Proposal Budgets – Basic Concepts and Common Terms

The budget section of the grant proposal is one of the most critical areas of your submission. The budget that
you present to grantors represents the exact manner in which you intend to spend the funding appropriation.
For this reason, you need to take extra special precautions to ensure that it accurately represents your proposed
expenditure methodology.

You should make every effort to ensure that your program budget:
• Accurately presents your projected costs and expenditures. Under no conditions should you ever inflate
the costs in a budget. If anything, underestimate the costs of the project. It is always better to err on the
side of caution.
• Accurately reflects any costs that have been mentioned in the narrative of your proposal. One of the
best ways to get your grant disqualified is to include budgetary items that were not mentioned in the
narrative, or to exclude items that were included in the narrative of your proposal.
• Accurately calculates the costs as indicated on your project budget. Inaccurate mathematical
calculations leave a bitter taste in the mouths of grantors whose expectations are that grant recipients are
capable enough to present accurate figures. If the grant seekers can’t be accurate in their budget, then
how will they ever be responsible with the grant appropriations? Inaccurate calculations are a
prescription for doom for grant proposals.
• Includes all other funding sources for your project. Grantors are pleased to see other funding sources
associated with a project because it shows that your project is valued by more than then just a sole
source.
• Leaves no budget lines blank.

Grant Budget Common Terms

There are certain terms that are commonly associated with budgetary figures. Here are some terms that you
will see popping up in all budget forms.

• Indirect Costs - Costs that have been incurred for a common or joint objective that cannot be easily
identifiable as part of a particular cost objective. Non-profit organizations may include depreciation on
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 buildings and equipment, the cost of operating and maintaining facilities, general administration and
general expenses. Included in “facilities” costs are interest on building debt, equipment, and capital
improvements. Included in general administration costs and general expenses are such items as salaries
and expenses of your executive officers, personnel administration, and accounting, as well as any other
type of expense not specifically chargeable to the grant. A percentage is established by the Federal
Government for applicants to utilize in order to calculate the dollar amount for reimbursement of
indirect costs incurred from doing the work on the project.
• Matching Funds - The amount of project funding that a grantee agrees to provide in return for the
award. This is especially true in the case of Federal funding. For example, you might apply for bullet
proof vests from the Department of Homeland Security for equipment amounting to a cost of $100,000
with a 50 percent match. That means that if you are awarded the full grant, the Federal Government will
grant you $50,000, and your agency would be responsible for paying the remainder of the grant, or
$50,000. Usually, the percentage of the match depends on the relative size of your agency. The larger
the agency, the higher the matching percentage.
• Prevailing Rates - Rates that have been established that are used as expenses on your project budget.
For example, there are pre-set rates for travel reimbursement, fringe benefit rates for employees and
others. The information can be obtained from the grantor if it is not evident on the grantor’s RFP.
• Client Fees - Costs that are allowable in the preparation, administration and management of the grant.
Examples are grant writers for the proposal and grant consultants as administrators of the appropriation.
These fees are generally included in the “Other” cost line on your budget.
• Performance-Based Fees - Associated with funding for general research and grants to educational
institutions for research training scholarships. In this way, the grantees can have much needed
flexibility and autonomy to manage their own research activities and priorities.
• Allowable versus Non-Allowable Costs - Allowable costs are expenses that are incurred during the
implementation and management of a grant and, usually, cannot exceed more than 3 percent of the total
grant appropriation. These costs are listed in the “other” budget line and can include such administrative
expenses as office supplies, shipping supplies and computers. Grant writer expenses are also allowable
costs, and should be so indicated in the “Other” budget line. For the most part, maintenance
agreements, product warranties, insurance, and Internet provider fees or any similar monthly fee are not
allowable. However, it’s always best to check with the grantor on these matters.

Not all funders require budget forms to be completed; however, every funder expects some type of budget
information to be submitted along with the narrative submission. The above items can be used to create an in-
house budget even in cases when no actual forms are required by the funder. And lastly remember that the

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budget is the financial description of your project, and it is seen by the “Numbers Cruncher” as the most
important section of your proposal. Take great pains to make it thorough and accurate because it is a reflection
on your ability to utilize funds in an organized and diligent manner.

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