In a recent Grantwriting Readiness Training in Crookston, a participant asked: “Should the grant budget zero out or should it show a surplus or deficit?” My reply is that there is a difference between your organizational budget and the budget submitted for a project or program grant. Propel Nonprofits in the Twin Cities makes the incredibly important point that “Nonprofits need capacity, which includes leadership, infrastructure, and systems.” They note that this requires a surplus in your organizational budget, which becomes an operating reserve at the end of the year. [Visit www.propelnonprofits.org for great budget, merger, and other resources] It’s helpful to include a note at the bottom of your organizational budget explaining why you show a surplus and what your agency reserves are used for. In a program or project budget, I believe it works best to zero out your budget or show a reasonable surplus. If your surplus is too large, funders will ask why you need their support. If you show a significant deficit, funders will question whether your organization can implement the project or program without full funding. I always recommend that your program and project grant budgets include full costs for your management and administrative support, as well as occupancy, phone, internet, a share of your audit, liability insurance, and other costs. If the grant isn’t large enough for you to include these costs, show them as in-kind support from your agency…but do show them. It’s often more compelling to funders when you can show multiple revenue streams for your proposed program or initiative. Your agency’s in-kind support counts as a revenue stream. And, it’s important for funders to understand the true costs of your projects and programs…and for you to understand also! Seeing true actual costs laid out in your budget can be a great visual reminder.
When you’re feeling stressed over your budget, just remember what another nonprofit colleague said at the Community Resource Connections Networking meeting earlier in December: “Budgets are like the weather forecast. They’re a guideline.”
Do you have a question you’d like to ask but are feeling reluctant to use your limited funds for paid advice? Contact me at Becky@bemidjiconsulting.com with your question, and I’ll consider blogging about it if I think I can make a meaningful contribution. Or, if it’s a really super question, and other nonprofit and tribal colleagues can also benefit, I may develop a training to address it! Feel free to contact me, it’s free.
