Funding Grid Tool

A funding grid (also called a Grant Schedule or Income Allocation Grid) is a critical tool for strategically managing income from a number of different sources.

For example, an NGO might have grants from several different donors plus membership fees, bank interest, sponsorship income and consultancy fees.

Challenges of managing multiple grants

  • It is not always clear which source of income is paying for what activity and whether funds are being used to their best effect.
  • Grants are applied for and received in different currencies
  • Grants are awarded for different timeframes
  • Different donors use different budget formats

We therefore need a tool that brings all information together to give a strategic overview of incoming resources.

What does the funding grid do?

A funding grid (or income allocation grid) gives a strategic overview of how an organisations income is allocated.  It is useful because it:

  • Makes sure that no activities are funded simultaneously by more than one donor – ie to identify instances of ‘double funding
  • Helps you to make optimum use of restricted funds
  • Helps in making decisions on how to allocate unrestricted funds
  • Helps identify gaps in project funding, especially overhead costs

How does the funding grid work?

The table below gives a summarised example of a funding grid for Milestone as a general illustration of how it works. (Note that a full funding grid would have many more rows and columns.)

Step 1

Start by setting up a table on a computer spreadsheet, or a large blank sheet with plenty of rows and columns. Choose a ‘base’ currency to work in.

Step 2

You now need to get the consolidated or master budgets for the whole organisation (or one programme if you need to focus at that level only). This budget  (line item descriptions and budgeted amounts) must be entered in  columns 1 and 2 of the funding grid table, using the chosen base currency.

Step 3

Next, enter all of the restricted sources of income (after converting to the base currency, if needed), matching as carefully as possible the donor budgeted amounts against the organisation budget in the left-hand columns. The greater the detail in your master budget, the easier will this stage be. In our example in  these figures are entered in columns 3, 4 and 5.

Step 4

If you have set up a spreadsheet, as you enter the donor income, the Sub Total (column 7) gives a running income total. Column 8 gives a balance of the funding status so far. It is helpful to have these running figures for the next stage.

Step 5

Now enter any sources of unrestricted income into Column 6.  Remember that unrestricted funds can be used for any purpose and should be allocated according to organisational and programming priorities. For example, it makes sense to use unrestricted income for budget items that are difficult to get donor funds for, such as office admin and support staff salaries. In practice, that means trying to bring as many rows as possible in the final Balance column (column 8) to zero.

Step 6

When all income sources are entered, review and recalculate the final column.  If the figure is positive, it means there is a funding gap (ie under-funded). If the result is negative, this means that line item is over-funded.

Download it here

 

Analysis of Milestone’s Funding Grid

In the example above, we have the odd situation of simultaneous over- and under-funding for certain budget items. This is surprisingly common. In particular, the funding grid shows us that:

  • Overall, Milestone appears to be short of funds by $24,600. However, this is not the full picture, the true shortage could be as much as $27,400 – see the next point.
  • The Training budget has $2,800 more funding than the approved budget requires. This has arisen because the (restricted) donor funds have been allocated according to the grant conditions – the total is more than is needed.
  • The Admin and Travel budgets are under-funded. There is a possibility to re-allocate some of the unrestricted funds – for example, to prioritise Admin and move more funds into that line – but that will worsen the funding shortage for Travel.
  • Personnel costs are currently all covered – unrestricted funds have been used to cover the part not funded by restricted income.

The over-funding situation for Training cannot be ignored. This represents a potential double-funding scenario which could cause a problem with Milestone’s donors. So Milestone would have to go back to the grant agreements or the donor to see if there is any flexibility in the restricted budgets.

Perhaps they could negotiate to move the surplus $2,800 to one of the other needy budget lines? If there were no flexibility to move funds around within the restricted grant, Milestone would have no alternative but to return the $2,800 to one of the donors.

Not ideal, but a legal solution and one which fulfils all obligations to donors.
 

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