g.: we would not expect a budget line which said simply

You should break this down such as –

We recognise the value of evaluation and, as such, expect to see a budget line for evaluation in all CSCF budgets. We do allow up to 5% of project costs for evaluation.

The UK Treasury Rate of Inflation should be applied and included within the relevant budget lines for year 2 onwards. Your CSCF Project Officer can advise you of the appropriate rate.

You should include any information or dissemination costs as a separate budget line.

It is also highly recommended that you include notes to your budget explaining budget lines. If you do not provide notes then we may have to come back to you with questions – this could delay the decision making process.

If you are making any purchases you must show this expenditure incurring in the year in which you make the purchase and not spread the cost over the lifetime of the project i.e. we would not expect to see a budget which had half of the cost of vehicle purchase in Year 1 and half in Year 2.

What UK expenditure can I include?

The UK expenditure must not exceed 8% of project costs. You must include a budget note showing how you have arrived at the calculation of the UK admin figure you have included e.g. staff costs, rent etc

What is not allowed in a CSCF budget?

We are reasonably flexible on budgets but there are a number of budgets items which we do not allow in CSCF projects:

  • Land purchase
  • Property purchase
  • Major capital expenditure
  • Inflation must not be included as a stand alone, separate budget line
  • Core costs (both UK and overseas): these are costs which are not directly related to the project application
  • Contingencies: Unforeseen costs arising during the project implementation will be considered on a case by case basis so must not be included in the budget
  • Depreciation. This is a bookkeeping transaction rather than an actual cost therefore must not be included.
  • Debt Repayment
  • Pre-project implementation costs i.e. any costs which you have incurred in pulling together the proposal e.g. design costs, baseline surveys etc

NB: This list is not exhaustive. There will be other budget lines that we cannot accept. If you are unsure about any item please contact the CSCF team to discuss (01355 844000).

How is my budget assessed?

When you submit your proposal it is passed to other parts of DFID as well as our external consultants for a full technical appraisal. At this stage no-one undertakes a rigorous appraisal of your budget. However, you may receive questions on some of the budget items you have included.

If we agree to support your proposal you will receive a letter confirming this decision but stating that the offer is provisional and dependant on our reaching agreement over budget (and possibly other technical) issues.

Guidance for Managing Budgets During the project

My project has been offered provisional support – what do I do now?

The DFID project officer dealing with your proposals will contact you with any areas for clarification we may have. Final funding is dependant on any issues being resolved. As the period following notification of our decisions is an exceptionally busy time, you should wait for your project officer to contact you.

NB: All successful CSCF applicants will be asked to speak with their local partner(s) to ensure that the budget submitted with your proposal is realistic.

Although, in previous years, we have been reasonably flexible over budget amendments we have noticed a recent trend for budgets to be over-inflated in the early years. This has led to a flurry of requests to move unspent balances in to later years. This situation makes it very difficult for us to ensure a full spend on the overall CSCF programme. As such we are no longer in a position to be as flexible over re-allocation of under-spends.

Therefore, it is VERY IMPORTANT that you revisit your budget to ensure that the final agreed budget is as realistic as possible

What happens once my budget has been agreed?

Once your project officer is satisfied with your budget and outstanding project queries have been resolved, you will receive 2 copies of the Grant Funding Arrangement (GFA). Along with your GFA you will also receive a budget summary containing budget sub headings for claim purposes. There are 7 budget sub headings;

  • Capital
  • Staffing
  • Operating Costs
  • Project Activities
  • Information & Dissemination
  • Monitoring & Evaluation
  • UK Expenditure

You should sign both copies of the GFA, returning one copy to your project officer. Once they have received the signed copy you are then able to begin claiming funds.

What happens if my budget needs some fine tuning once the project has started?

If your annual allocation for a financial year will remain unchanged, there are 2 ways in which you can make changes to your budget.

Transfer money between lines within budget sub headings

Up to 10% can be transferred between budget lines within each budget sub heading. You do not need approval for this however it is helpful if you notify your project officer of any changes giving a brief explanation of why they have occurred.

However, any transfer over 10% must be approved by your project officer before you can make a claim against those lines. To request approval you should submit a budget showing the changes with a brief explanation of why they have occurred.

Transfer money between budget sub headings

Any transfer of money between budget sub headings must be approved by your project officer before you can make a claim against those sub headings. To request approval you should submit a budget showing the changes with a brief explanation of why they have occurred.

What do I do if the project can’t spend all the money allocated for this financial year before 31 March?

It is your responsibility to ensure that your project expenditure is in line with the project budget. If at any time it appears likely that there will be an under spend in the agreed annual allocation for the project, you must notify your project officer immediately.

As the CSCF is heavily committed each year, we cannot guarantee that funds will be available to accommodate any carry forward. Therefore late notification of under spends may result in funds being lost.

To request a carry forward, you must submit a full revised budget (in the same format as your original agreed budget) to your project officer for approval at the earliest possible date. An explanation of the changes you have made to the budget, why these changes are necessary and what impact these will have on the project should accompany the budget.

You should also ensure that your UK expenditure for each year is still within 8%.

Should your revised budget be acceptable you will be issued with a revised GFA setting out the new annual allocations for the project. This must be signed and returned to your project officer within 30 days of receipt. Please note you cannot begin to report against your new budget until DFID is in receipt of your signed revised Grant Arrangement.