A well presented budget and budget narrative can greatly help make your case to a funder. This is especially true if you are approaching a funder for the first time.
I certainly know from my experience as a grant writer that I often put considerable effort into creating a masterpiece narrative describing my organization and its programs, only to save the budget for last which resulted in some errors, omissions, or material items left unexplained on a budget.
So here are a few things to consider or think about so that you can present meaningful budget information to your funders:
- Does it all add up? This is probably stating the obvious but this does happen. Take the time to be sure that 2+2 equals 4 and not 3 on your budget. If using software like Excel, it can be real easy to omit a cell in a spreadsheet, which will impact one or more totals. Or, if you use your good old-fashioned calculator, add the numbers again to be sure that you get the same sub-totals and totals the second time around.
- Make sure all numbers are linked. The main program narrative and the budget should work together. It is important to link information back and forth between the narrative and the budget. For example, if you identify key staff in the narrative, they should be listed in the budget (or vice versa).
- A Change Here May Need to be Updated There: It is not uncommon for numbers to go through iterations as you develop a proposal. You may decide to make a change to the budget and if you aren’t thinking it through, you may forget to update any references to that figure in other parts of the proposal. If you increase the project budget to $175,000 but in the narrative or executive summary it says $115,000 that could be confusing to the reader to say the least.
- Do your numbers make sense? Take a moment to ask yourself if your numbers seem logical. Do your total costs seem reasonable when you consider the level of service provided or the number of clients to be served? Are the revenue sources for the organization or project realistic?
- What is your per unit cost? Many times no consideration is given to unit cost. If not provided, it is always possible that the funder will do a quick calculation to determine your unit cost; in fact many foundation boards want this information. Take the time and calculate your unit cost. If you find yourself gasping at how high your per unit cost is or scratching your head and asking yourself if it’s really true that you will serve 1,500 people at 25 cents per person — more than likely the funder, too, is gasping or head scratching!
- Explain your budget. Always include a thoughtful narrative that gives a summary overview of your budget. At the very least, your budget narrative should discuss any significant increases or decreases compared with last year’s or next year’s budget and any other important figures that you want to explain to the funder (such as a high per unit cost). For example, if your $250,000 organization has a $75,000 increase in rent, explain why. Show that you are on top of your budget situation.
- Show the sources for revenue categories. If the revenue portion of your budget states that you plan on raising $100,000 from foundations during your fiscal year — it is always useful to detail where you hope to get that money. If possible, also show if the grant has been submitted, funded, etc. This helps show that there is a plan.
- Provide a detailed program budget if appropriate. If you are seeking funding for a particular program or project, provide the entire program/project budget — revenue and expenses. Many times an organization will provide a program budget that only details how a particular foundation’s grant would be spent. For example, I have seen project budgets that only detail how the foundation’s $10,000 grant would be spent rather than providing the entire $100,000 project budget which would include the $10,000 grant request.
- Grantee Beware! Keep in mind that armed with your federal tax-id number (and DUNS number which is now required of nonprofits for federal grants), it is possible for a program officer or funder to find out more about your organization simply by surfing the web and using sites such as Guidestar, http://www.guidestar.org/. It may be a good idea to check out what information is out in cyberspace on your organization to be sure it is accurate and up-to-date.
- Have another pair of eyes look at the budget. Allow time for another person (staff, board member, volunteer, or anyone else you can persuade) to look over the budget and accompanying information. This is especially helpful if you have been up all night writing and crunching numbers or if you are not comfortable preparing budgets. You would be surprised what another set of eyes may see that yours didn’t!
If you are new to budgeting or want to take a moment to be sure that you are up-to-speed on preparing a budget, there are sources available on-line that have good budget examples. One tutorial may be found at the Foundation Center’s website http://fdncenter.org/learn/classroom/prop_budgt/index.html