1 00:00:06,900 --> 00:00:12,400 As an archive service you may be part of a local authority or of a university 2 00:00:12,500 --> 00:00:15,300 You could also be set up as a charity or a social enterprise spin off 3 00:00:15,400 --> 00:00:20,200 How you are set up will of course affect not only how your accounts look 4 00:00:20,300 --> 00:00:25,100 But how much involvement and control you have in how the budgets are designed, allocated and controlled 5 00:00:25,200 --> 00:00:32,100 Even if you find that you don't have much of a say, understanding how your organisation's accounts work 6 00:00:32,200 --> 00:00:36,100 Will go a long way towards helping you manage or design project budgets 7 00:00:36,200 --> 00:00:43,000 Also, if you understand how the budgets work then you are in a better place to talk about them 8 00:00:43,100 --> 00:00:47,900 And if you can talk about them, then you can engage with key stakeholders on a financial level 9 00:00:48,000 --> 00:00:53,900 Engagement with both internal and external stakeholders is key to successful project development 10 00:00:55,500 --> 00:01:00,400 This is an example budget supplied by a local authority archive 11 00:01:00,500 --> 00:01:08,500 At first instance, the staffing figures seem quite high, however staffing costs are typically two thirds of an archive budget 12 00:01:08,600 --> 00:01:13,800 In this budget that is pretty much what they are, so don't worry if the figures sometimes look a little scary 13 00:01:15,600 --> 00:01:19,800 Whilst these are just budget headings and not full breakdowns, this budget does give 14 00:01:20,200 --> 00:01:25,000 A clear indication of where the expenditure is, this is key when defining your own budget 15 00:01:25,100 --> 00:01:31,600 You might think that the income levels are relatively high for an archive, and you would be right 16 00:01:31,700 --> 00:01:36,500 This service however provides external lettings of the archive space 17 00:01:37,800 --> 00:01:42,100 The main budgets you can affect are staffing and income, but even doubling this income 18 00:01:42,200 --> 00:01:45,900 Makes a relatively small impact on the net budget 19 00:01:46,700 --> 00:01:50,800 This is important to recognise when thinking about sustainability 20 00:01:50,900 --> 00:01:54,900 Income generation for some archives is the way forward 21 00:01:55,100 --> 00:02:00,600 But this cannot be championed in isolation. Without understanding how the rest of the budget works 22 00:02:00,700 --> 00:02:05,500 Alot of time can be spent on intiatives that just don't have a big enough overall impact 23 00:02:05,600 --> 00:02:12,300 Let's have a closer look at recharges as these seem to be taking up quite a lot of the overall budget 24 00:02:12,400 --> 00:02:19,800 Recharges, otherwise known as overheads and sometimes just as core costs 25 00:02:19,900 --> 00:02:24,700 This all depends on whether you are a local authority, a university or a charity 26 00:02:24,800 --> 00:02:29,600 There are different guidelines for each type of organisation when it comes to producing accounts and budgets 27 00:02:29,700 --> 00:02:34,500 But we don't need to be confused, in this instance they all mean the same thing 28 00:02:34,600 --> 00:02:39,200 The recharges in this example then are the premises recharge 29 00:02:39,300 --> 00:02:44,300 This is the cost of the portion of the building that is used by the archive service 30 00:02:44,400 --> 00:02:49,700 It is basically the rent owed to the parent organisation, the actual cost of housing the service 31 00:02:49,800 --> 00:02:56,800 The payment so to speak is generally adjusted on paper, rather than sending it over and sending it back again 32 00:02:56,900 --> 00:03:00,600 Although this is not always the case 33 00:03:00,700 --> 00:03:05,500 The support services recharge is most likely in this case to be a charge for things such as 34 00:03:05,600 --> 00:03:10,400 HR services, fundraising, marketing or development team costs 35 00:03:10,500 --> 00:03:18,500 Basically any of the support services that the parent body provides which are apportioned across the various departments 36 00:03:18,600 --> 00:03:25,000 Depreciation is a calculation that allows an organisation to account for the decline in value of equipment 37 00:03:25,100 --> 00:03:33,100 This could be IT, vehicles and in some circumstances can also be applied to property through wear and tear usage 38 00:03:33,200 --> 00:03:41,800 Most organisations have a policy setting out the annual depreciation rates. This allows an organisation to assess their assets realistically 39 00:03:41,900 --> 00:03:46,700 And plan for and cost upgrades as necessary 40 00:03:47,200 --> 00:03:51,600 These three components then are what contribute to the total cost of the service 41 00:03:51,700 --> 00:03:58,400 Often, parent organisations have covered these costs in the past, especially if a building has been owned outright 42 00:03:59,200 --> 00:04:04,200 Or if the HR support to a service has been minimal because of small staff numbers for example 43 00:04:04,300 --> 00:04:10,900 However, in changing times with changing funding structures and more business-like approaches to service delivery 44 00:04:11,000 --> 00:04:19,500 These costs, which may have been hidden are rising to the surface and need to be taken into account 45 00:04:20,300 --> 00:04:27,100 This is referred to as above and below the line costs. So what is the total cost of this service? 46 00:04:27,800 --> 00:04:35,200 From these accounts it is pretty straight forward, it is A plus B, £599,373 47 00:04:35,300 --> 00:04:42,400 The total being the net revenue budget. Quite simply, this means all these costs have to be considered 48 00:04:42,500 --> 00:04:48,700 When considering the cost of supplying the service, not just the salaries of the staff or the materials 49 00:04:48,800 --> 00:04:53,000 One important rule to take forward in this instance is above and below the line 50 00:04:53,100 --> 00:05:00,000 Above the line costs. All those above the income line are costs that you can technically control 51 00:05:00,100 --> 00:05:05,400 When we say control, we don't mean necessarily that you can pick and choose what you want and don't want 52 00:05:05,500 --> 00:05:11,700 But these costs can change and fluctuate depending on decisions and circumstance 53 00:05:11,800 --> 00:05:17,200 These are the costs most directly related to the delivery of your service or project 54 00:05:17,800 --> 00:05:25,200 Below the line costs. The premise recharges, support service recharge and depreciation are costs that you cannot control 55 00:05:25,300 --> 00:05:31,000 In as much as those costs will always be there regardless of the projects and services that you are delivering 56 00:05:32,000 --> 00:05:40,200 Whilst you can't control the amounts or the policy, you can exercise control by understanding better what the recharges entails 57 00:05:40,300 --> 00:05:46,100 As mentioned, this budget just provides the budget headings. But what is included in those recharges? 58 00:05:46,200 --> 00:05:55,300 Can you find out? Where from? Understanding what that breakdown includes will again put you in a better place to engage 59 00:05:55,400 --> 00:06:00,800 With those that do control the policies and procedures around recharges. It will also help you 60 00:06:00,900 --> 00:06:05,700 Understand what needs to be included when you are thinking about core cost recovery.