How to Discuss the Budget in a Nonprofit Grant Proposal

It’s time for your proposal to present information about project costs and the other funding that’s available. If your nonprofit organization offers only one service for which it’s seeking money, the organization’s budget is the same as the project budget. If the proposal seeks funds for an activity that is one of many things the nonprofit does, it’s presented as a smaller piece of the overall budget.

Different foundations have different attitudes about covering the indirect costs associated with projects. Check with the foundation to which you’re applying to see whether it limits how much can be charged to indirect costs or to management and fundraising expenses.

The project budget should be clear, reasonable, and well considered. Keep a worksheet of budget assumptions with the grant file in case anyone asks months later how you computed the numbers it contains.

Foundations don’t want to believe that an organization is inflating the budget, nor do they want to think that the applicant is trying to make his proposal more competitive by requesting less than he really needs. Either approach — budgeting too high or too low in relationship to the cost of a project — can raise a red flag for funders.

Unless the foundation is willing to consider a proposal for 100 percent of the project costs, the proposal budget should include both income and expenses. Some foundations ask for the information in a particular format. For those foundations that don’t require a special budget format, here are some general standards that apply to the presentation:

  • Income should head the budget, followed by expenses.

  • If the organization has multiple income sources, contributed sources should be listed apart from earned sources. Within contributed sources, a writer usually lists grants first, followed by corporate gifts and contributions from individuals.

  • All expenses related to personnel costs — salaries, benefits, and consulting fees — come first in the expense half of the budget. Usually personnel costs are subtotaled.

  • Non-personnel costs — rent, materials and supplies, printing, and so on — follow the personnel costs and are also subtotaled.

  • Some kinds of project budgets allow for contingency funds of a certain percentage of the project’s projected costs. These funds are usually listed last among expenses.

  • Budget footnotes can explain anything that may be difficult for a reader to understand.

The budget is like a spine for the rest of the proposal and supports every aspect of the plan. The costs of every activity in the methods and evaluation sections should be included.

Keep in mind that some project budgets seem simple and straightforward when they really are more complex. Say, for example, an agency wants to purchase a piece of equipment. It researches the cost and writes it down as the one and only budget item. This approach may be foolhardy: Other costs may include shipping and installation, insurance, training of staff, maintenance, and supplies.

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