Monday, June 21, 2004

The Word "Gets" Is In "Budgets"

Most often a budget is one component of a grant proposal. This one part of the document can be 'the hurdle' for some. You may wonder,

'Who creates the grant proposal budget?'
'What information goes into a budget?'
'How detailed does the grant proposal budget need to be?'

Blachhhh?

You aren't alone.

As a public entity and as an entity asking for financial assistance, expect to fully disclose your organization's accounting. Investors have a right to get a sense of your whole organization including costs, how and where money is spent, and how well its money is handled.

When a foundation receives a grant proposal they are looking at one of many many documents that they have to read to understand the request, the agency making the request, what the money is requested for, and how healthy is the agency, among other points.

One way for a foundation to determine your agency's 'health' is to look over your agency's financials. These are the agency's accounting reports such as the Balance Sheet (from the most recent closed accounting period), a Profit and Loss (Year to Date (which means 'so far in this fiscal year'), agency budget (current), and the past fiscal year financials (preferably audited by an outside accounting firm, per the Sarbanes Oxley Act).

The financials give a picture of how the agency's leadership spends the agency's money, where the money is spent, and how healthy your organization's cash flow is.

Your grant proposal budget details the accounting (budgeted and actual income and expenses)for whatever you are requesting the grant for. So, if you would like a grant to build an addition onto the single mothers' housing facility that your organization runs then the proposal budget would include all financial detail about the projected and actual (after the project begins) expenses and the projected and actual (after the project begins) income. Here's an example:

Mother's Safe Haven
Grant Proposal to the Nest Foundation
For Building an Addition to Haven House

Income:

Budgeted
$35,000 - Our Major Donors
$50,000 - Mothers' Foundation grant (Notification due Dec. 2005)
$20,000 - Good Neighbor Bank grant
$20,000 - Fundraiser Dinner at the Fancy Pants Hotel
Total: $125,000

Actual (Year to Date)
$20,000 - Fundraiser Dinner at the Fancy Pants Hotel
$20,000 - Good Neighbor Bank grant
$20,000 - Our Major Donors
Total: $60,000

Year To Date Income Total: -$65,000

Expense

Budgeted
$20,000 Building/Landscaping Materials
$200,000 Construction Labor
$50,000 Construction Management
$15,000 Architect
$5,000 Permits, Fees, and Notices
$1,500 Postage, Printing, Photocopying
$10,000 Electricians
$5,000 Landscaping Contractors
$10,000 Executive Director Salary
$1,500 Bookkeeper Salary
$4,000 4 Month's Mortgage Payments
$2,000 4 Month's Electiricty, Trash, Water, Sewage
$1,000 Cement Mixer and Labor
Total: $325,000 Total

Actual (Year to Date)
-$200,000 Good Guys Construction Labor In Kind Donation of Labor (Received June 2005)
-$50,000 Construction Management
-$10,000 Electricians
Total Paid:$260,000

Year to Date Actual Total Project Budget: -$125,000

If a foundation requests more detail in the budget; start with the basic information that needs to go into your budget (as suggested in the example above) and then add the detail as appropriate either as footnotes on the same sheet as the budget or in the written portion of the document.

Always be sure that when you proof read your proposals that the budget is also proofed by someone who can read and understand budgets and that everything that is mentioned in the written portion of your proposal matches correctly with the budget, itself. There should never be any discrepencies between what you claim in a proposal and the agency's accounting.

If the project head or the agency's accountant already has a budget for the program - great, use it! Make sure that each line item is described well enough so that anyone reading it will understand what each line is describing (get rid of jargon). Also, be sure that each party in the project has ok'ed that budget.

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