Painting a Bigger Picture with Budget Narratives
Written by Kelly Burnett
While a budget spreadsheet lays out the essentials, including a budget narrative component creates a standalone document that can bring an entire proposal to life -
Nonprofits that routinely apply for federal funding often dread the budget narratives section due to its stringent requirements. So, when applying for funding from foundations -- which typically do not require budget narratives -- the temptation is to skip this pesky task. However, narration plays a key role in a grant request. It offers an opportunity to add context and justification to each cost time. It allows the applicant to address potential concerns, and provide supplemental background information. It gives color and clarity to the project budget, like painting inside the lines. In fact, it might just be the extra element that leads to funding success.
Strong grant budget narratives strengthen proposals in several ways:
1. They explain all project/program direct and indirect costs, including:
a. Personnel
Details of the position(s), role at the organization, percentage of time allocated to the project, pay rate and benefits
Reason(s) why the position is necessary to achieve the program outcomes
b. Professional and Contractual Services
Services provided and vendor/contractor qualifications
c. Supplies & Materials
Brief descriptions and purpose of all items
Further detail on complicated or industry-specific items that minimize jargon
d. Costs Otherwise Undefined
Travel, postage, overhead, or related administrative expenses
e. In-kind or Cash Matches
Show how volunteer hours, in-kind product, or existing project funding will pair with the budget items
Detail matching contributions in a separate column for each of the categories
2. They demonstrate that proposed costs are reasonable and allowable.
While it’s not necessary to justify every item down to a postage stamp, narratives clarify the purpose of high dollar or unusual requests. They are the nonprofit’s opportunity to explain expenses which are beyond the norm. Referencing any items that might prompt closer inspection shows an understanding of the funder’s allowable costs, creates opportunities to tell your story in greater detail, and confirms that you’ve done your background research.
3. They tie expenses to expected outcomes.
After explaining the what and the why of the proposed expenses, re-read the goals of the grant request, as well as the mission, purpose, and/or goals of the funder. Using the budget narrative section, draw connections between project costs, the impact you hope to achieve, and how it aligns with the funder’s goals. Be specific: use metrics where possible, such as “with this additional staff support and programming, the nonprofit will train an additional 15 employees and serve 10% more clients within the first year.” Questions in the proposal about outcomes can then be directed to the narratives for further detail.
4. They add context to any potential concerns or unusual items.
Reviewers may question context differently. For budget requests with an unusually high personnel-to-materials ratio, use the budget narrative to explain a gap in staff funding that requires that ratio. For more technical proposals, use the budget narrative to briefly describe specific equipment or professional development requests. Unless another section outlines legacy plans for this project after the grant period, use the budget narrative section to explain if and how personnel and program costs will continue to be covered by other funding sources.
Three arguments for including narratives with your grant budget, even when not required in the guidelines:
1. The budget should stand alone.
Some people like pictures (graphs, pie charts, colorful infographics). Some people like to read textual material. And some prefer to look at numbers. Oftentimes, specific readers are responsible for analyzing the budgets of grant applications while others review the written requests. The budget may be the only thing that this reviewer sees.
2. There are no word or character limitations.
Increasingly, grant requests are submitted through online portals, forcing nonprofits to squeeze their proposals into small, space-restricted boxes. Budgets, however, are typically added as an attachment, with the format left to the applicant. Budget narratives provide an opportunity to include important details that would otherwise be omitted from the application form.
3. It’s a way to stand out from the crowd.
How many nonprofit organizations will devote the time to include budget narratives if not expressly asked to do so? In a hyper-competitive grant-seeking environment, here’s an opportunity to make your request unique and memorable. Best of all, the special effort taken to add narratives to your budget will strengthen the reviewer’s confidence in your organization’s ability to deliver on its promises.