Capital funds are designated for what purpose in the annual budget?

Capital funds are specifically allocated to finance the acquisition or improvement of long-term assets that have a significant value. These assets typically include buildings, vehicles, equipment, and infrastructure that will be used for more than one year. By using capital funds for these purchases, organizations can ensure that they are investing in their future capabilities and operational efficiency.

Operational costs, temporary staffing, and immediate needs are generally covered under recurring operational budgets, not capital funds. Capital expenditures are seen as investments that contribute to the organization's capacity and sustainability, distinguishing them from day-to-day costs that do not enhance long-term asset value. The identification of capital items over a specific value is crucial for proper financial planning and accountability, ensuring that resources are allocated effectively to support the organization's long-term goals.