A budget simply refers to a document that specifies how the money will be allocated to implement the activities described in a proposal. The budget gives a clear picture of all expenditures involved in carrying out a project. It is a description of the project in numbers.
A proposal budget includes the details of all income and expenditures for a project. This allows the donor to determine the value and cost-effectiveness of the project. A proposal budget puts a number in achieving the main goal of a project. The budget is often seen as a more unprejudiced, factual account compared to the narrative part of the proposal. Numbers cannot lie. But a bad budget can ruin a great proposal.
Today, we will discuss 10 common mistakes that an NGO makes in a proposal budget:
Most donors have their own set of guidelines for proposal submission. As a fundraiser, you need to understand those guidelines and design your budget accordingly. Read the request for proposal (RFP). Read it thoroughly and follow it exactly. If the donor provides a budget template, use that budget template. Many NGOs may feel they can get away with using the format that they have already prepared, only to be rejected in the first round. Donors will not even read your proposal if you do not follow their guidelines. While it may seem annoying or unfair, always remember you are asking for their money and not the other way around.
Donors are not giving money to your organization’s sole benefit. Grants are not just meant to pay your organization’s operating costs like rent, staff payroll, etc. But every project comes with operating cost, which needs to be paid. When you ask for operating support in a budget, identify the cost to the project and justify it in your narrative. Define why it is necessary to incur the cost to perform the project and how it is going to benefit the targeted audience and achieving the goal.
The budget should not only add up, but it also has to support the logic of the proposal’s narrative. A budget should always match the narrative part of your proposal. From a donor’s perspective, the budget is the main proposal. Always re-check if you have over or underestimated the cost described in your goal statement.
One of the most common mistakes, which can be easily stopped, is the mathematical error. Double and triple check the equation. With so many free applications available today, getting a basic mathematical error is more than a silly mistake; it shows your incompetence. Make all of your budgets in a spreadsheet program like Microsoft Excel. These tools make it easier to formulate, calculate, and organize the numbers.
Make sure it is easy for donors to look at your budget and easily understand what is going on. Budgets can make or break a grant opportunity. Your proposal should please the reviewer not irritate them. Always put commas in between larger numbers. Numbers with commas are much easier to read. Use the columns and use singular alignment to the right. The list of ‘particulars’ should be short and to the point. Use different categories and always number them. They should be easy to follow. And if your donor has given a guideline on the budget format, always follow it.
As explained before, the budget should be easy to follow. You do not want to puzzle your donors with heavy mathematical terms or equations. A simple language is what you need. If you do make use of formulas, make sure it is clear how you arrived at the result. Make it simple- DMAS is all you need to calculate your budget.
Just like location and theme, donors also have a set range of grant sizes they are willing to give. Requesting an amount outside that range is a mistake a major mistake done by NGOs who do not do donor research or submit the same proposal to every grant opportunity. The vast difference in the amount offered and the amount asked will lead to proposal failure. You do not want to ask for a USD 2,000 when a foundation wants to give USD 10,000 or vice versa. If the amount is not mentioned in the funding opportunity announcement, do your research to find other funded projects to find their range.
At the end of the budget always mention the net amount you want from the donor. Asking a specific amount always helps the donor. Do not make it a guessing game by giving a range.
For Example, give an exact amount like USD 7,000 rather than USD 5,000- USD 10,000.
Also remember to combine all subtotals, and subtract any income or additional funding sources.
Always check if the foundation is giving funds in Dollars, or Pounds or any other currency. It is recommended to list out amounts in the donor’s currency and also in local currency. Do not presume that the donor is going to sit and calculate the exchange rate for you. Clearly define the exchange rate and formula used. When you do use the exchange rate, do not give amount with pennies or cents. The inclusion of pennies makes it difficult to understand. Calculate a round figure.
Transparency is the ethical liability of an NGO towards its donor. Showcasing Financial transparency will help omit any skepticism. List out available funds and other sources of funding. When you list an expense, make sure it matches the market price. You may feel you can ballpark the price. Don’t. Always confirm the market price. Even if it was not your intention, you do not want to be labeled as untrustworthy.
So, what are the common mistakes you have made? Share in the comment section below!
Priti is a Development Professional with years of experience as a Director of Operations for an American humanitarian organization in Nepal. She is a published writer and researcher focusing on international development funding and grassroots NGOs. She holds a master’s degree in Business. She oversees the team that provides support to NGOs and site users.
Budget is such a headache.. thanks for this.
I am glad that this article was helpful for you.
Question: Is it recommendable to summarize key information in tabular form in first page of the proposal?
Dear Francis: I would not say it is a bad idea. But most donors give you a set of guidelines for proposal budget. So, always consider the guidelines and make it simple and clear.
It seems like I just make a mistake in my recent proposal for a grant. The sponsors said, they were given $3000 but my budget said $4,374…😭😭😭😭😭😭
In your experience, are very considerably enhanced or expanded annual expense budgets for nonprofit public charitable trusts and NGOs sometimes casually or hastily compiled (taking a systematic process with a pinch of salt or bypassing it, as it were) when there are assurances given by the trustees that major projects hitherto only thought about (or very roughly “sketched on the drawing board” at the most) can definitely be undertaken or commenced during the coming year because funders/donors have already promised/committed the required estimated substantial fund amounts, such projects generally involving heavy capital expenditure possibly running into more than one financial… Read more »
It is simply WOW!
Organizational contribution is very important. It is better if there is a part in the budget on contribution from the organization.
I am totally new and hope to acquire information on various spheres of NGOs . I am entrusted to write proposal for a project working for supporting the education and creating employment for income generating activities for those from the meagre of no income brackets. I am struggling to write one and wish if I can get support in writing/preparing a project plan.
IDeart Ram Thapa: f you just start learning about the basics of proposal writing, maybe this article https://proposalsforngos.com/what-is-a-project-proposal/ would also be interesting for you.
I hope this helps!