Grant Guru

Let's look at some nuts and bolts of the budgeting process. There are some simple steps you can follow to assist you in developing your budget.

First, read the RFP to carefully determine the time period of the proposal. How many months or years will your budget cover? The RFP may require a line item budget for each funding year. Some staff may need to be funded for 10 months; others may be 11 or 12 months. Build your budget with your ideal plan. If you are to successfully complete each activity, what expenditures will you need to make? As I have said before, I write the budget first. The budget drives what I can do programmatically. Because budgets are living documents and you often need to allow for flexibility and changes in your program plans. Program changes may require changes of budgeting expenditures. As a rule of thumb, most funders allow you to change up to ten percent of any budget category without approval of the funder.

The second step is to estimate your expenses. I brainstorm a list of everything I will need. I determine my direct expenses by thinking about what it will take to fund program staff salaries and benefits; supplies, equipment, program-related travel, reprographic charges, and any outside contracts I may need. I next look at indirect costs, sometimes known as overhead. Many programs in your organization often share costs such as electricity, telephones, copier leases, etc. Your organization may charge an indirect rate as a way to recover these indirect costs. Your funder's RFP will give you specific guidelines to follow. In general, the costs must be reasonable and not more than your project's fair share. Work with your fiscal staff to determine how best to handle indirect costs.

I use Excel to capture my brainstormed list. This way I can go back and place in a separate column what budget category this expense falls. By sorting on the categories, I have now a simple way to capture everything I need and have grouped these needs by account object codes (1000-1999 - Certificated Personnel Salaries; 2000-2999 - Classified Personnel Salaries; 3000-3999 - Employee Benefits; 4000-4999 - Books and Supplies; 5000-5999 - Services and Other Operating Expenditures; 6000-6999 - Equipment, Capital Outlay; and Indirect Costs). I expand my spreadsheet to include the following headings: Item, Account Object Code, Quantity, Cost, Quantity times Cost, Sales Tax, Shipping and Handling, Total Cost, and Comments. I include a comment category because this is where I write a budget justification statement. Estimating reasonable costs may take several days. For equipment, I generally don't use retail price, but usually use a "street" price. For salaries, I use my district's salary tables and include a 5% raise for each year as a possible cost of living adjustment and possible step or column movement. I take into account similar rises in benefit costs. Work with your district or university's business office. They may already have pre-established spreadsheets that you can use to simplify the calculating of benefits.

The third step in developing your budget is to estimate donated goods and services that may be used in your project. Not all costs are paid in cash. Many nonprofits anticipate volunteer time and plan that into their budget. If you have a program computer donated, that reduces the amount you need in your equipment budget. These donated goods and services are known as "in-kind" contributions. Some funders require a certain portion of your budget to include in-kind because this is the way you can demonstrate community support or your agency support for your project. Typically, I list in-kind contributions as both income and expense. If a volunteer contributes $1,000 worth of time, you record this as income and pay out $1,000 as an expense.

In some instances, the project you are creating may be funded by more than one source. If you are requesting funds from several foundations, let them know that up-front. For example, you might say, "This project has received a $2,000 commitment from XYZ Corporation." Hence, we are asked your foundation for a grant of $8,000, the balance of support needed to fund this worthwhile endeavor.

The final step in budget preparation is to check for sense. Take a close look at your requested budget. Does it make sense? Does it correspond to the activities in your proposal? Do you have any budget red flags? Review the budget through the eyes of your grant reader. What is not clear? What is a possible concern? Cam you accomplish your objectives with the budget you have proposed?