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What do funders look for in grant proposal budgets?

Tracy Kaufman waves as a video of her discussing grant proposal budgets plays on a computer screen on a desk.

Demonstrating credibility is one of the most important factors in a grant proposal. You may be surprised to learn that the budget in your proposal plays an important role in illustrating your organization’s credibility. Many funders look at your budget first, even before they read the narrative of your proposal. In this short video, I share how your proposal budget adds credibility to your application.

Transcript

Hi. I’m Tracy Kaufman, programs manager at Candid. I’m here with some basic advice on budgets.

If you write grant proposals, two qualities that funders love to see radiate out from their grant proposals, above all else, are credibility and impact.

Another thing about funders that not everyone realizes, if you ask a funder which part of the proposal they read first, many of them are going to say it’s the budget.

This is because, if the budget is doing its job right, it explains with instant crystal clarity the components and mechanics of the project, what’s required to make the project happen, and how much support you’ve already secured to make it happen, versus how much you’re currently asking for.

Your budget can be a powerful tool to illustrate credibility and impact, those same two qualities that funders want to see above all else in a grant proposal.

Let’s talk specifically about credibility. If your numbers don’t add up or pieces of the project are conspicuously missing from the budget, that can suggest that you may not fully understand how the project really works. But, if the budget is complete, easy to understand, and the numbers make sense, you are demonstrating credibility.

Also, if the income side of your budget shows that you’re funding the project with a decent variety of diversified revenue sources, that is helpful, too.

Funders usually do not want to see you fully reliant on them for support. They want to see your project as sustainable, with a variety of supporters throwing their resources behind it.

Having the enthusiastic support of multiple funders or donors makes you look extremely credible, and that support will in turn help you to create a bigger impact.

If you want to spend a little more time thinking about your proposal budgets, Candid has a self-paced, online course on the subject called Creating a Sound Proposal Budget. It’s newly updated with fresh material, it’s only $30, and it can help. Good luck!

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  • David Zemel says:

    May 20, 2021 9:24 am

    Good advice. We normally start our review with the budget. Lots of applicants are good with words and not usually as comfortable with numbers. What's true about both is what's not included is often as important as what is included. Many applicants are well acquainted with their own budget - even those who only write grants and are not intimately involved with program management and services (a weakness among agencies that tend to isolate development from agency and program operations). We get to see about 500 every year and no matter how objective one tries to be, applications are compared for completeness, candor, adherence to generally accepted accounting principles etc. My only criticism about the article is it didn't encourage applicants to talk directly to potential funders - and before an application is drafted.

  • Nancy Burd, Founder The Burd Group says:

    May 20, 2021 8:21 am

    Thanks, Tracy for pointing out how important the budget is. I am a nonprofit finance consultant who works with funders and nonprofits helping both sides to understand the nuances of revenues to build sustainability. Diversification of revenues must be considered in two ways, building multiple streams of money within a category of revenue such as having multiple streams of government $$ vs. diversification across categories. Bridgespan spearheaded a study in 2007 (How nonprofits get really big) tracking the successful growth of large nonprofits and found that those organizations who diversified within a category grew quicker and with greater efficiency and financial sustainability. That makes sense as the skills required to achieve these goals were concentrated in specific areas of expertise, such as those adept at raising and managing government funding. Nonprofits can determine their relative financial risk by using the Autonomy Reliability matrix to establish a strategy for financial sustainability.