What is a lump sum budget?

A lump sum budget represents a financial plan that encompasses the total expenses and revenues within a specific period, rather than itemizing each individual cost. This approach simplifies the budgeting process by allocating a single figure for overall expenditures, making it easier to manage funds without the need for granular detail on every line item.

This method is often used in project management or grant funding where a fixed amount is provided, allowing the management team to have flexibility in reallocating funds between various categories as needed while still adhering to the overall budget limit. Unlike detailed projections for each item or performance-based metrics, a lump sum budget focuses on achieving financial goals through a specified total, streamlining the decision-making process regarding spending.