preparing a program budget section for grants : Non-Profits
A well written budget highlighting a programs' expenses is bound to leave a positive impression on grantors. In preparing this section, the request for proposal (rfp) should be read thoroughly. This will inform the writer about specific components that are required since they vary from grantor to grantor. Bear in mind that most funders provide a tool that can be used to capture the budget.
The main components of the budget section of a grant include direct costs, indirect costs and in-kind support.
According to The Mott Foundation, "Direct costs are those for activities or services that benefit specific projects, e.g., salaries for project staff and materials required for a particular project". These costs can be traced to programs and are itemized for identification ease. Also, calculations for direct costs should be simple. It doesn't serve much purpose to create complicated formulas.
Another name for indirect costs is overhead costs. As Cost Tree states, "An indirect cost supports the overall success of your organization. It may be fixed or variable, incurred from a common purpose, or is a cost that cannot be directly traced to one specific grant, service, or project". Examples of indirect costs might include rent, utilities and equipment rental.
Although most non-profits have an indirect rate that they apply to their budgets, some funders may reimburse a percentage of total indirect costs only if the rate has been approved by them after negotiation.
In-kind support in the form of donated goods and volunteer services is an indication of a programs' sustainability. In addition, the inclusion of this section reflects the support that the program receives from the community. This, in turn, creates a favorable impression on grantors.
The inclusion of direct costs, indirect costs and in-kind support will contribute to the creation of a comprehensive budget that reflects thoughtfulness. Such a budget will boost the rate of success of an organization's funding objectives.
Written By: Sherita Brace