Managing grant payments

Simplifying the Grant Budgeting Process: A Step-by-Step Guide

Know how to simplify your grant budgeting process, and the steps you should take to ensure your plans for the money you’ve received will work out.

Ask anyone for a list of their favorite things to do. We’re willing to bet that nowhere on that list is grant budgeting. It’s no secret that the grant budgeting process can be tedious. But, fear not! In this post, we’re sharing some advice for simplifying it. We’ll explore what a grant budget is, and the six steps that you should take to ensure your plans for the money you’ve received will work out.

What exactly is a Grant Budget?

A grant budget is a financial plan that outlines the estimated costs and expenses associated with a specific grant project.

Grant budgets typically include:

-- The associated costs for salaries of personnel

-- Any supplies you might need for your project

-- Equipment fees

-- Travel expenses

-- Anticipated direct and/or indirect costs that might come up.

Because creating a grant budget can be such a pain, it’s critical that we simplify the process. What does that look like though? It can mean using software to prevent errors, and following a framework that can be repeated over and over again.

Why is it so important to simplify the grant budgeting process? Simply put, it can save time, improve accuracy, help your grant project to be more transparent, and increase your chances of success. It will also make reporting on how you used grant funds easier which could make applying for future grants more successful as well.

As we have mentioned, our step by step guide is just six steps.

  1. Understand the grant guidelines
  2. Gather all pertinent information
  3. Categorize your expenses
  4. Estimate your costs
  5. Create your semi-final budget
  6. Review and revise as needed.

That’s really all there is to it. Now, let’s break down these grant budgeting process steps to help you make your life a whole lot easier shall we?

Step 1: Understand the Grant Requirements


You have to know what is expected of you before you spend a single dime of your grant. The reason? If you don’t use the funds as intended, it could result in your organization being required to return the money. In the worst cases, it can also result in fines and penalties. No one wants that!

It is, therefore, crucial to thoroughly read and interpret the grant guidelines and requirements before preparing the budget.

You can usually find this information within your grantmaker’s paperwork they send you when you receive your grant. It may also be on their website, and even within the application you filled out. If you aren’t sure about your guidelines, ask questions. It’s better to be safe than sorry.

Tips for reading and interpreting grant guidelines and requirements

  1. Start by reading the grant guidelines and requirements thoroughly and highlighting or noting any areas that require clarification or further research.
  2. Determine what types of expenses are eligible for funding and what types of expenses are not covered by the grant.
  3. Note any specific requirements for reporting and documentation of expenses.
  4. Determine the duration of the grant and note any restrictions on the timeline for spending the grant funds.
  5. Identify any requirements for matching funds or in-kind contributions.
  6. Look for any restrictions on the use of funds and determine how the proposed activities align with the grant requirements.
  7. Consider the evaluation criteria and determine how the proposed activities align with the grant's goals and objectives.
  8. If there are any unclear or confusing requirements, reach out to the grant program officer for clarification.
  9. Review the guidelines and requirements periodically throughout the budgeting process to ensure that the proposal aligns with the grant requirements.

Step 2: Gather Necessary Information


What kinds of things will you need for your grant budgeting process? Essentially, you will need estimates for costs related to support staff, supplies, equipment, travel, and any other expenses you anticipate will come up while working on your project. Don’t neglect anything. If you think there will be a fee associated with something, add it to the budget. The more thorough you are, the less chances there will be that you will run out of money.

Tips for gathering cost information from relevant sources

  1. Consult with project staff: Talk to the staff members who will be working on the project to get a better understanding of the resources and materials needed for the project.
  2. Research online: Look for pricing information online for supplies and equipment to get a sense of what these items might cost.
  3. Reach out to vendors: Contact vendors directly to get pricing information and estimates for equipment or materials needed for the project.
  4. Review historical data: Look at budgets for similar projects in the past to get a better sense of what expenses might be involved.
  5. Check with the funder: Review the grant guidelines and contact the funder if you have any questions about allowable expenses or budgeting requirements.

Step 3: Categorize the Expenses


You might wonder why you should categorize your expenses. The idea is that it will make it easier to figure out what items will cost the most so you can plan them out better. For example, if you see that equipment will be your largest expense, you can start negotiating with your community to borrow equipment and/or purchase it second hand. Or if you see that personnel costs are excessive, you can start reaching out to find volunteers that won’t charge for their time so you can save in that area.

Typical categories are:

  • Staff and support personnel
  • Equipment
  • Office supplies
  • Software
  • Advertising
  • Food, and
  • Travel

If your expenses don’t fit in these categories however, you can make as many categories as you feel would be appropriate.

Tips for categorizing expenses accurately

  1. Begin by listing all the expenses required for the project and grouping them into similar categories.
  2. Use the grant guidelines to ensure that all expenses are eligible for funding and align with the grant requirements.
  3. Consider any restrictions on the use of funds and ensure that the proposed expenses are consistent with the grant guidelines.
  4. Be specific when categorizing expenses and avoid grouping unrelated expenses into a single category.
  5. Ensure that all expenses are accounted for and that the budget is comprehensive.
  6. Check the budget periodically throughout the budgeting process to ensure that all expenses are categorized accurately and that the budget remains within the grant's budgetary restrictions.
  7. Consult with project team members and finance experts to ensure that all expenses are accurately categorized and accounted for in the budget proposal.

Step 4: Estimate Costs


Estimating costs is typically the most tedious step of the entire grant budgeting process. This is because now you have to actually research all of your anticipated expenses. It’s also the more frustrating step because what we anticipate costs will be doesn’t always line up with what they actually are.

When we underestimate costs, we might not be able to complete our plans. When we overestimate them though, it can result in an inefficient use of your resources.

Tips for estimating costs accurately

  1. Use historical data: Reviewing data from past projects can help inform cost estimates for the current project. It's important to take into account any differences between the projects that might affect costs.
  2. Get multiple quotes: For equipment or materials, it's a good idea to get quotes from multiple vendors to ensure that you are getting the best price.
  3. Consult with experts: If there are aspects of the project that are outside your area of expertise, consult with experts to get a more accurate estimate of the costs involved.
  4. Consider all expenses: Make sure to include all expenses, including indirect costs like administrative fees and staff time, in your cost estimate.
  5. Factor in contingencies: It's always a good idea to include a contingency fund in your budget to account for unforeseen expenses or cost overruns.
  6. Use budgeting tools: There are many online tools and templates available that can help with cost estimation and budgeting. These tools can help ensure that all expenses are accounted for and can simplify the process of creating a budget.

Step 5: Create the Budget


This step in the grant budgeting process involves assembling all the categorized expenses into a comprehensive budget document. This document should provide a detailed breakdown of all expenses and demonstrate how they align with the grant requirements. You want it to be clear, concise, and easy to read and comprehend.

Tips for creating a clear and concise grant budget

  1. Start by reviewing the grant guidelines and ensuring that all the expenses are eligible for funding and align with the grant requirements.
  2. Organize the expenses into categories and ensure that all expenses are accounted for.
  3. Use a spreadsheet or budgeting software to create the budget document. The budget document should include a detailed breakdown of each expense category, including the itemized expenses and their associated costs.
  4. Ensure that the budget document is easy to read and understand. Use clear and concise language, and avoid technical jargon.
  5. Be transparent about any assumptions or estimates made in the budget document. Clearly state any uncertainties or assumptions in the budget.
  6. Provide a narrative that explains how the proposed expenses align with the grant's goals and objectives.
  7. Be realistic when estimating expenses and ensure that the proposed expenses are reasonable and necessary.
  8. Include a summary or overview of the budget at the beginning of the budget document. This summary should provide an overview of the budget and highlight key expenses and budgetary restrictions.
  9. Have the budget reviewed by project team members, finance experts, or other stakeholders to ensure its accuracy and clarity.
  10. Double-check the budget document for errors and ensure that it is formatted correctly before submitting it with the grant proposal.

Step 6: Review and Revise


Homestretch! At this stage, you will review your budget and revise it anywhere you feel is necessary. In this stage you will also look for inconsistencies, start reaching out to people for discounts and in-kind donations, and make changes as needed.

Tips for reviewing and revising the budget

  1. Get feedback from stakeholders: Solicit feedback from stakeholders who are involved in the project. They may be able to identify areas where the budget needs to be revised or may have suggestions for reducing costs.
  2. Review the budget line by line: Go through the budget line by line to identify any errors or inconsistencies. Check that all costs are included and that there are no duplicated expenses.
  3. Check the budget against project objectives: Ensure that the budget aligns with the project objectives and that the project can be completed with the allocated funds.
  4. Look for ways to reduce costs: Consider if there are any areas where costs can be reduced without compromising the project objectives. This may include finding more cost-effective suppliers or changing the scope of the project.
  5. Revise the budget as necessary: Make any necessary changes to the budget based on the feedback received and the results of the review. Ensure that the budget is balanced and that all expenses are covered.

By reviewing and revising the budget, grant seekers can ensure that the budget is accurate, feasible and aligned with the project objectives. This can help increase the chances of securing funding and of successfully completing the project.

Conclusion and Next Steps

In conclusion, simplifying the grant budgeting process is crucial for successful grant management. By following the step-by-step guide, grant-makers can ensure they have a comprehensive and accurate budget that meets all the requirements of the grant. The guide includes important steps such as understanding the grant requirements, gathering necessary information, categorizing expenses, estimating costs, creating the budget, and reviewing and revising the budget.

Applying the tips and steps outlined in the guide can help grant-makers to streamline the budgeting process, save time and resources, and avoid financial shortfalls or over-commitment. With SendGrant software, grant-makers can further simplify the process by distributing award money, receiving notifications when recipients receive funds, verifying funds are being used within program criteria, and having a digital transaction log and client portal to refer back to.

We encourage grant-makers to apply these tips and steps to simplify their grant budgeting process and achieve greater success in their grant management efforts.

Sign up for the SendGrant pre-launch. With our software you can further streamline the process and ensure a more efficient and effective grant management experience.

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