Grants Development

PBS 136 – GrantsmanshipNovember 10, 2008Chapter 7 - Budgets

Today’s Agenda

• Presentation: Tiffany Haworth, United Way Nonprofit Leaders Network: 6:00 – 7:00

• Break: 7:00 – 7:15• Review Chapter 6: 7:15 – 7:30• Go over Chapter 7 (Budgets): 7:30–

9:00

Future Presenters

• December 1st: Michelle Jones - Associate Director, Office of Community Capacity Building, Virginia Department of Housing and Community Development.

• December 15th: Jeffrey Mansour - Senior Program Officer, The Harvest Foundation.

Budgets

Budgets are:• Strategic.• Bring depth to your Project Description.• Aligned with you objectives.

Three parts to the Budget Section:1. Expenses2. Revenues/income3. Narrative

Budgets

Expenses:- Direct:

- Personnel.- Non-personnel.- New.- Existing and ongoing.- Can be in total, percentage based or

prorated.- Can be estimates.

Budgets

Expenses:- Direct (operating):

- Management/supervision.- Occupancy (rent/lease).- Telephone.- Utilities.- Office supplies.- Computers.- Also can be prorated.

Budgets

Expenses:- Indirect:

- Administrative staff.- Audit/accounting fees.- Equipment rental.- Fundraising costs.- Insurance.- Legal.- Occupancy.- Utilities

Budgets

Expenses:- Indirect:

- All project grants should try to recover indirect costs.

- Projects do not occur in isolation.- Talk to funder about indirect expense

allocation policies.- In general, two methods:

- Adding a percentage to the entire grant. 10%-20% is typical.

- Line by line allocation.

Budgets

Expenses - Suggestions for development:• Keep the detail… create notes.• Your financial officer/accountant is your

friend.• Learn and use a spreadsheet package.• It’s listen as an expense now… It will

become a management objective afterwards.

• Be very conservative (err on high side).• Reporting is key. Create a solid tracking

process.

Budgets

Revenues:• Not necessarily needed? Why?• Show when:

– Other grants.– Other income:

• From organization• From project activities (earned income). With earned

income include projections only.

– Matching requirements.– Difference between expense and revenues can

be your grant ask.

Budgets

Revenues - Suggestions for development:• Be conservative (err on low side).• Keep the detail.• Only include revenue if you are absolutely

certain it is needed/can be obtained.• Never include potential grants, only cash in

hand.• Occasionally grantors will ask for a list of

other grants applied for. This is NOT to be included within your revenue projections.

• Seek help if inexperienced.

Budgets

What happens if…• I under estimate expenses? Revenues?• I over estimate expenses? Revenues?

Funders look poorly upon organizations who either leave too much money at the end of a grant or who run out of money prior to the end of the project.

Budgets

Narrative:• Used to explain budget.• Can provide further detail.• Can provide rationale, methodologies or formula.• Two ways to present:

1. Notes.2. Straight text.

Basic budget info does not belong in the budget narrative but elsewhere in the proposal. Keep to the detail or explain the unusual in the budget narrative.

Budget - Tips

• Focus on the cost-benefit ratio. Clarify how grant dollars will be maximized through a frugal budget, how the grant will leverage other funding, and how the benefits will be long-term.

• Budget line items should reflect the values of your organization (mission).

• Check for consistency between the project description, budget narration, and budget line items.

Budget - Tips• Far too many organizations arbitrarily request an

extra computer or half-time clerical assistant with every application submitted; foundations recognize these as unnecessary budget inflation.

• Aim for management efficiency. If your Executive Director position is already funded, then five percent of this individual’s time can be allocated for project oversight at no additional cost. Show in-kind contributions outside of the budget or if the are a direct cost offset.

• If major pieces of equipment drive up total budget costs, investigate whether the equipment can be shared with other nonprofit organizations or whether second-hand equipment would provide a reasonable substitute.

Budget - Tips

• Include an inflation factor and projected salary increases when applying for multi-year grants.

• Some grant experts recommend that budgets aim for no more than 40% personnel costs, with 60% for direct program support. This guideline does not always apply.

• For staff, identify the percentage of time that each individual will spend on the project and pro-rate the costs appropriate. Do not double-dip if already cover by another grant.

Budget - Tips• Calculate fringe benefits and payroll taxes on the

exact cost percentage, based on information from your human resources department and the specific job classification.

• Government funders will often allow the fair market value of furniture, computers, equipment, and a designated percentage of office space to be included as part of the required nonprofit financial match. This type of overhead cost may not be appropriate for private foundations (prefer cash).

• Beware of including minimal costs (e.g. letterhead, postage, photocopying) if not essential to project operations.

• Consider including operational costs only when directly impacted by your project.

Budget - Tips• Keep training costs reasonable. Capacity building

related to the success of your organization can be considered viable/grant-worthy training.

• Be cautious about including non-essential travel in the budget for a project that only has local impact. If conference attendance is of vital importance for project effectiveness or results disseminations, identify the conference and provide ample justification in the budget narration.

• Use only whole numbers (no cents) with proper formatting: $1,270 (not 1270).

Budget - Tips

• For pilot projects, a modest “contingency” line item might be appropriate, but allowed expenditures must be carefully defined and examples given.

• Do not include a “miscellaneous” budget category. Small expenses should properly be allocated for supplies, transportation, photocopying, or a similarly appropriate category.

Useful Websites

• http://www.grantproposal.com/• http://foundationcenter.org/getstarte

d/nonprofits/• http://www.grantstation.com/Public/F

unding_Strategies_px/funding_strategies_main.asp

• http://www.grants.gov/applicants/app_help_reso.jsp