Budget Allocation and Financing Leonellha Barreto Dillon seecon

Budget Allocation and Financing Leonellha Barreto Dillon, seecon gmbh Budget and Financial Issues

Find this presentation and more on: www. sswm. info. Copyright & Disclaimer Copy it, adapt it, use it – but acknowledge the source! Copyright Included in the SSWM Toolbox are materials from various organisations and sources. Those materials are open source. Following the opensource concept for capacity building and non-profit use, copying and adapting is allowed provided proper acknowledgement of the source is made (see below). The publication of these materials in the SSWM Toolbox does not alter any existing copyrights. Material published in the SSWM Toolbox for the first time follows the same open-source concept, with all rights remaining with the original authors or producing organisations. To view an official copy of the Creative Commons Attribution Works 3. 0 Unported License we build upon, visit http: //creativecommons. org/licenses/by/3. 0. This agreement officially states that: You are free to: • Share - to copy, distribute and transmit this document • Remix - to adapt this document. We would appreciate receiving a copy of any changes that you have made to improve this document. Under the following conditions: • Attribution: You must always give the original authors or publishing agencies credit for the document or picture you are using. Disclaimer The contents of the SSWM Toolbox reflect the opinions of the respective authors and not necessarily the official opinion of the funding or supporting partner organisations. Depending on the initial situations and respective local circumstances, there is no guarantee that single measures described in the toolbox will make the local water and sanitation system more sustainable. The main aim of the SSWM Toolbox is to be a reference tool to provide ideas for improving the local water and sanitation situation in a sustainable manner. Results depend largely on the respective situation and the implementation and combination of the measures described. An in-depth analysis of respective advantages and disadvantages and the suitability of the measure is necessary in every single case. We do not assume any responsibility for and make no warranty with respect to the results that may be obtained from the use of the information provided. Budget and Financial Issues

Find this presentation and more on: www. sswm. info. Budget Allocation and Resource Planning A budget is defined as patterns of expenditure and revenue over the life of the project (SEAGA 2001). Realistic planning of finances is key to the implementation of a project or program. Generally, the budget has mainly two functions (UNIVERSITY OF VIRGINIA, 2010): 1. it estimates, as realistically as possible, the cost of completing the objectives identified in the project proposal. 2. It provides a means to monitor the project's financial activities over the life of the project. Budget and Financial Issues 3

Find this presentation and more on: www. sswm. info. Typical categories may be, for example: ● people ● travel costs ● vehicles ● equipment ● consumables and supplies ● Sub-contracts Budget and Financial Issues 4

Find this presentation and more on: www. sswm. info. SOURCE: L. Barreto Dillon Budget and Financial Issues 5

Find this presentation and more on: www. sswm. info. Direct costs Typical Direct costs are (EC 2009): ● Personnel costs: they should reflect the total remuneration, including salaries plus social security charges ●Travel and subsistence allowances: round-trip airfare, lodging and meals, taxis, visa, etc. ●Vehicles: usually this cost will be included in the travel and subsistence item. ●Durable equipment: any item which will retain its usefulness beyond the grant period is considered capital equipment. ●Consumables and supplies: stationery, duplicating supplies, typing/computing supplies, and software. Budget and Financial Issues 6

Find this presentation and more on: www. sswm. info. Indirect costs, also called overheads, F&A and Facilities & Administrative Costs, typically are costs of (EC 2009): • operating and maintaining buildings (electricity/gas/water bills), • grounds and equipment, • depreciation, • general and departmental administrative salaries and expenses • library costs. Budget and Financial Issues 7

Find this presentation and more on: www. sswm. info. Budget Allocation and Resource Planning: More tips! üIt is important that the budget is realistic. üBefore preparing a budget, determine what would be an appropriate amount to request. üThe numbers should be specific. üYour planning should allow for contingencies. üSome donors require that some part of the cost of a project be borne by the applicant institution. Budget and Financial Issues 8

Find this presentation and more on: www. sswm. info Sources of Funding Beneficiaries contribution Stakeholders might be willing to invest some of their own resources. Many financing approaches : -cost-sharing model that encourages users to contribute for the services that they have chosen as best meeting their needs. -household invests in its own facilities and pays directly for operating and maintenance costs -tariffs paid to service provider (connection charges, volumetric tariff, etc). -cross-subsidies between rich and poor users or existing and new customers Budget and Financial Issues 9

Find this presentation and more on: www. sswm. info Sources of Funding Government Budget Ideally, funding for most of the actions in a water and sanitation projects should come from the Government’s own resources. The type of financing mechanisms included in this type of source are: (1)a percentage of public subsidy for hardware or software, (2)subsidised credit to end-beneficiaries for investment in their own infrastructure, (3)subsidised loans to service providers (public or private) (4)community-level rewards (e. g. grants to local govt). Budget and Financial Issues 10

Find this presentation and more on: www. sswm. info Sources of Funding Private Participation Public-private partnership (PPP) describes a government service or private business venture which is funded and operated through a partnership of government and one or more private sector companies (PPIAF 2010). In water and sanitation: build-operate-transfer (BOT) or BOO (Build – Own – Operate) projects In these cases, the private parties invest their capital only in the construction of the infrastructure. Budget and Financial Issues 11

Find this presentation and more on: www. sswm. info Sources of Funding External Funding The need for external funding arises when none of the above approaches would be feasible. Source: PHILIP et al 2008 However, it should always be kept in mind that tapping external sources usually means financing for a limited period of time and according to the rules of an external organisation. If the issue of long term financial viability has not been taken into consideration: many projects may collapse once the external finances are no longer available! Budget and Financial Issues 12

Find this presentation and more on: www. sswm. info Sources of Funding External Funding: International Donor Organisations Some examples are (adapted from SONI 2005): Asian Development Bank (ADB) [www. adb. org/Water/default. asp]. ADB promotes stakeholders participation in the management of water resources at all levels. It encourages partnerships between governments, private agencies, NGOs, and communities. Australian Aid Agency (AUSAID) [http: //www. ausaid. gov. au/country/post/india. cfm] AUSAID delivers aid to Asian countries in the sector including water and environmental sanitation. Budget and Financial Issues 13

Find this presentation and more on: www. sswm. info Sources of Funding External Funding: International Donor Organisations Danish International Development Agency(DANIDA) [http: //www. danidadevforum. dk/en] A key area for assistance is water and sanitation, with focus on ground water based rural water supply systems. Delegation of European Commission [http: //ec. europa. eu/external_relations/delegations/web_en. htm] EC supports programmes for rural and natural resources development including integrated watershed management. Though a large part of the assistance is channelled to government implemented bilateral programmes, projects undertaken by NGOs are also supported. Budget and Financial Issues 14

Find this presentation and more on: www. sswm. info Sources of Funding External Funding: International Donor Organisations UK Department for International Development (Df. ID) [http: //www. dfid. gov. uk/] DFID’s partners include members of the government, private sector, NGOs, civil society and the research community. One of the priority areas is promoting increased investment in clean water. German Development Cooperation (GTZ) [www. gtz. de/en] GTZ technical and financial assistance for protection and sustainability of natural resources including watershed protection and sanitation. Budget and Financial Issues 15

Find this presentation and more on: www. sswm. info Sources of Funding External Funding: International Donor Organisations United Nations Children's Fund (UNICEF) [www. unicef. org] UNICEF supports developing and implementing a range of replicable models for water and sanitation sector. US Agency for International Development (USAID) [www. usaid. gov] One of the key focuses is the link between dependable electricity supply and water conservation. The World Bank [www. worldbank. org]. The World Bank is partnering with various organisations to reduce poverty and improve living standards. Among the focus areas is infrastructure development which includes water and sanitation sector. Budget and Financial Issues 16

Find this presentation and more on: www. sswm. info Sources of Funding External Funding: Private Foundations Ford Foundation [http: //www. fordfound. org] Focuses on rural development, including assisting efforts to improve the management of both large-and small-scale irrigation facilities using pumped groundwater. Small Grants Programme of the Global Environment Facility (SGP-GEF) [http: //sgp. undp. org/ Provides grants to NGOs, CBOs and other for projects that benefit the global environment and promote sustainable livelihoods in local communities, including water conservation projects. Bill and Melinda Gates Foundation [www. gatesfoundation. org] The Global Development Program leadership team oversees the foundation's work in developing countries on agricultural development, financial services for the poor and emergency relief. Budget and Financial Issues 17

Find this presentation and more on: www. sswm. info. References EUROPEAN COMMISSION (2009): Guide to Financial Issues relating to FP 7 Indirect Actions. Seventh Framework Programme. URL: ftp: //ftp. cordis. europa. eu/pub/fp 7/docs/financialguide_en. pdf [Accessed: 08. 05. 2010] METHOD 123 (2003): Project Management Guidebook. URL: www. method 123. com. [Accessed: 20. 05. 2010] NEBIU, B. (2002): Developing Skills of NGOs, Project Proposal Writing. Szentendre: The Regional Environmental Centre for Central and Eastern Europe. URL: http: //documents. rec. org/publications/Proposal. Writing. pdf [Accessed: 07. 08. 2010] NETSSAF (2008): The NETSSAF Participatory Planning Approach. A Tutorial for Sustainable Sanitation. URL: http: //www. netssaftutorial. com [Accessed: 14. 05. 2010] PHILIP, R. , ANTON, B. , BONJEAN, M. , BROMLEY, J. , COX, D. , SMITS, S. , SULLIVAN, C. A. , VAN NIEKERK, K. , CHONGUIÇA, E. , MONGGAE, F. , NYAGWAMBO, L. , PULE, R. , BERRAONDO LÓPEZ, M. (2008): Local Government and Integrated Water Resources Management (IWRM) Part III: Engaging in IWRM – Practical Steps and Tools for Local Governments. Freiburg: ICLEI European Secretariat Gmb. H. PPIAF –PUBLIC-PRIVATE INFRASTRUCTURE ADVISORY FACILITY- (2010): What are Public-Private Partnerships. URL: http: //www. ppiaf. org [Accessed on 14. 05. 2010] SONI, P. (2005): Solution Exchange for WES-NET India -Water & Environmental Sanitation Network-. URL: http: //www. solutionexchange-un. net. in/environment/cr-public/cr-se-wes-29070501 -public. pdf [Accessed on 16. 05. 2010] TRÈMOLET, S. , PEREZ, E. and KOSLKY, P. (2007): WSP Sanitation Financing Study. Methodological Note. URL: http: //www. susana. org/images/documents/07 -cap-dev/a-material-topic-wg/wg 02/tremolet-et-al-2007 a-methodologicalnote-sanitation-wsp-en. pdf [Accessed on 16. 05. 2010] Budget and Financial Issues 18

“Linking up Sustainable Sanitation, Water Management & Agriculture” SSWM is an initiative supported by: Compiled by: Budget and Financial Issues 19