Preparing the Budget Section

From NGO Handbook

Writing a Successful Grant: Preparing the Budget Section

Writing persuasive and successful proposals is an important skill for NGOs, but it is often a daunting task. The budget section and the justification of the budget, which are vital components, are inevitably challenging. There are four specific questions that we will be addressing. We will be getting to them in a short while. But before we do that I want to place the budget section into context.

The typical grant proposal, regardless of its length, contains eight major sections. They normally appear in a set order.

  • Need section or justification for the project. First you need to describe the need for the project. That is to give an overall context and to show the gap between the existing situation and the desired situation. That gap constitutes the needs.
  • Projected results. Once you establish the needs, you present the results. That is how the projects will narrow or eliminate that gap. What will that project accomplish? What will the results be?
  • Methodology. Once you have done that, the third section normally talks about the methodology that you will use to accomplish the project. What exactly is the project going to do? How is it going to work?
  • Staff. Once you have talked about the project’s methods, you can describe those who are going to work on the project and show that they are qualified and they have the necessary skill set to do the work that needs to be done.
  • Project assessment. The fifth section is essential to every proposal: How will you know if it is working? If it is not working as well as it ought to be working, what can be done to it to make it more effective?
  • Budget. Now we come to section six of the eight sections, and that is how much will the project cost?
  • Applicant’s qualifications. Following the budget, we normally talk about the applicant’s ability to carry out the project. What is there in your background that would give your funder confidence that you have the ability to do what you are proposing to do?
  • Sustainability. And finally, since grants are not for infinite duration but are finite, what will happen when the grant ends? Funders want to be sure that the project will not be terminated as soon as the grant is terminated. You need to show that you can institutionalize the project.

When you sit down to write a proposal, it generally works best to approach the writing task in that sequence. That sequence represents a logic model in which everything flows logically from the need that you have established. Once you have created a need, there should be no surprises introduced into the proposal. Funders do not like surprises; they want things to follow in a logical sequence.

Writing the budget section

When you come to writing the budget, you have a great deal of help into getting your budget figures from the narrative that you have constructed. Once you have written the proposal, the first five sections, you can read it carefully and make notations of each reference to a cost factor and then you can add up the costs. A very useful format for doing this is to use the outline of the federal budget form (SF-505). Whether or not you are seeking an American federal grant or a grant from any other funder, the 505 form is a logical grouping of cross-factors that enables you to capture and explain every cost regardless of what it is for.

Federal form 505. Let us take a look at what is in the federal form 505. Here are the categories: first you start with salaries and those salaries exclude benefits and consultants. There is a reason for doing that. Salaries are expressed in dollar amounts, whereas benefits are generally calculated as a percentage of salaries. Consultants receive benefits and so sorting them out and putting them in a later category facilitates the calculation of the benefits. Category three is all of your travel costs: mileage, airfare, accommodations, meals and any other expenses that are travel related. Line four of the budget is the construction process. Line five is all of your contractual costs, which would include consultants as well as things such as rent, utilities and other contractual items. Things that you are going to purchase are sorted out according to whether they are durable goods, which go into category six, or consumable goods which are category seven. The federal definition is something that will still be usable after three years. Anything that is used up within three years time is considered a supply. Category eight is a residual or any items that do not clearly fit into any of category seven. I almost never have to use that. Category nine is a subtotal of all of the direct costs. Once you have calculated and added up all of your direct costs, you are usually permitted by the funder to apply a percentage of your direct costs as indirect costs. We are going to come back and talk about indirect costs a little later in this hour because they are frequently misunderstood. Finally, you have the grand total of the project. It is a very clear format for presenting a lot of information in a small amount of space.

Four questions about the budget section

Now that you know the budget, how do you present the information to the funder that you are approaching? Let us look at four questions that were raised in the description of this course:

  • First, how should salaries and benefits be presented?
  • Second, what about the matching funds portion of the grant and the indirect costs portion?
  • Third is a very specific question, and that is how specific should your budget be?
  • And finally, what are the pitfalls that can turn off a prospective granter? There are many and we will come to those in a little bit.




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