| Subject: Budgeting Tips |
Author:
Sarah
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Date Posted: 12:33:05 02/09/02 Sat
In reply to:
Sarah
's message, "Some Fundraising Links" on 11:32:25 02/03/02 Sun
OK, those who will be directly involved with figuring out the necessary budget requirements in your area of any of our productions (or administrative staff of our company - this if primarily for your info) the following are some guidelines to keep in mind. Any interns who come on for grantwriting or fundraising, assisting with budgetary items, etc... this is also useful starting ground points.
Remember, folks, we are going to evenutally have a resource center for artists. It isn't a bad idea for any and all of us to be aware of these issues, as a whole company, as the more we all understand the inner workings of all that goes on, the better chance we have at survival and success.
There are no mysteries to be held - just as if one artist who primarily deals with dancing, but wants to perhaps learn about film, let's keep in mind that adminsitration is an art form in itself. There is a lot of creativity that goes behind adminsitration and anyone who wants to at least peruse, rather than pursue, the adminsitrative side of things - ask, and ye shall find...
OK...so...here's some answers...Grazie!
***************
How to figure out what your real project budget is
In order to execute your contract and grant check, we need you to provide us with a current, complete, and realistic project budget. This budget will be the basis of your contract with Creative Capital; the starting place for your technical assistance in fundraising and other areas; and a flexible document for you to use and update as you plan and carry out your project.
Use the project budget that you submitted last fall (see copy, enclosed) plus these instructions to prepare your updated budget. Don't be surprised if your "real" budget turns out to be quite different - and quite a bit higher - than your earlier version. Some points to consider:
Expenses: Pay yourself! This is a new concept for some artists, but it's smarter to figure out now what your time is worth, represent this time in your project budget, and raise money based upon these real costs than to underbudget the project and wind up maxing out your credit cards with expensive, last-minute charges and cash advances. Here are two ways to represent your time in your project budget:
If this project is not the primary source of employment or income for you as its director, producer, coordinator, etc., you need to make sure that all artists' fees, including your own, are included in the project budget, and that your organization is "paid" for its services to the project. Organizations typically budget up to 20% of a project's total costs to cover administration and overhead (A), which includes a portion of indirect costs such as bookkeeping, fundraising, audit, and so on. So the A for a $50,000 project would be $10,000, and the "real" budget for this project would be $60,000 (direct costs plus A).
If this project is the primary source of employment and income for you as its director, producer, coordinator, etc., you can represent your time as a percentage of a theoretical, yet reasonable, annual salary. (This example particularly applies to individual or self-producing artists.) For example, if you choose $35,000 as a reasonable annual salary, and you estimate that you will spend six months working full-time on this project, with no other sources of income, your artist's fee - one-half of your "annual salary" - would be represented in your budget as follows: Artist fee for six months ($35,000 x 50%) $17,500
Whichever way you choose to represent your fee, and those of other artists, in the project budget, the goal is to compensate yourself fairly, not to pay yourself last, if at all.
A word about "self-financing": It's easy to forget that "self-financed" expenses are still project expenses, and need to be accounted for in your project budget. If you've been using personal credit cards to cover artistic expenses, check your receipts: what's there that should be here?
Income: A complete budget includes expenses AND income! If your original budget listed projected sources of income, let us know the status of these (which grants have been secured, which ones are still pending). Don't forget to include your Creative Capital grant as confirmed income. If your project will be funded in part through earned income, include projected income from this source. If, like many grantees, you still need to raise money for your project, but have no idea where this money will come from, simply write "to be raised," followed by the amount.
An income budget for a $50,000 performance project might look like this:
Earned income (box office) $2000 projected
Creative Capital $8000 confirmed
Rockefeller MAP $25,000 pending
To be raised $15,000 (list prospects, if known)
Total income: $50,000
A useful resource for identifying funding for your project is Foundation Grants to Individuals, a Foundation Center publication. New York City artists can consult this directory at the Foundation Center Library, 79 Fifth Avenue, 2nd Floor. Artists in other parts of the country can check www.foundationcenter.org for information on regional Foundation Center locations.
In-kind: Two important things to remember about in-kind goods and services
1. In-kind goes in as income and comes out as an expense of the same amount. In other words, you can't "save" in-kind; it has value only when and if it's used.
2. This dollar amount should represent the fair-market value of the in-kind. "Fair-market" value refers to what this exact item or service would cost you if you purchased it with cash. For example, if the owner of a rehearsal studio lets you use the studio for several hours free of charge, the owner has just made an in-kind contribution to your organization. (Actual hourly cost of rental x number of hours donated = fair-market value of contribution.) But if a friend lets you rehearse in her living room for a few hours, this contribution has no fair-market value, because your friend's living room is not ordinarily a rehearsal studio; thus, she isn't giving you something that other people would have to pay her for. You can include her donation in your in-kind budget, but you can't assign a dollar value to it.
Because it may take time to figure out, for example, the fair-market value of a used video camera donated to your project (other than that it's worth much less than a new one), it's helpful to separate the in-kind budget from both the income and expense budgets.So, unless you're not using any in-kind, your complete budget will have three distinct sections - expenses, income, and in-kind - and you'll add the in-kind to the cash budget to determine the total budget. If you're not yet sure of the fair-market values of some of your in-kind line items, simply write "value to be determined," and add the dollar amount when you know it.
A word about depreciation: If you're using your personal computer, film/video equipment, etc., for this project, note this in the in-kind section of your budget. While it may be impossible to figure out the dollar amount of your equipment's depreciation due to project-related wear-and-tear, your budget will, at least, reflect your "loan" to the project. If you believe that you will need to replace or upgrade your personal equipment as the direct result of heavy use during this project, it's a good idea to include an "equipment replacement" line in the expenses section of your budget, just in case.
A word about home-based offices and studios: If you work out of your home, you can figure out the value of your workspace and include it in the project budget. The formula is similar to the one for figuring out your artist's fee, i.e., what percentage of your home are you using for what period of time? This does not mean that you can claim your entire rent as a project expense; rather, this is a version of the home-office deduction allowed by the IRS. More important from the perspective of project budgeting: determining to what extent you will use your home phone, home fax, or personal computer ISP for project-related communications. (Those calls add up.)
A word about "self-financing: if you've been using personal credit cards to cover artistic expenses, check your receipts: what's there that should be here?
A word about depreciation: If you're using your personal computer, film/video equipment, etc., for an artistic project, note this in the in-kind section of your budget. While it may be impossible to figure out the dollar amount of your equipment's depreciation due to project-related wear-and-tear, your budget will, at least, reflect your "loan" to the project. If you believe that you will need to replace or upgrade your personal equipment as the direct result of heavy use during this project, it's a good idea to include an "equipment replacement" line in the expenses section of your budget, just in case.
A word about home-based offices: While you can't claim your entire rent as a project expense if you work out of your home (sorry), if you use your home phone, home fax, or personal computer's ISP for project-related communications, remember to include these items under project expenses. (Those calls add up.)
As you plan an artistic project of any size, you should plan the budget for this project, too. Here's why:
1. A budget is not just something that a prospective funder - ideally, it's a flexible tool that will help you in project planning, cost control, and avoiding unwelcome surprises.
2. Even a bare-bones or "self-financed" project costs something. If you've been covering artistic costs on your credit cards, you still need to account for these costs. The project budget is the place to do this.
3. If you need to raise money for your project, you'll have a better chance of securing funding if you know early on how much money you need and when you need it. If you're figuring out the budget as you go, you probably won't have time to raise the money you need. (Remember, funders' timeframes are not the same as yours, and your definition of "emergency" funding may not be the same as theirs.)
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