Income is the money an organisation receives. Expenses are the amounts of money an organisation pays out.

A budget sets out the amounts the organisation expects its income and expenses to be for a fixed period of time, such as a year. In other words, the budget tells you how much money the organisation thinks it will need to do its work in the next one to three years; where it hopes some of the money will come from, and how much money it still needs to find.

The Management Committee must decide what should be included in the budget. Someone – usually the treasurer – must be given the job of drawing the draft budget up. The Management Committee – or the highest decision-making body- then has to approve this.

Once the budget has been prepared, it needs to be checked and discussed by other members of the executive. Then it must be approved by the trustees, management committee or whoever has authority in the organisation.

• The budget should be presented to the membership, either at the Annual General Meeting or in the Annual Report, and it should be used regularly as a way of monitoring the spending of the organisation.
• Budgets are also an important part of trying to raise money from funders. You cannot fool funders with made-up amounts. Amounts must be properly motivated, either in the funding proposal or in a note with the budget. An example of such a note is ‘A motor vehicle is essential for the field employee because the settlements are, on average, 150 kilometres apart, and there is no public transport.’