How To Craft Grant Budgets for Winning Proposals

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Published:

November 5, 2021

Last Updated:

November 20, 2023

If your grant budget doesn’t add up, you’re not getting the grant. 

It’s a harsh reality. 

You could have the best idea, a perfect plan, assembled the best team, but if you can’t demonstrate that it is feasible, you’ll lose out.

In this comprehensive guide, we'll walk you through:

  • The process of creating a winning grant proposal budget
  • Why it's so crucial in the grant application process
  • Practical insights, useful templates, and real-life examples

This guide will equip you with the knowledge and resources to prepare a grant budget and write a grant that wins funding

Let’s dive in!

nonprofit budget template

What is a Grant Budget

A grant budget is a financial plan that outlines the estimated income and expenses associated with a specific project or program for which you are seeking funding. 

In essence, it's a blueprint for how you intend to use the grant funds to achieve your project's objectives.

Understanding a grant proposal budget is fundamental for successful grant writing. Unlike your operating budget, which outlines your revenue and expenses, your grant budget focuses exclusively on the dollars and cents of your proposed project or program. 

It's a mandatory element in almost all grant proposals because it demonstrates the feasibility of your proposed plan.

The Components of a Grant Budget

A complete grant budget will include the following: 

  • Income: This section should outline all the sources of income for your project, including the grant you're applying for, matching funds, and any in-kind contributions.
  • Personnel Costs: Detail the salaries and wages of staff working on the project. Break down their roles and hours to show how their time is allocated.
  • Non-Personnel Costs: This category covers expenses like supplies, equipment, travel, and overhead. It's important to provide specifics for each item to demonstrate financial responsibility.

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Why Is a Grant Budget Important?

A well-structured grant budget is not just a formal requirement but a powerful tool that can make or break whether you write a winning grant application.

Your grant grant budget plays a critical role in building trust, ensuring project feasibility, and ensuring accurate reporting.

  • Demonstrating Financial Responsibility: A grant budget shows your organization's commitment to wise financial management, assuring funders that their investment will be used efficiently.
  • Ensuring Project Feasibility and Sustainability: A well-crafted grant budget helps evaluate your project's financial health, identify potential shortfalls, and demonstrate long-term viability to funders.
  • Building Trust With Funders: A transparent and well-prepared budget shows accountability, commitment, and paves the way for future collaborations with funders.

Facilitating Effective Project Monitoring and Reporting: An accurately crafted grant budget serves as a reference for tracking progress, ensuring transparency, and efficient fund utilization in project management.

8 Steps to Prepare a Grant Proposal Budget

Creating a winning grant proposal budget requires careful planning and attention to detail. To help you navigate this crucial aspect of the grant application process, we've outlined eight essential steps that will guide you in crafting a compelling budget.

Related: Project Budgets: What To Do (and What NOT To Do) w/ Margit Brazda Poirier

1. Thoroughly Analyze Grant Guidelines

Before you get started writing your grant budget, make sure to read and understand the grant proposal guidelines. You should be confident that you understand the key requirements within them. 

Here are some things to look for as you read through the grant guidelines:

Eligibility

Funders will often list different eligibility requirements. This section will list details such as geographic location or type of organization they intend to fund. Ensure that your nonprofit and project meet the eligibility criteria set by the funder. If you don't meet these requirements, your proposal is unlikely to be considered.

Areas of Funding

Beyond the eligibility criteria, some grants specify what kind of projects or operational expenses the funders are looking to fund. It’s important to pay close attention to this section so that you can ensure your project aligns with these categories. 

Pro Tip: You can use Instrumentl to easily identify the area of funding for a grant by looking under the “Fields of Work'' section

Example of how to see funding areas of a funder in Instrumentl

Grant Amount

When researching funding opportunities, it’s also important to take note of the listed grant amount. Make sure that this funding amount aligns with your project needs and goals. Then, ensure that your budget falls within these limits.

Related: How to Know How Much to Ask for in a Grant?

Limitations

Many grant funding announcements will also list what the grant funds can and cannot be used for. Identify these limitations or restrictions imposed by the funder and do not submit a grant proposal that includes any requests for funds outside of the scope of the grant.

Related: The Difference Between Restricted and Unrestricted Funds

2. Conduct a Detailed Cost Analysis for Your Project

Once you've familiarized yourself with the grant guidelines, it's time to conduct a detailed cost analysis for your project. This will involve outlining exactly what your project will cost.

You want to be as exact in this process as possible so that you can execute your project within your proposed budget. 

Be sure to consider all expenses related to your project, such as:

  • Salaries for staff working on the project
  • Materials and supplies
  • Equipment costs
  • Travel and transportation
  • Consultant fees
  • Rent and utilities
  • Costs associated with monitoring and evaluating the project's progress and impact
  • Expenses for creating and distributing project-related materials, reports, or publications

3. Diversify Your Revenue Streams

Many foundations and grant-funding organizations like to see that their funds are not the exclusive source of revenue for your project or nonprofit. While a grant can provide a significant portion of your project funding, it's wise to diversify your revenue streams

Possible other sources of revenue could be: 

4. Ensure Cohesion Between the Budget and Its Narrative

Your grant budget should align seamlessly with your budget narrative.

Make sure that all grant budget items are described and accounted for within your narrative justification of these expenses.

A common mistake in grant proposals is that these two budget components are often inconsistent. If you outline a budget and then describe or justify expenses that were not listed in the spreadsheet, or fail to articulate items that were, you will end up confusing the funder. 

A funder should be able to draw a line between your grant budget and its narrative, aligning the two to get a thorough understanding of the project. 

In short, the narrative and the budget should tell a consistent and compelling story of your project's goals, activities, and financial needs.

5. Get A Professional To Review Your Budget

It's a good practice to have an external party review your budget for objectivity. Consider reaching out to peers, colleagues, or others in your network who can provide feedback. 

They can offer valuable insights and help identify any areas that may need further explanation or adjustment. External reviews can provide an unbiased perspective on your budget's accuracy and clarity.

6. Factor in Contingencies

Unforeseen circumstances can arise during a project. As such, it's important to factor in contingencies within your budget

Typically, a contingency allowance of 10% of the total budget is a reasonable starting point. Including contingency funds ensures you have a financial safety net to address unexpected challenges and changes.

7. Highlight Matching Funds or In-kind Contributions

If your project has secured matching funds or in-kind contributions, be sure to highlight these in your budget. 

These contributions demonstrate additional support for your project and are often viewed positively by funders. Matching funds and in-kind contributions indicate a broader community of support for your project and increase the perceived value of your grant request.

8. Detail Monitoring and Evaluation Costs

Don’t forget to include a section in your budget for monitoring and evaluation costs

This helps funders understand how you plan to assess the project's progress and impact, which is a critical aspect of grant reporting. Clearly articulating monitoring and evaluation expenses shows that you're committed to measuring and reporting on the project's outcomes.

What Is the Difference Between Direct and Indirect Costs for Grants?

Grant budgets are typically broken into multiple cost categories. Most of these cost categories will be considered direct costs. A smaller, specific amount of your budget may include indirect costs.

So what is the difference between the two?

Direct costs

Direct costs are the expenses that go directly toward producing the goods or services outlined in your grant proposal. Some examples of direct costs are:

  • Salaries (if costs are tied to personnel directly implementing the grant activities)
  • Materials
  • Travel
  • Supplies directly connected to grant activities

If you intend to pay salaries with your grant funding, you need to include the associated benefit costs on a separate line item in your detailed budget.

Indirect costs

Indirect costs are the general business or operating costs required to maintain your organization. This cost is reported as a single line called “indirect costs” rather than listing out what might be covered by these funds. 

Some examples of indirect costs are:

  • Salaries (of personnel maintaining operations but not directly implementing grant activities)
  • Rent
  • Utilities
  • Business services and administration
  • Supervision

The Dyson Foundation, for instance, outlines examples of direct and indirect costs. They also note their typical indirect allowable cost percentage at 15%. Watch for that detail in the grant proposal request information provided by the grantmaker.

What Is the Difference Between Modular and Detailed Budgets?

In your exploration of possible grants, you might come across something called a modular budget. Although uncommon, it is worth knowing the difference between a modular and a detailed budget.

Modular Budget

The National Institute of Health (NIH) is the only funding entity that requires the use of a modular budget. Why is it still worth mentioning, you may wonder? 

The NIH is the largest funder of research in the United States, awarding over 50,000 competitive grants each year.

The modular budget they request in a grant proposal is a budget that is written in modules, or increments. Instead of outlining your specific budget line items, you submit in increments of $25,000 up to $250,000 for a funding year.

If you determine that applying for an NIH grant is aligned with your nonprofit needs, you can use examples of modular budgets to better understand how to build your funding request.

Detailed Budget

Within every other grant proposal requiring a budget, you will need to complete a detailed budget.

A detailed budget is just what it sounds like, a budget that outlines the detailed costs of your project. In a detailed budget, you will list each of your expected expenditures for the entirety of your project.

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What Should a Grant Budget Look Like? Grant Budget Templates and Examples

A well-structured grant budget is not just about the numbers; it's about presenting your financial plan in a clear, comprehensive, and easy-to-understand format

Grant budgeting templates and successful examples can serve as invaluable tools to ensure your budget aligns with industry best practices.

If a grantmaker provides their own template, you should definitely use it. However, if the funder does not provide a template, consider the following templates and examples:  

Sample budget template

When you complete your own grant budget you may want to consider expanding on each of the activities shown in the above example. San Francisco State University also has a grant proposal budget example to see how each of these budget categories can be extended in your grant budget. 

Sample budget template from San Francisco State University

You can also find another example of a helpful grant budget template from the Southern Regional Education Board. Their template gives descriptive details of what might be included under each budget category.

Sample budget template

Wrapping Things Up: How to Prepare an Effective Grant Proposal Budget

Writing a grant proposal budget is where you will prove to your grantmaker that you have a strong grasp of your intended use of funds. 

Spend some time understanding what a grant budget is and what should be included before writing your own.

For more support finding and tracking your grants, create a 14-day free account on Instrumentl to get personalized grant recommendations and start winning more funding today!

Instrumentl team

Instrumentl is the all-in-one grant management tool for nonprofits and consultants who want to find and win more grants without the stress of juggling grant work through disparate tools and sticky notes.

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