3.8: Budget Summary, Narrative, and Justification
The budget describes your operation's financial plan. It should estimate the income and expenditures of each activity you expect to perform during the grant funding period. Many funders require a justification or explanation for each line item of your budget.
Your budget items must be reasonable and cost-effective. Be realistic since you do not want to cause financial headaches down the road by underestimating your total expenses. Some grant writers compose their budget before the proposal narrative since knowing your financial requirements can help you formulate your objectives.
Include a budget narrative or justification with your proposal; in the United States, most state or federal agencies require them. For example, your budget may list $405 for mileage expenses. Your justification could state that your project will require 1,000 miles of local travel for the project director, costing $0.405 per mile.
Watch this video for guidance on creating a budget and justification for your expenses.
Read this article for additional tips on how to justify your budget. The helpful section on "common mistakes" specifies a few pitfalls to avoid.
Indirect Costs
Indirect costs, also called facilities and administration, are expenses your project will incur that are not directly part of the project operations. For example, indirect costs may include the amount needed to maintain your physical plant, computers, library resources, or general administration. Grantees usually calculate these costs as a percentage of the project's total direct costs. Read the RFP carefully since some funding agencies have precise restrictions on which indirect costs are allowed.
Read this article for detailed definitions of direct and indirect costs and cost sharing.
Matching Funds
As the video below notes:
Cost sharing or matching funds describe the amount of cash or in-kind support you can raise to contribute to the project. Some funding agencies require grant recipients to put forward or match a portion of the total cost, such as 25 or 50 percent of the requested amount.
Never use the money you have received for one grant project to support another grant project's matching fund requirements. Once funds have been committed to serve as a matching grant for one project, they cannot be double-counted.
Be realistic about what you can obtain and maintain detailed documentation. Since most funding agencies require you to provide a detailed accounting of all of the cost-sharing funds, you might identify one person on the project management team to keep track of all of the cost-sharing and matching funds.
Watch this video, which explains non-federal matching funds and maintenance of effort for a grant application. Many educational institutions use employee salaries as part of the match.
Budget Items
As you create your budget, be sure to include all of your expenses, including taxes and shipping charges. For example, if you need to buy computers or technology equipment for your project, remember to include labor and maintenance as indirect expenses. Many include an additional 10 percent overage to account for these added costs.
These elements are typically included in a standard budget.Personnel
- Salary and benefits, including taxes and benefits, such as retirement and health insurance costs
Travel
- Car mileage for gas and expenses
- Airfare, hotel, per diem or daily meal expense, and ground transportation to attend conferences
Supplies
- Consumable
- Equipment. Refer to the RFP for allowable major and minor technology equipment
Other
- Printing, postage, photocopying, and other office expenses
Contractual
- External evaluators
- Speakers
- Instructors
Read this article on how to plan and present a budget. Though different grant proposals may require specific budget formats, this article gives several formatting examples.