Key Points Discussed in This Section:

The different types of budgets and

budget formats.
Ways to identify budget
discrepancies.
Administrative costs guidelines
and reasonable requests.

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Do not be intimidated. It’s not rocket science, and yes, you do
have to be able to add. A budget is merely the fiscal
management plan for your proposed project. The key to
preparing the proposal’s budget is that it should accurately reflect
the expenditures required to support and execute your project.
Your budget should be meticulously constructed, cost effective
and make sense when viewed in relationship to the program’s
objectives, methodology, staffing and work plan.

Respond precisely to what the RFP/IFB/NOFA/SGA 1 requests, in the

manner that it is requested and do not deviate. When you have
questions or need clarification, do not speculate contact the
requestor and ask for an explanation. If forms are provided, use
them. Read and follow their directions. Remember that the
initiator/grantor has the most familiarity with its own formats.
Occasionally, the forms can be computer-generated but always
check with the grantor for permission. Never substitute the forms
without permission.

There are various budget formats, e.g. line item, functional,

budget narratives and/or budget justifications. Read the
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Request For Proposal, Invitation For Bid, Notice of Funding Availability, Solicitation Grant Award

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RFP/IFB/NOFA/SGA for instructions on which kind of format to
prepare. The following information provides brief descriptions of
these formats.

 Line Item Budgets are usually standard categories and

straightforward. Expenditures are totaled categorically,
e.g. total personnel costs, total fringe benefits, total
equipment, supplies, travel, and contractual services
costs, total facility costs (rent and/or utilities) and so forth.

 Functional Budgets apply a zero-based budgeting concept,

i.e. the costs incurred by a project component are
allocated proportionately to the component or deliverable,
e.g. Cost of Leadership Development Component = x%
personnel$ + x% equipment$ + x% contractual services$
+ x% facility cost$ . (Verify if administrative costs are
allowable or should be indicated elsewhere.)

 Budget Narratives and/or Justifications require a written

statement that explains: 1) the amount, 2) what the
expenditure is, 3) shows the calculations for any
quantities and 4) establishes the expenditure is essential
to the program’s operation. For example, this item would
be listed under the budget line for Contractual Services:
“The amount of $12,000 covers the purchase of
consultant services for the development of an Academic
Content and Student Tracking System for the program.
The tracking system is essential to the program because
it will allow enrolled students to self monitor progress
made toward learning and academic achievement, as well
as, provide for monitoring the program’s effectiveness in
promoting increased academic performance.”

Sometimes a submission requires ALL of the above and may also

require a forecast of periodic planed expenditures. Ask yourself,
why would a grantor request this? How could having all three
affect the submission? Budgets fiscally chart your proposed

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spending and provide evidence of responsibility. A comparative
analysis will immediately show any discrepancies and/or
inconsistency. Make sure that all of your related figures match and
the totals are consistent across the documents. A helpful hint: if
your eyes cross from staring at the numbers that come from all
this budget balancing and preparation, it’s wise to have someone
else handle the cross check.

Now, let’s talk about the one thing every agency dreads,
“Administrative Cost”. What actually constitutes “administrative
cost”? OMB Circular A122 and A-21Revised 2 normally require
administrative and clerical expenses be treated as indirect costs,
not as direct costs, except when the expenses are used to support
a major project or activity. Although, this is something every
agency tries to recapture; be prudent; ask if it is an allowable
expense. When it is, generally an initiator/grantor will require a
cap on this expense. A standard allowance runs anywhere from
10% to 15%, over all. If higher or hidden, it can cause the
reviewer to question the agency’s fiscal competency and its
commitment to the proposal’s integrity. Some agencies have
federally approved rates, it is wise to determine if this is the case
because the rates can vary by type of institution.

Finally, when you prepare your budget, keep in mind it is not a

Christmas wish list or the time to go shopping for everything your
Agency’s programs never had. Use common sense. It is patently
unwise to allocate $50 for a paper clip and huge, ambiguous
expenditures are automatically questionable. Remember your
proposal will stick out like a sore thumb if it is blatantly out of the
normal range of submissions. Entries like these can lead to entire
line items in your budget being disallowed, thus compromising
your program’s integrity and capacity to perform. On the other
hand, if you are proposing a “Cadillac or Mercedes-Benz Program”
a high-end budget may be appropriate, risky but appropriate. In
this case, underfunding can be just as dangerous as over
requesting and can indicate that you do not really understand the
true cost of the effort involved.
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Revised 5/10/04

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Finally, don not forget to check your spreadsheet formulas;
computer errors are as possible as human errors. Check, cross
check and recheck all calculations. Keep your budget simple,
clear, accurate and easy to understand.