Tips to Strengthen Your Grant Budget
Tips to Strengthen Your Grant Budget
One of the most critical yet most neglected parts of a
successful grant application is the budget. Your grant applications need to
explain your request in both words and numbers. Your grant budget should be
used to paint the financial picture of your request.
What is a “grant budget?”
A grant budget ideally should not be the same as your
organizational budget. A grant budget should have grant-specific information
and purposes including:
• Detailing the costs of the program or project you’re proposing
•
Showing the funder exactly what their money will pay for
•
Listing other sources of income for costs not covered by the grant being requested to show program
sustainability.
How to create your grant budget
Include both expenses
and revenue
Your grant budget should contain two sections: one that outlines your expenses and another that shows your revenue (i.e. where the money will come from to pay for your program
or project, and how much each revenue source
will generate).
It should be obvious why grantors want to see projected expenses: they want to know how much your program
or project will cost. But why do they care about where the other money will come from to pay for things?
Funders like knowing that you’re not solely relying
on their grant funds to keep your organization going. They
value investing in programs and projects that bring other
resources to the table - like other
grants, individual donations,
corporate sponsorships, etc. Plus, showing grantors that you have secured some
or most of the needed funds gives your program or project credibility because
this means that there are other people or organizations interested and willing
to invest in your nonprofit.
Categorize your costs in a way that makes sense
When
creating line items
in your budget,
your goal should
be to illustrate to the grantor what it would
take to successfully operate
your program or complete your project.
As
you’re thinking through
all of this, you should group items into broad categories like Salary/ Wages, Travel,
Equipment, Materials & Supplies, etc. Then, assign dollar amounts to these, being sure to provide descriptions
of how you arrived at your dollar
amounts.
Make sure your costs tie in with your
narrative
A grantor should be able to look at your budget and
understand what you’re proposing to do, even if they haven’t read your program or project description
yet.
Unfortunately, a couple of the biggest mistakes people
make when putting together a grant budget is leaving out things they discuss in their narrative and not making their budget
match what they propose.
To avoid doing that, once you’ve put together your grant budget,
take a step back and ask yourself,
“Does this budget tell the
same story as my narrative?” In other words, do the words and numbers match? To
check, read through your narrative.
Every time you mention something
that costs money, stop and double-check that it’s
in your budget.
Use real numbers
It’s
critical that you base your budgeted expenses
on the true costs of things. You should not be guessing
at costs or pulling numbers out of thin air.
Determining dollar amounts for
employee or mileage costs should be easy because your nonprofit should already have that information or be able to project
it. When it comes to other costs - like materials and supplies
- you’ll need to do your research.
A few good places to do this are:
- Stores: Need to buy 10 shovels for a project? Check out your local hardware retailer and see what their price is for the ones you want to buy.
- Online pricing: With technology, jumping online and finding a price can be really quick and easy, but don’t forget to factor in shipping costs, too, if they apply.
- Quotes from vendors: Maybe you’re replacing some flooring in an animal shelter or excavating some property to install a community garden. Getting a quote for what you need done, especially when it’s a specialty project or service, takes the guesswork out of how much it’ll cost, giving you an accurate estimate.
Make sure your numbers add up
Your grant budget and the costs have to add up to the
total grant amount being requested/ sought out, total of costs in a category,
or total program or project budget amount listed.
When
creating a budget
from scratch, it is best to use Excel because
you can use formulas and make them do
the calculating for you. This helps avoid potential math errors that can damage
credibility if they make it to the funder. Plus, you can format things easier.
If you have never used Excel and you need help, you can simply Google “Excel tips,” and you’ll find lots of useful information.
Even
if you use a formula
in Excel, though,
you should still
manually check the numbers. Mistakes
can still be made,
like a formula not including
all necessary cells, and the total will be thrown off.
It’s always wise to have someone else who can read
financial statements look over your budget and ask them to make sure your
dollar amounts make sense and add up correctly.
Your
board treasurer would be a good first option to approach if you do not have an in-house
accounting or finance staff.
Show
the grantor what costs they would be covering
It’s a great idea to show the grantor what costs their
money will pay for. You can do this by simply adding a column in the expenses
section of the grant budget.
Sometimes grantors may ask you to be very specific in the
narrative about exactly what the grant will be
paying for; you should be able to tell them how much of the grant would
be used for specific expenses.
It should go without saying that you
need to ensure that the costs you’re asking the funder to pay for are allowable. If a funder doesn’t
award grants for personnel costs,
for instance, don’t
ask them for a grant
to cover your Executive Director’s salary.
Be realistic
about the grant amount you’re requesting
Sometimes, you can find out how much to apply for in a
grant application by reading a grantor’s guidelines. Maybe there’s a
range - i.e. ask for no less than $500 but no more than $1,000. Or maybe there’s a
specific amount the grantor wants to give away.
But what if there’s no recommended amount? How do you know how much you should request/ apply for?
In
this case, it may be helpful look at their
latest IRS Form 990 and see how much they gave to their grantees in the previous
year. You might see a trend, or you can take the time to calculate an average amount. When in doubt, you can always call or email the foundation
directly and ask them what request amount they would recommend for a first-time applicant.
In the end, make sure what you’re asking for is reasonable and explainable.
The Bottom Line
With millions of grants applications being submitted
every year, you can increase the chances of getting yours approved by including
fully developed grant budgets that tell the story of your grant in numbers.
Ensuring that your organization has a clear and thoroughly developed
grant budget is essential to successfully obtaining grant funding.
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