Budget Development Policy

Type: Operational

Target audience: Employees

1.0 Rationale

The Ontario Trillium Foundation (OTF) is accountable for the disbursement of public funds. The goal is to be as prudent as possible, while at the same time enabling OTF to operate effectively and efficiently.

2.0 Purpose

This policy outlines the principles behind the development of the OTF’s annual budgets.

The policy is supplemented by OTF’s Budget Calculation Guidelines.

3.0 Policy

OTF’s primary source of funding is from various ministries of the Government of Ontario.

Development of OTF’s annual budgets, including those for grant programs, operating and the Partnership Investments allocation, takes into consideration a number of factors and calculations. 

All budgets are recommended by staff to the Finance & Audit Committee, based on the principles in this document. The Committee then makes recommendations to the Board. Final approval of the budgets rests with the Board. The Board determines an operation cost ratio for the organization to adhere to.

3.1 Community Investments Granting Budget

The CI granting budget is the amount of money that will be used for Community Investments grants, based on funding received from the Ministry of Tourism, Culture and Sport. It must be allocated across the province in accordance with approved criteria (as adjusted in accordance with OTF’s Budget Calculation Guidelines).

The Board approves OTF’s overall target ranges for each stream (i.e. percentage of Granting budget), following which the Grant Review Teams (GRTs) set their catchment targets for each stream based on the Board-approved target ranges.

3.2 Operating Budget

The Operating Budget amount is calculated based on a target ‘operating cost ratio’ – the percentage of total funding approved for spending on operating expenses.

The operating cost ratio may include an ‘escalator factor’ – or annual increase – based on 100% of the previous calendar year’s inflation rate (Statistics Canada: Ontario, all items).
 
Under some circumstances the Finance and Audit Committee and/or the Board may decide that the Operating Budget is not appropriate and requires adjustment:

  • If in any year the allocation received from the Ontario Government represents a significant increase or decrease over the previous year, the target operating cost ratio may be adjusted.
  • If for any other reason the Operating Budget is deemed to be inappropriate, it may be adjusted. In a case where a lower amount is approved, the excess funds may normally go into the Granting Budget. If a higher amount is approved, the additional funds may normally come from OTF’s reserves.

3.3 Partnership Investments Budget

The annual budget for Partnership Investments is calculated based on percentage of estimated funds available, calculated in accordance with OTF’s Budget Calculation Guidelines. This target percentage is approved annually as part of the Business Plan, and normally will not exceed 4.5% of total expenditures.

3.4 Other Program Budgets

All other program budgets will be developed in accordance with the respective Agreements with the Funder.

3.5 Unspent Funds

Any Operating, Granting, Partnership Investments, or other program funds unspent during a fiscal year may be transferred to the Granting budget or carried over to the following year's budget, depending on the circumstances.

4.0 Definitions

Operating Cost Ratio: OTF’s total expenditures (excluding depreciation) as a percentage of total funding received.