How to Determine Your Annual Budget

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This involves numerous considerations. Ultimately the philanthropists’ budget depends on the amount available and what the philanthropist thinks is an appropriate amount to give, and the answer to both these questions is driven by her values. Once these broad parameters are set, more specific considerations come into play.

  • Some donors set budgets, some don’t.
  • Most structured giving will rely on a capital donation and use the income from that capital to determine its annual budget. In some instances, that capital lump sum is determined by a bequest in a will. In other instances, the individual or family will arrive at what it regards to be the right amount.
  • Even if a philanthropist has established a specific vehicle for her giving, such as a trust or an NPC it is not inevitable that the trust will exist past her lifetime. If the intention is to spend down the trust over a period of years, then the annual budget may be more generous and use significant portions of the capital as well as income.
  • Philanthropist should also spend some time reviewing and planning the budget over a short and medium time frame
  • Three to five year (and even ten year) planning may be advisable especially when income streams can increase or decrease year on year and when your commitments over the period are fixed.
  • Budget planning can also significantly affect one’s strategic planning for programmes and projects and they go hand in hand
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