How to Prepare a Budget for a Nonprofit Grant Application

Creating a budget for your nonprofit’s grant application can be a challenging process, but it’s also one of the most critical components of your proposal. A well-prepared budget not only supports your project narrative but also demonstrates to funders that you have a clear, detailed, and realistic financial plan in place.

Align Your Budget with Your Project Narrative

One of the most important steps in preparing a grant budget is ensuring that it aligns with your project narrative. Your budget should be a financial representation of your project’s story, reflecting the activities, goals, and outcomes you’ve outlined in your application. If your narrative describes a comprehensive program but your budget only includes a few expenses, this discrepancy could raise concerns for funders. Make sure every dollar you request is justified by the project elements you’ve described.

Be Detailed and Accurate in Your Cost Estimates

Accuracy and detail are key when preparing your grant budget. Funders want to see that you’ve done your homework. This means taking the time to research and document precise cost estimates for each line item in your budget. Whether it’s salaries, materials, or administrative costs, make sure each expense is backed by research and includes all necessary details.

Include All Direct and Indirect Costs

When preparing your budget, it’s essential to include both direct and indirect costs. Direct costs are those that can be directly attributed to your project, such as salaries for project staff or materials needed for program activities. Indirect costs, on the other hand, are expenses that support the project but aren’t tied to a specific activity, like rent or utilities. Including both types of costs ensures that your budget fully reflects the financial needs of your project.

Incorporate a Contingency Plan

No project goes exactly as planned, so it’s important to include a contingency line item in your budget. Allocating 5-10% of your total budget for unexpected expenses can provide the flexibility needed to address any unforeseen challenges. Be sure to justify this contingency in your budget narrative by explaining how it will help ensure the success of your project even if things don’t go as planned.

A well-prepared budget is crucial for your grant application’s success. If you’re looking for more in-depth tips, be sure to download my free resource that expands on these three points with seven additional budget tips. The form is at the bottom of this post—don’t miss out!

By taking the time to align your budget with your project narrative, being detailed and accurate in your cost estimates, and incorporating a contingency plan, you’ll be well on your way to preparing a budget that strengthens your grant application and increases your chances of securing funding.