3.5 Finance and Budgeting: Terms to Learn

Program Budget: A document that presents the specific expenditures associated with a program or event.

Expenditure: A specific expense; something that costs money (i.e., fruit to make a fruit salad for a high school reunion event, paper for your origami craft session, centrepieces for the tables at your upcoming gala).

Expenses: A collection of expenditures (e.g., overall food expenses for your high school reunion).

Revenue: Also called income/profit, is the money left over after paying expenses.

Direct Costs: Costs that can be linked directly to a specific program. Example: Hiring a DJ to play your event, buying popsicle sticks for the Valentine’s Day craft you plan to run with at the children’s after-school program, or hiring a lifeguard to teach swimming lessons at the community centre swimming pool. *Note: Direct costs may be both fixed and variable!

Direct Fixed Costs: Costs that can be traced directly to a specific program that will not change, no matter how many people participate in that program. Fixed costs remain constant during a specified time period (e.g., the duration of a program or event) and do not change. Example: The DJ you hired will charge the same fee per hour, regardless of whether 20 or 100 people show up. Similarly, the booking fee to rent a group campsite at a Conservation Area will not change, regardless of how many individuals attend the camp skills weekend.

Direct Variable Costs: Variable Costs are costs that can fluctuate depending on volume/numbers. Direct variable costs can be traced directly to a specific program that will vary based on the number of people attending. For example, if you choose to mail a thank you card to each VIP who attended your event, the cost of cards and stamps will depend on how many people attended.  In an aquatics program where each child receives a swimming badge, the costs for badges are variable because the number of participants in the swimming lessons will fluctuate. In some cases, like a children’s summer camp, staff wages may be considered a direct variable cost, as staff are hired to meet ratios according to the number of weekly participants.

Indirect Costs: Costs that an organization incurs regardless of whether or not it operates a specific program or runs an event. Examples: Office supplies, administrative salaries, hydro, Internet, monthly phone bills, licensing fees, etc.

Sponsor: An individual or organization that provides financial support to an event or program through the provision of products or services, usually in return for advertising. Example: In 2023, the Montreal Canadiens signed a multi-year jersey partnership agreement with Air Canada, which will see the Air Canada logo featured on the club’s away jerseys for the duration of the deal.

Donor: Any person who donates money or material goods to an event, an individual, an organization, or a cause.

Gift-in-Kind: A charitable act of giving a product or service rather than cash. For example: Food, clothing, furniture or building materials.

Total Cost of a Program = Indirect Costs + Direct Fixed Costs + Direct Variable Costs