The budget forecasts your income and expenses for a specific time period (usually one year). The budget is a very powerful plan, it summarises how much activities you plan to deliver per year, how much you estimate to earn from these activities and from other funding sources, how many you estimate you need to spend for the resources necessary to deliver the activities and how much surplus or loss will remain after one year. The budget is therefore a feasibility check, demonstrating that you know what you are going to do, how and with which means.

At year-end the actual income and expenses are summarised in the income statement of your accounting system. This is how you will calculate your profit or remaining “contribution”. The income and expense statement also indicates the actual structure of your expenses and income (e.g. % of staff expenses in relation to total expenses, % of training income in relation to total income, etc.).

Please note the link between budget and cash-flow forecast. The budget plans the income generated by the institution, e.g. by training fees. If the institution plans to hold a training programme in May - the budget contains this as income and it will be put in relation to the expenditures incurred to deliver the training programme. The budget aims to identify whether the training programme will produce a surplus or incurr a loss. The cash-flow forecast for the training programme will have to predict when the participants' payments will arrive at the institution's bank account. This might well be in June or July. The cash flow forecast puts this in relation to the payments that need to be made before and briefly after the training event and clarifies which cash reserves will pay for these expenditure in the mean-time, i.e., before the arrival of the cash-inflow from the training programme.

In order to serve your financial management and to support your price calculations for your programmes and services, you will have to differentiate between:

• Fixed expenses that occur even if no activity takes place in your institution: electricity, rent, administrative staff, etc.
• Programme expenses: directly linked to your activities, e.g., trainer fees, venue rental, experts' fees, printing costs