Budgets are undoubtedly one of the most confusing parts of the grants process. While funders tend to give relatively clear instructions on how to complete grant narratives, when it comes to budgets, nonprofit applicants are often left to their own devices.

How do I know what funders are really looking for? Does presenting certain types of expenses help or hurt my proposal? How do I present revenue for projects that haven’t even started yet?

These types of questions are common across the nonprofit sector, and the intimidation factor can be especially high when you (like most of us!) don’t have a background in finance and are learning on the fly. We also know from 5 Common Mistakes to Avoid on a Grant Proposal that presenting a strong, compelling budget is absolutely critical to creating a winning proposal. That’s why we’re breaking budgets down into a three-part series, How to Create a Winning Grant Budget, that will cover all these questions and more. In this series, we will walk you through:

These posts will include short videos that demonstrate sample budgets and give you the tools you need to succeed. We’re confident that you’ll quickly learn that building budgets is not as hard as it seems!

But First, Why Do Budgets Matter?

To kick off our series, it’s important to explain why grant budgets matter. Given that roughly 90% of grant applications require at minimum an organizational budget (at least in our experience!), it would be helpful to know why foundations care so much about these delightful spreadsheets. Let’s get down to it:

Reason #1 Show Me the Money

Foundation trustees may be skimming your application for narrative highlights, but they are bringing out the magnifying glass on your budget attachment. Why?

• Because the budget shows them exactly where their dollars will be directed
• What percentage of your overall organizational and/or program budget they will be funding
• Who else is supporting your project

For trustees with busy schedules and 60 other grant applications to review after yours, the budget is a quick and crucial checkpoint filled with important information to be seen at a glance. 

Reason #2 Grants are Investments

For many foundations, awarding a grant is equivalent to making an “investment” in your organization. While foundations don’t expect to see a financial return on their investment (and if they do, RUN!), they want to feel confident that your organization will be good stewards of their dollars, will spend the money as intended, and will be able to demonstrate some level of social or societal impact. The budget is one more way to measure if your organization can “make the most” out of an awarded grant. Just as importantly, your budget helps build the case that your organization and programs are sustainable and that the impact of the foundation’s investment will live on well beyond the grant period.

Reason #3 Budgets Build or Break Confidence

You can write the most compelling grant narrative in the world, but if you turn in a budget with a single line item and no other information, you are cooked. Part of the overall case you are building for support includes demonstrating that you understand what it truly costs to run your organization and programs. Building realistic “all-in” budgets not only shows prospective foundations that you are serious about your organization’s financial stability, but it also gives you the ability to support your programs and operations in a holistic and sustainable manner. This is good for the donor and great for you. 

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