Isabelle’s 8 Tips for how to write a grant budget:
- Read all the grand budget rules
- Design for success, not low cost
- Be thorough
- If you don’t have a budget template, make sure to develop your own detailed version
- Include matching
- Account for ‘overhead’ or indirect costs
- Finalize with a budget narrative
- Understand the donor’s perspective
When applying for competitive grant funding, figuring out how to write a grant budget is a small but crucial part of the process. A grant budget includes all the costs associated with carrying out the grant project or program. With many organizations competing for funding, a grant budget proposal is one of the more objective components of your application – it consists of hard numbers that funders can verify if necessary and it’s an important document to refer to if you receive funding. Previously, our in-house grant writing expert Isabelle Le Marois shared her top tips for a successful grant. Now, she’s put together 8 top tips on how to write a grant budget:
1. Read all the grant budget rules
Be aware of what you are not allowed to spend on. A lot of grants do not allow spending on capital, infrastructure, advertising, and on salary and staff training. While grants don’t typically cover these expenses, donors still expect you to explain how you plan to cover them because they know that these elements are essential to your organization. As such, be sure to include them in your budget, and clearly indicate from what funding sources those costs will be covered.
2. Design for success, not low cost
Avoid under-budgeting your costs. If it looks too good to be true, donors will be suspicious of your proposal, your understanding of the work, and your capacity to meet the goals that they have set forth.
3. Be thorough
When considering how to write a grant budget, make sure to include a detailed breakdown. This includes:
- Firstly, make sure to use any budget templates they have provided.
- Provide a description of how each expense is essential to the success of the project, particularly higher-priced items.
- Include plenty of subcategories – for example, rather than creating a single line for staff, list each individual position separately.
- Avoid round numbers (such as $100.00) They give the impression that you haven’t given much thought or research to the actual cost.
- If you are dealing with an expense that has fluctuating prices, you should budget for the upper end of the price spectrum.
- Budgeting for unclear potential expenses is accepted. However, you will need to offer examples, explain why they are unclear, and show how you’ve arrived at the budgeted estimate.
4. What if you don’t have a budget template?
Make annual budget sheets and a summary. Excel has a great tool for this. Your budget should contain:
- Salary and staff: list each salary and staff position individually, even if they are not going to be funded by the grant, and detail how that person is going to be funded.
- Domestic and international travel: provide separate totals for these two categories.
- Equipment and infrastructure: if they are known, list each one on a separate line with your best estimate of the cost. If there are possible unknowns, you can group them by purpose or activity.
- Events and training: this is often a point where applicants will overgeneralize and fail to provide a clear link to how it benefits the project. Put as much detail as possible here, with subcategories for venue, supplies, speakers, lodging, travel, advertising, and any other prominent costs. With events, expect unexpected costs and aim for the higher end of the potential cost.
5. Include matching
Matching refers to any other resource that you bring to the table from outside the grant – from another grant or unrestricted funds, such as fundraisers, loans, or start-up funds. Donors love to see matching, and most grants require a specific amount of it. In-kind matching, if allowed by the grant, is a great opportunity to demonstrate that you’re tapping into all the resources possible even if you are cash-limited. In-kind matching is anything besides money that helps make the project a success. This includes equipment and supplies you already own that will be used in this project, any volunteer work hours, and even office space. Estimate the cost of these items in your budget and clearly indicate that they will be matched, especially if these expenses are not covered in the grant you are applying for. For anything also used for other projects, such as office space, you’ll need to estimate what percentage of the item’s total use is by the project in question and apply this percentage to the total cost of the item to arrive at an estimated match amount.
6. Account for ‘overhead’ or indirect costs
‘Overhead’ and ‘indirect’ costs are the same thing. Project overhead accounts for all the indirect expenses that are associated with managing a project. This means you cannot assert that they are for this project specifically, yet they support the project in important ways (administration fees, facilities, electricity, office supplies, etc.).
Donors generally recognize the importance of indirect costs and allow a percentage of them to be added to the requested grant amount. If you’ve previously received funding for indirect expenses, then you can provide evidence of this and use the same rate.
If you’ve not received indirect/overhead before, for example, if you are applying for a grant for the first time, you can calculate what percentage of your annual budget goes to general operating expenses and reference that. You could also use USAID’s recommended minimum of 10%, but keep in mind that this percentage is generally extremely low.
7. How to write a grant budget narrative
A budget narrative is a separate sheet from the budget template. Here, you want to carefully reference each item listed in the budget template and provide an explanation, in paragraph form, of the item, why it’s crucial to the success of the project, and how it will be sourced (grant funding or matching). Make sure you label the exact amount and use the exact wording used in the budget template so it’s easy to reference. If the expense is matching, justify how you’ve arrived at that monetary value. Do not forget to explain what percentage of the total project cost is going to be covered by matching funds.
8. Understand the donor’s perspective
Donors want your project to be a great investment, so be sure to ask for enough on each line item to ensure that you’ll be able to complete the work, even if market prices flux. Keep in mind that the proposed budget is only meant to be an estimate of the funds needed, so it’s okay if there are changes after the award. However, be sure to discuss them with your donor. During the implementation phase, always receive your donor’s pre-approval for big expenses – generally ones that exceed $5,000 – even if they are described in the budget. Finally, large donors do not want money back and they will be watching your burn-rate, i.e., how much money you spend over time. The burn-rate is an indicator for donors of how much progress you are making toward the goals they have set for you.
Grant writing can be a challenging process, and investing time in creating a carefully considered budget can be an easy place to start. After listing out all the components of your project and their costs, you’ll have everything you need in mind to begin the grant narrative. You’ll also demonstrate to donors that you understand how to get the best results with the funds they provide.
Need more help on writing a grant budget?
Scriptoria Solutions has a dedicated grant-writing expert who knows the ins and outs of how to write a grant budget. Get in touch today to see how we can help you amplify your impact with amazing grant applications. You can also follow us on LinkedIn for more information on grant writing, copyediting, writeshopping, and more!