Why Free Labour Still Needs a Budget

There is a short answer about the hidden costs of volunteer-run activity and a useful one, and they are not the same. What follows is the useful one.

The costs that always appear

Every regular activity consumes materials, refreshments, printing, cleaning products, replacement equipment and small repairs. None of these is large individually and together they form a predictable annual figure that most groups never write down.

Because nobody budgeted for them, they get paid by whoever is standing there, usually the same two or three people every time. Those people rarely claim, partly because there is no process for claiming and partly because it feels awkward to ask. The result is a project that appears to cost nothing while being quietly subsidised by its most committed members.

Insurance and the compliance floor

Public liability cover, and sometimes employer's liability where volunteers are involved, is a genuine annual cost in most jurisdictions. Venues, funders and local authorities frequently require evidence of it before allowing an activity to take place at all. Additional requirements may include risk assessments, food hygiene registration, licences or checks depending on the activity.

Each has a cost in money or in someone's time, and time given by a volunteer is still a cost to the project. Requirements vary considerably by country and by activity, so check locally rather than copying another group's arrangements.

Free venues and their conditions

A room offered without charge usually comes with conditions: specific hours, storage limits, cleaning expectations or a requirement to vacate at notice. Those conditions have a monetary value, most obviously when the group has to hire storage or transport equipment each session. Free arrangements also end, frequently when the person who offered the room moves on and their successor sees an unused asset.

A group with no budget cannot respond to that, which is how projects with years of history close within a month. Knowing what the space would cost commercially is the first step to being able to survive losing it.

Replacement, not just purchase

Equipment bought with a start-up grant wears out, and the second purchase is the one nobody planned for. Tools, tables, urns, laptops, gazebos and safety equipment all have finite lives, and grants for replacing them are much harder to find than grants for buying them. Setting aside a small amount each year against replacement is the standard answer and requires a bank account and a decision.

Sorting the donation bags, groups that do not do this experience equipment failure as a crisis rather than as an expected event.

Listing what you own with a rough replacement date takes an hour and changes the conversation with funders substantially.

Why funders ask for a budget

A funder reading an application claiming zero running costs concludes either that the project is tiny or that the applicant has not thought about it. Including realistic costs, including volunteer expenses, insurance and replacement, makes an application more credible rather than less.

Many funders now explicitly encourage applicants to include a share of core costs, having recognised the effect of decades of the opposite. Underbudgeting to appear efficient produces a funded project that cannot deliver what it promised, which damages the next application. The honest number is almost always the more fundable one.

Writing the first budget

List every category you spent on last year, including the things people paid for personally and never claimed. Add insurance, replacement provision and a modest contingency, since something unbudgeted happens every single year.

In the annual accounts, decide who can authorise spending and up to what amount, which prevents both paralysis and unpleasant surprises. Create a reimbursement process and tell people it exists, because unclaimed personal spending is the most fragile funding source a group has. A single page is sufficient, and having one puts a group ahead of most of its peers.

The takeaway

Write down what people paid for and never claimed; that list is your real budget.

Give the boring thing they asked for rather than the interesting thing you have.