How to integrate digital costs into your operating budget (Budgeting for digital, Part 3 of 3)
Author: Cat Ainsworth;
Reading Time: 4 minutes
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This article explains how to boldly and bravely explain to anyone why digital costs are critical for your organisation. It shows you how to map digital costs to your strategic goals and position costs within a budget for your board or a funder. It will be most useful if you’ve already read part 1 and part 2.
Doing this will increase your confidence in advocating for essential digital costs. This will make it clearer how resources are allocated, increase transparency, and improve decision-making.
It’s important you learn how to do this because:
- Operational costs keep your organisation going and thriving, and some of your operational costs are digital.
- As funding opportunities change and evolve, knowing how to tell your digital story becomes even more important.
- It’s not always clear how to include digital costs in a proposal. Funders are still learning so it pays to show you already know and can explain why they are needed.
Read Part 1: how to understand your current digital costs.
Read Part 2: how to budget for future digital costs.
Here are six tips to integrating your digital costs into your budget.
1. Categorise your expenses
If you’ve followed the suggestions in Part 1 and 2 then you should have a list of your current and projected digital costs. Categorise these against your operational areas. For example: services; internal communications; project management; marketing. By categorising your costs you identify where they fit in your organisational budget and proposal budgets.
2. Map digital costs to your strategic goals
Understanding how your digital costs align with your strategic goals helps you attribute their impact and justify their importance. Some costs may be dedicated to one strategic goal, others may contribute to several. After you match costs to goals, you can create a story that explains how digital technology helps your mission.
3. Use separate line items to highlight critical costs
Where guidance is unclear about how to position digital costs in a funding proposal budget try asking the funder first. This may save you time preparing your application. If ambiguity remains then create separate lines for any critical or large costs.
For example, you may have a case management system that is critical to service delivery. Include a separate line item to show what proportion of the budget will be dedicated to this system.
If you have a digital partner supporting your digital software and systems, include their costs as a standalone item. This shows the costs of digital maintenance and development compared to software and system subscriptions.
4. Be prepared to justify your costs
Funders will often query digital costs as part of reviewing an applications. We know this from the social sector organisations we’ve supported. Funders ask questions for different reasons. They want to understand and learn, not just critique proposals. Be prepared to justify and stand by your costs. It will help if you already have a narrative that explains how they contribute to your strategic goals.
5. Create contracts with digital partners
We have worked with many organisations who are paying for digital services but have no contracts in place with the service provider. Although it’s commendable for digital partners to be flexible, funders need to make sure their funding is used responsibly. To ensure confidence from funders, have contracts in place before submitting a funding proposal.
6. Think creatively and bring your organisation on board
Make sure you are aware of likely and unlikely digital funding opportunities. To do this, make sure others in your organisation, especially those who secure funds, understand the costs and benefits of digital.
Include trustees and senior management in this process, as they may find opportunities and can advocate for funding. Explain how your teams use digital tools responsibly and effectively, so they understand the importance of digital costs. Articulate this in your funding applications too.
More help
- Read Part 1: how to understand your current digital costs.
- Read Part 2: how to budget for future digital costs.
- View Catalyst’s funding resource pages.
- Looking for funding? Try our list of potential digital funders.
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Image credit: Kingroyos, Catalyst
