How to Discuss the Budget in a Nonprofit Grant Proposal
Because a proposal is a request for money for the nonprofit, your proposal should present information about project costs and the other funding that’s available.
If your 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 a project 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 management and fundraising expenses.
The project budget should be clear, reasonable, and well considered. The grant writer should keep a worksheet of budget assumptions with the grant file in case anyone asks months later how he 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 to be used, 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 government grants first, followed by foundation grants, 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 follow the personnel costs and also are 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. 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 involved may include shipping and installation, insurance, training of staff, and maintenance and supplies.
At some foundations, all project budgets and financial reports are analyzed by staff with expertise in that area. They may be separated from the rest of the proposal for this reading. Therefore, a budget needs to be clear even if it’s read on its own — separate from the narrative part of the proposal.