Budgets are the mainstay for your annual funding planning and spending. These are required for a business to run and maintain an appropriate strategy in order to prevent loss and guarantee that expenses can be covered. This also affords the ability to see where shortfalls are and what is required to rectify that gap. Budgets also significantly impact your grant requests.
Writing the budget
When writing a budget with the idea of grant funding involved, it is frequently found that nonprofits will pad or adjust their budget with the anticipation of potentially getting more than they need or being prepared to address a shortfall by asking for more. People then start becoming manipulative in their budget to persuade funders to give them that perfect amount to cover their gaps. This is a bad strategy.
Funders and budgets
Funders have seen so many organizations and budgets, they can smell something rotten very easily. They are also seasoned business people or people who have personal experience with running nonprofits. They know what is needed. They are not naive and they don’t just take your word for it. They want:
- outside proof of cost
They don’t want the funding they provide to be squandered and used irresponsibly. They don’t want the money to not cover the project if the full project cost is not met. This is why they have so many demands and expectations. Your budget is no different.
Foundations want realistic. Do not inflate your budget. This is one of the LARGEST mistakes I have seen from clients. Do not underestimate costs and try to look like you don’t need much either. No foundation will think you will survive if you do that. They know what it costs to do things and if you are not realistic with the numbers, they will not take you seriously. You need to know for sure and you need to be accountable to those numbers.
Most importantly, funders are not interested in being the sole purse you take from. They want to see numerous sources of revenue. This includes more than just grants to numerous foundations. The best mix is private donors, fundraisers, and multiple grant sources. This must be represented in your budget.
A well constructed budget will force you to consider where you need to improve your efforts. Hanging on prayers waiting for funders to save you is going to guarantee failure and it makes foundations avoid you. You are not realistic with this strategy. You don’t get to play the victim card like so many nonprofits (and artists) do. You really have to be strategic and hit it hard in every possible way to ensure that your organization gets the funding it needs to fully function and provide the services you claim to provide. Sure, you can cut expenses, but don’t let that come at a cost to effectiveness.
Hiring a Grant Writer
This includes being cheap with grant writing. Hiring people who cost you little because you think it is just about stringing sentences together and writing a cheerleader script is going to guarantee you have a long hard haul before you really get funding you can rely upon. This is one area where spending should be solid. It’s not a performance game. It’s not a commission game (which is unethical). It is a determination game. A grant writer worth their salt knows the uphill battle ahead and will have strategies to get you there. This includes advising on your funding activities and budget.
A grant writer is the person who is communicating with these foundations on your behalf. They are the one who understands foundation behavior and what they are looking for. They are the ones who represent the level-headedness of the plan you intend to implement. Of course the Executive Director and other staff may be involved with developing a relationship with that funder, but be careful that you aren’t just giving them flash and sky high promises. That grant writer who knows foundations, will not do so. They will be realistic with that foundation and they will talk shop like a responsible financial adviser would.
If your grant writer is advising a different type of budget or more specific details than the budget you provide, please take heed and do so. Foundations will withhold money until they get the type of information and budget they want to see. This means that line-item budgets need to have justifications for these expenses. This provides opportunity to explain the line items that may or may not seem reasonable. This also aids in educating the funder on areas they may not be fully familiar with. If you can explain how those numbers were established, the planning involved, and strategy to implementation, the higher the opportunity to receive grant funding requested.