Asset development and transfer projects can carry significant financial risks. Before undertaking your project you need to know the key building blocks that are necessary to enable a project to be implemented and successfully managed from a financial point of view
This is true for both existing organisations looking to develop a project and new organisations that are established specifically to take on ownership and management of a land or building project.
Before we move on, let's be clear what we mean when using the words funding and finance. Generally finance and funding are interchangeably used but they really are a bit different, and here is why.
- Funding: in the context of the third sector, funding usually means money provided by grant allocating bodies for a specific purpose or project, which you do not need to pay back (although there may be certain conditions attached).
- Financing is a process of receiving capital or money for a business purpose, and it is usually provided by financial institutions e.g. banks or other lending organisations e.g. Social Investment Scotland with the expectation that it will be repaid.
Financial Planning for an asset transfer or any project is the process of identifying financial goals and budgets. There are three components in this process:
- estimating costs
- identifying income
- preparing financial projections
For small asset ownership projects will often just use grant funding. But if the project is a major one it is likely that the money needed will come from a mix of grant funding and other finance eg borrowing.