Budget Basics for Federal Grants

Federal grant applications are generally comprised of two pieces: a project description, or narrative, and a financial description, or budget. These two elements are inextricably linked, as the budget lays out how much the program plan will cost.

The project description and the budget tell the same story in different ways. Every activity described in the project narrative that requires resources must be assigned a monetary value in the budget. Anything extraneous or unaccounted for in either section will raise red flags with reviewers. For example, if your project narrative discusses improving mathematics outcomes with online tutoring, the budget should reflect a line item for tutoring software licenses. At the same time, if your budget contains a line item for tutoring software licenses there should be a narrative discussion of tutoring needs in the project description.

Sometimes the project director (or grant writer) and the budget developer are different people. Perhaps one is from the world of program development and the other is from the finance office. These individuals need to recognize the interdependence of their roles and the necessity to work together to create a unified, consistent grant proposal.

Weaknesses in the budget can result in a loss of points in the technical review process. Some typical budget pitfalls are described below:

  • A budget that has been built from the sky down rather than from the ground up. Savvy reviewers can often tell when a budget is padded. While you do not necessarily want to leave money on the table, ask only for what you need to conduct the project.
  • Requests for funding costs that should be typically supported by the organization, such as day-to-day programming. Federal funds should be used to supplement, not supplant, existing resources.
  • Costs that are not tied to the project objectives, or worse yet, are not tied to anything in the project plan.
  • A budget that has a high cost-per-participant. A high cost-per-participant shows that a budget is too expensive for the number of people being served.
  • A budget that is laden with personnel. Some projects require a lot of personnel. However, unless there is a solid sustainability strategy for keeping key personnel positions post grant, reviewers may wonder about the long-term viability of your project.
  • Matching funds that are only provided by third parties. An organization should ensure it has its own matching funds (cash or in-kind) available for a project. Reviewers will want to know you are willing and able to make an investment in your own grant program.
  • No funding plan beyond the project period (i.e., no sustainability).
  • Insufficient justification of costs. While project narratives typically have page limits, budget narratives often do not. This is your chance to use the budget narrative to break down line items into their component parts. For example, instead of assigning an $850 line item simply to “travel,” break it down into understandable pieces such as airfare $250, ground transportation $50, hotel for three nights $450, and meals $100.
  • Incorrect calculations and costs placed in the wrong funding categories.
  • Inclusion of costs that have already been funded by another source.


Preparing grant application budgets can be challenging. Remember that your project narrative and budget should always tell the same story. Read and review your proposal carefully to ensure alignment and avoid common mistakes.


About the Author: Barbara Norris Coates is Grant Development Consultant from La Grange Highlands, Illinois. She specializes in education.


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