Budgets built top-down ("we have INR 50L, divide it") always break. This pack teaches activity-based costing: start from what you actually do, cost each piece honestly, then add overheads and contingency. Walk out with a budget a funder can trust.
4 modules~100 minInteractive -- India 2026 costs
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Your Capstone
Defensible Activity-Based Budget
A complete programme budget with activity costs, salary tables, overheads, contingency, and a budget narrative -- ready for a funder proposal.
Module 1 -- ~25 min
Activity-based budget structure
Activity-based costing starts from the ground up: list every activity the programme will deliver, estimate the resources each requires (people-days, materials, travel), and price each resource at current market rates. The total emerges from the activities -- it is not imposed from above.
Budget categories
Human resources -- salaries, consultants, field staff (typically 40-60% of total)
Programme activities -- training events, materials, community mobilisation
Travel and logistics -- field visits, vehicle hire, per diem
Equipment and materials -- computers, kits, printed materials
Monitoring and evaluation -- data collection, analysis, reporting (budget 8-12% of total)
Administrative and overhead -- office rent, utilities, communications (10-20%)
Contingency -- 5-7% for unforeseens
Worked example -- Activity costing for a 3-day training
Activity: 3-day training for 30 community health workers in Madhya Pradesh
Trainer fees: 2 trainers x 3 days x INR 8,000/day = INR 48,000
Venue hire: 3 days x INR 5,000/day = INR 15,000
Participant travel: 30 x INR 800 = INR 24,000
Meals and tea: 30 participants x 3 days x INR 400/day = INR 36,000
Training materials: 30 kits x INR 350 = INR 10,500
Coordination: 1 person x 5 days (incl. prep + follow-up) x INR 3,000 = INR 15,000
Total for one training: INR 1,48,500
Your Activity List and Costing
List your programme's 3-5 major activities with rough costs.
Activity name, unit, quantity, unit cost, total
Saved
Self-check
Your programme budget allocates 75% to salaries and 25% to everything else. What does this likely signal?
This is normal for people-intensive programmes
Either activities are under-budgeted, or the team is over-staffed relative to programme delivery
Salaries should always be the largest line item
This is fine as long as overhead is low
Correct. While salaries are typically the largest category (40-60%), 75% suggests either the activities themselves are under-costed (will the team have enough operational budget to actually do their work?) or the team size is disproportionate. Check by asking: "If I remove one staff position, can I still deliver the programme?"
Module 2 -- ~25 min
Salary tables and day rates (India 2026)
Salary costs are the single largest budget line and the one funders scrutinise most. Under-paying staff leads to attrition; over-paying triggers audit queries. Use market benchmarks and be transparent about the basis.
India 2026 salary benchmarks (development sector)
Role
Monthly CTC (INR)
Day rate (consultant)
Programme Director (15+ years)
1,50,000-2,50,000
12,000-18,000
Senior Manager / Specialist (8-14 years)
90,000-1,50,000
8,000-12,000
Programme Coordinator (4-7 years)
50,000-80,000
5,000-7,000
Field Officer / Associate (1-3 years)
25,000-45,000
2,500-4,000
Community Resource Person (CRP)
12,000-20,000
800-1,500
Data Entry Operator
18,000-28,000
1,500-2,500
Admin / Accounts
22,000-40,000
2,000-3,500
CTC vs. take-home
Cost-to-Company (CTC) includes PF, gratuity, insurance, and any other benefits. Take-home is typically 70-80% of CTC. When budgeting, always use CTC -- it is what the organisation actually spends. When funders ask for "salary," they usually mean CTC. Clarify in the budget narrative.
Your Staff Table
List your team with monthly CTC and % time allocation.
Role, monthly CTC, % time on this programme, months, total cost
Saved
Self-check
A funder asks why you have budgeted INR 1,20,000/month for a Programme Manager "in a rural Jharkhand programme." How should you respond?
Reduce the salary to avoid the question
Justify with market benchmarks: CTC includes PF, gratuity, insurance; the role requires 8+ years of sector experience and Ranchi living costs have risen
Say it is non-negotiable
Move it to overhead to hide it
Correct. Be transparent. Provide the CTC breakdown (basic + PF + gratuity + insurance). Reference salary surveys (e.g., IDAct sector salary data). Explain experience requirements. Never hide salary costs in other line items -- auditors catch it, and trust is destroyed.
Module 3 -- ~25 min
Overhead, contingency, and indirect costs
After direct costs (activities + staff), three more categories complete the budget: overhead (the organisational infrastructure that makes programmes possible), contingency (the buffer for things that will go wrong), and indirect costs (the funder's way of capping your institutional support).
Overhead components
Office rent -- field offices in district towns: INR 8,000-25,000/month; metro offices: INR 25,000-80,000/month
Utilities -- electricity, internet, phone: INR 5,000-15,000/month per office
IT infrastructure -- laptops, software, data backup: INR 35,000-50,000 per device (amortised)
Audit and compliance -- statutory audit: INR 50,000-1,50,000/year; FCRA compliance if foreign funding
Contingency: how much and what for?
Standard practice: 5% for stable contexts, 7-10% for uncertain environments (new geographies, disaster-prone areas, first-time programmes). Contingency is not padding -- it is for genuine unforeseens: fuel price spikes, additional field visits due to access issues, currency fluctuation on imported items.
The indirect cost conversation
Many funders cap indirect costs at 10-15% of direct costs. This rarely covers actual organisational overhead. The honest response: present your actual overhead calculation, show how it maps to the funder's cap, and negotiate transparently. Under-recovery of overhead is the leading cause of NGO financial stress in India.
Your Overhead and Contingency
Saved
Self-check
A proposal has 0% contingency. What does this tell the funder?
The team is confident and well-planned
The team either padded other line items to absorb risk, or has not thought about unforeseens -- both are red flags
Contingency is optional and its absence is fine
The team wants to appear cost-efficient
Correct. Zero contingency signals either hidden padding elsewhere (common, but dishonest) or naive planning. Experienced funders prefer a transparent 5-7% contingency line with clear justification over a "perfect" budget that will inevitably require reallocations.
Module 4 -- ~25 min
Budget narrative and funder formatting
The budget spreadsheet tells funders what you will spend. The budget narrative tells them why. Without the narrative, every line item invites a question. With it, the budget becomes a persuasive document that demonstrates operational competence.
What the narrative should cover
Budget summary -- total, by major category, as % of total
HR rationale -- why each position exists, why at that salary level, CTC breakdown
Activity costing basis -- how you derived unit costs (market quotes, past experience, benchmarks)
Overhead justification -- what overhead covers, why it is necessary, how it maps to funder policy
Contingency explanation -- what risks it covers, why the % was chosen
Value for money statement -- cost per beneficiary, cost per output, comparison with similar programmes
Worked example -- Value-for-money statement
"The total programme cost of INR 1.2 crore over 24 months translates to INR 5,000 per household (2,400 households). Comparable WASH programmes in Chhattisgarh report per-household costs of INR 6,000-8,000 (WaterAid 2024, UNICEF MP 2023). Our lower cost reflects the use of community resource persons for mobilisation rather than full-time staff."
Your Budget Narrative
Cost per beneficiary + comparison with similar programmes
How did you derive the numbers? Market quotes, past programmes, sector benchmarks?
Saved
Self-check
A funder says: "Your cost per beneficiary is INR 8,000 but a similar programme did it for INR 3,000." What is the best response?
Reduce your budget to match
Explain the difference: scope of intervention, geography, quality standards, included vs. excluded costs, and what outcomes each achieves
Question the other programme's data
Add more beneficiaries to lower the per-unit cost
Correct. Cost comparisons are only valid when scope, quality, and included costs are equivalent. The INR 3,000 programme may exclude overhead, cover a different geography, or deliver a lighter intervention. Explain what your budget includes and what outcomes it will achieve -- not just what it costs.
Capstone
Your Activity-Based Budget
Click Build my brief to compile your full budget document.