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.

Whatisa“grantbudget?”

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.

Howtocreateyourgrantbudget

Includebothexpensesandrevenue

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.

Categorizeyourcostsinawaythatmakessense

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.

Makesureyourcoststieinwithyour 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.

Userealnumbers

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:

1. 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.
2. 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.
3. 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.

Makesure yournumbers 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.

Showthegrantorwhatcoststheywouldbecovering

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.

Berealisticaboutthegrantamountyou’rerequesting

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.

TheBottomLine

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.