Your budget will tell the funder instantly
if you know what you're doing.

The Who, What, When, Where, and How of Grant Budgets

You probably remember the mnemonic in the title from grade school English class on how to write a news article. In teaching budget preparation I have long stressed that a budget must be able to stand on its own and answer questions about your grant proposal (not raise questions). It occurred to me that in this way, a grant budget is like a good news article and that by using the familiar formula the grant writer will remember to include all important activities in the budget. These words are also good ways to group expenses and income for a clear presentation. Of course, "why" is missing from the list of points to cover. I've not yet discovered how to explain that in numbers -- yet.

How to make your budget tell your story

Who
Who will carry out your project? Staff, consultants, and volunteers all have a place in this part of your budget. In thinking about staff, don't forget support staff and supervisory staff. They may spend only a fraction of their time on a project, but some portion of their salaries should be included. And think about what you'd have to pay people to do the work of your volunteers. If you include volunteers in your staffing, list them on a separate line and put a corresponding line for the same amount in the Income section of the budget as donated services.

What
List all your direct expenses (supplies, postage, mailing expense, shipping, special space rentals, service fees, equipment, transportation, etc.) that you must have to do the project. Don't leave out the value of supplies you have on hand; you'll have to replace them after the project has consumed them, so these should be counted, too. You will probably need a line for indirect expenses. These are expenses that you can't justify as being part of the project, but you must incur these expenses to operate your organization. Examples are rent, utilities, insurance, and accounting and banking fees. Of course, if your budget is for your entire operations, everything is a direct expense. (Indirect expenses and how to allocate them are explained in depth in my book, The Complete Idiot's Guide to Grant Writing, 2nd Edition, and the Budget Builder Tool on the CD turns a complicated calculation into fill-in-the-blanks.)

When
When will your project take place? What period is the grant meant to cover? Sometimes, those won't be the same thing. Let the funder know when you need the money by clearly labeling the column of expenses or in the title on the page. And if the project dates and grant date aren't the same, you may need to list the specific costs you want the funder to cover in a separate column. That way, they can see the total costs, as well as what part their grant will play in the overall project.

Where
The location of the project can be expressed in several ways. If yours is an operating budget, you'll include all your occupancy costs (rent, utilities, etc.) and costs of any additional spaces you'll have to rent. Your project grant budget will include a percentage of your occupancy costs as indirect expenses, indicating that at least part of the program will take place in your offices. Specific rental costs will show that you are operating outside your space. And if that extra space is donated, include a fair market value for the space in your expenses and show a corresponding space donation line in the Income section.

How
The statement of all of your income sources will tell the funder just how you expect to carry out the project. Will there be service fees charged to clients? Will audiences pay admission? In addition to the funder for whom you're preparing this budget, what other funders do you expect to support your project? Which have already made a commitment and which are pending? Will you have any in-kind income, that is, will anyone be donating goods or services (like your volunteers) to the project? List everything here. The more sources supporting your project, the better it will look to the funder.

Footnotes and Budget Narratives
Sometimes, everything just can't be clear from numbers alone, so feel free to add footnotes or to write a short narrative putting some of the important expenses into context. Your largest expenses will most often need explanation, especially if their role in the project is not clear. For example, if you have large travel costs, and your project takes place locally, you might want to explain that the travel costs will allow you to bring in an expert from across the country to take part in the project.

Here's a sample budget created using the above guide. Take a look and see just how much you can tell about the project just from the budget!

This article also appears in the Information Exchange of the Association of Fundraising Professionals website.