Application 8.2

Program Budget

Overview:

For the grant writer, putting a dollar figure to an idea can be vexing. Yet the budget is the first step in understanding the true costs associated with making your dream a reality. While the grant requirements may necessitate a different type of budget, the spirit behind the request is putting dollar figures to ideas. The budget narrative provides the details behind the line items of the budget and are essential to the justification process. The narrative provides an explanation of the ideas to include matching funds and nuances of the budget that may be lost elsewhere in the grant. Some grant reviewers rely heavily on the budget, while others find value in the budget narrative – both are important parts of the grant writing process.

When approaching the budget section of a grant application, it is vital that the grant writer already have a basic understanding of what a budget is and the general components that make up a budget. Serving as the financial plan for the grant period, budgets reflect the priorities of an agency within the terms of assets, liabilities, and equity. Assets are anything an agency owns and has value, such as programming material already purchased, revenue, or capital such as equipment or owned facilities. Salaries, expenses, and debt can be categorized as a liability, which is something that an agency owes to anyone else. Budgets reflect the effectiveness and efficiency of resource allocation illustrated through the budget, which is something that can determine whether an agency receives funding or not.

Drafting a Budget – In Three Easy Steps

Creating an impactful budget begins by fully understanding the grant requirements and doing the necessary research (step 1). Some grant applications require an operating budget for the organization – all income, expenses, and other assets required to achieve the organization’s mission are shown. Some grant applications merely desire a program budget where the organization isolates funding specific to the program or project, not the organization as a whole. Knowing what the prospective funding agency requires with the budget is an essential part of the planning process.

The research portion of a budget starts by gathering the resources necessary to put numbers with ideas. This typically starts with examining expenses such as personnel (salaries and wages), direct costs (expenditures associated with production or provision of a service such as materials, supplies, equipment, and personnel), and indirect costs (general expenses related to operations such as rent, office supplies, utilities – items not directly tied to the program/project outcomes). As discussed in chapter 6, a logic model can be a great place to start because of the visual representation of what it takes to offer a program. By examining the inputs, outputs, and outcomes, one can get a good sense of the expenses associated with developing a program.

A budget is a blueprint of what you want to achieve. Therefore, step 2 of developing a budget is identifying and then communicating the who, what, when, where, how, and, why of the program. The Who of the budget discusses the individuals carrying out the program or project as described in the grant proposal. This may include instructors, administrative team, or even volunteers. The What of the budget describes the expenses needed to run the program, including direct, indirect, and in-kind costs (goods and services provided versus cash) – terms previously discussed. When will the project/program take place? Understanding the timeline of the project and when funding is needed through the budget to the funding agency. The grant writer may find that the funding timeline presented by the agency they are applying to does not align with the organization’s budget cycle. The where includes the actual location and the why is important to not lose track of the outcomes – important when creating a budget that includes closing the loop from an evaluation standpoint.

The third and final step of the budget process is putting text and meaning to the numerical values. The budget narrative provides descriptive details and a justification behind the line items on a budget sheet and may serve as the subject of review for funders. It also provides the opportunity to connect line items to the organizational objectives. Another role that the budget narrative does is justify the allocation of funds where more explanation is needed. The budget narrative explains why the funds are needed and is usually a companion to the written budget.

Assignment:

Based on the following scenario, create a line-item budget proposal for the program. Is there enough revenue to cover the cost of the program? If not, what is the amount needed to cover all expenses in the program?

Bike On

An organization wants to start a program for the youth in the area whose mission it is to promote healthy lifestyles through cycling. The program is open to 15 youth. The program will have two facilitators working for $10 an hour for a total of eight hours. A challenge course will be utilized for the program. The course rental is $50 an hour and is needed for eight hours total. Three bikes need to be purchased and cost $120 per bike. A total of $100 will be spent on supplies including snacks, paper, drinks, cups, and napkins. Revenue for the program includes $10 per camper and a $200 donation from a local business. In addition, 25 shirts will be ordered costing $10 per shirt.