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How do I write a grant budget narrative?

When you write a grant budget narrative, you explain how the money connects to your program.

When you’re write a grant, the application will often request a budget narrative. What is that? Didn’t you just explain what you were going to do with the money in the program narrative?

Budget narratives are different

When you are writing a grant proposal, one component essential to your success is a reasonable program budget. Not only do you have to know what you are trying to accomplish, you need to show that you understand the resources required to make it happen.

So your grant narrative might say, “Funding from the XYZ Foundation will provide meals to the homeless in our community.” This is fine for program narrative (with perhaps a bit more explanation), but it won’t fly for the budget narrative.

The budget narrative takes each line item in the budget and explains how it translates into some concrete object or action. So for instance, your budget might include $600 for facilities. Your budget narrative should explain, “$600 will pay for the utilities at St. Benedict’s Parish Hall and the use of their commercial kitchen for one year at a cost of $50 per month. The use of the space is being donated by the Church.”

Another example: $936 for food might be explained, “The ministry plans to feed 20 people lunch three times per week. The average cost per meal will be 1.2 pounds of food per meal multiplied by an average of $0.25 per pound of food from the Food Bank. 20 people X 3 meals X 52 weeks X 1.2 pounds per meal X $0.25 per pound of food = $936.

Put all of the pieces together.

Let’s take a look at what this will look like for a real budget. The following is a type of grant budget and narrative that I have used successfully at the food bank.

Budget

Line ItemCost per poundTotal expense
Building $0.04$10,000
Equipment$0.01$2,500
Labor$0.11$27,000
Labor Benefits$0.02$5,000
Management$0.02$5,000
Supplies$0.003$700
Transportation$0.02$5,000
Total Operations Cost$0.237$55,200
Total Lbs. Food Distributed 232,911
Total Meals Distributed194,000
Value of Distributed Food $1.66$386,632
Value Produced by Grant $441,832

Budget Narrative

The above grant budget is based upon a cost allocation model of budgeting. This model accrues a percentage of the total operations cost to every pound of food that is acquired, stored, sorted, and distributed. This method of budgeting allows us to factor in costs such as building, labor, and management for our food distribution program. The line items listed above are defined as follows:

Building – The cost of occupancy, financing, and maintenance for the warehouse facilities that store the food.

Equipment – The cost of acquiring and maintaining mission critical equipment such as fork lifts, pallet jacks, and computers.

Labor – Wages paid to our outreach staff, warehouse staff, and logistics staff.

Labor Benefits – The cost of fringe benefits for the staff.

Management – Salaries paid to leadership staff.

Marketing – The cost of printing and publicizing the Food Bank for fundraising and informational purposes.

Transportation – The cost of fuel and maintenance for the logistics fleet that picks up food from donors and delivers it to partner agencies.

Food will come from a variety of different donors, including retail partners, government programs, and manufacturers at no cost. The total pounds distributed is based on the amount of the grant divided by the average operating cost per pound to solicit that food from donors, bring it to our warehouses, and distribute it to our partner agencies.

Total meals distributed takes the total pounds and divides it by 1.2 pounds per meal, the USDA stand weight of a single meal.

The value of distributed food multiplies the total pounds of food by $1.66 the IRS standard value for one pound of donated food.

The total grant value is the value of the donated food added to the cost to distribute it.

Your budget tells a story

It might seem a bit much to go to this level of detail with your grant budget. But remember, people in charge of giving grant money look at applications like yours all the time. They will be able to tell if you don’t know what you’re doing by looking at the grant budget and seeing if the numbers make sense at all. In the above example, if you don’t mention that you’re getting food from donors, the grant funder would rightly say, “Where on earth are they going to get their food?” Until you explain that the food source is donations, your budget isn’t logical. They would throw out your application right there.

Good budgets are a challenge, but going through the process to create them is good for your ministry. When you write a grant budget narrative, you explain your thought process to the grant funder. When they read a solid budget narrative, they will see that you understand what you’re trying to accomplish and will have the resources to make it happen.


Looking for more articles on grant writing? Try these:

Check out The Fundraiser’s Playbook for a full list of fundraising articles.


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