How to Create a Strong Budget Using GrantCraft's Proposal Builder

Why the Budget Can Make or Break Your Proposal

The budget is the section of your grant proposal that tells funders exactly what you will do with their money. A strong narrative means nothing if the budget does not support it, and a budget full of errors or vague estimates signals to reviewers that your organization may not be capable of managing funds responsibly. Step 5 of the GrantCraft Proposal Builder provides a structured framework for building a detailed, accurate, and well-justified grant budget.

Many grant writers treat the budget as an afterthought, filling in numbers after the narrative is complete. This approach almost always produces a weak budget because the numbers are retrofitted rather than developed in parallel with the program design. The Proposal Builder encourages you to work on the budget alongside your project description, ensuring that every activity has corresponding resources and every budget line ties back to a specific program component.

Understanding Standard Budget Categories

The Proposal Builder organizes your budget into standard categories that are recognized by both federal agencies and private foundations. Understanding what belongs in each category prevents common classification errors that frustrate reviewers.

Personnel

Personnel costs are typically the largest category in a grant budget. The Proposal Builder prompts you to list each position, the percentage of time dedicated to the grant-funded project, and the annual salary. For example, if your program director earns $60,000 per year and will devote 50 percent of their time to the project, the personnel cost is $30,000.

Be precise about time allocation. If you claim a staff member will spend 25 percent of their time on the grant, you need to be able to document that through timesheets or effort reporting. Overstating time commitments is one of the most common audit findings for grant-funded organizations.

Fringe Benefits

Fringe benefits include employer-paid taxes, health insurance, retirement contributions, and other benefits. The Proposal Builder includes a space for entering your fringe benefit rate, which is typically expressed as a percentage of salaries. If your total fringe rate is 28 percent and your personnel costs are $100,000, fringe benefits would be $28,000.

If you do not know your organization's fringe rate, calculate it by adding up your total employer benefit costs and dividing by total salaries. Common components include FICA at 7.65 percent, health insurance, workers compensation, unemployment insurance, and retirement contributions.

Travel

Travel costs should be based on your organization's written travel policy or, for federal grants, the federal per diem rates published by the General Services Administration. The builder prompts you to describe each trip, including destination, purpose, number of travelers, and cost breakdown covering airfare, lodging, meals, and ground transportation.

Equipment

Equipment is generally defined as items costing more than $5,000 with a useful life of more than one year, though some organizations use a lower threshold. The builder prompts you to list each equipment item with a description and cost. If you are purchasing specialized equipment, include a vendor quote or catalog price to support the estimate.

Supplies

Supplies are consumable items needed for program delivery, including office supplies, training materials, software licenses, and program-specific materials. The builder helps you organize these items and calculate total costs. Group similar items together and provide enough detail for the reviewer to understand what you are purchasing and why.

Contractual

This category covers services provided by external vendors, consultants, or subcontractors. Common entries include evaluation consultants, IT services, accounting services, and specialized trainers. For each contract, describe the scope of work, the basis for the cost, and how the contractor was or will be selected.

Indirect Costs

Indirect costs, also called overhead, cover expenses that support the project but are not directly attributable to it, such as rent, utilities, and administrative support. If your organization has a federally negotiated indirect cost rate, use that rate. If not, many grants allow a de minimis rate of 10 percent. The builder includes a field for entering your indirect cost rate and calculating the total.

Writing Budget Justifications

A budget table without justification is like a proposal without a narrative. The Proposal Builder includes space for budget justifications, also called budget narratives, that explain the reasoning behind every line item. A good justification includes the basis for the cost calculation, the necessity of the expense, and the connection to project activities.

For example, a personnel justification might read: "Program Coordinator, 1.0 FTE at $45,000 annually. This position is responsible for recruiting participants, coordinating daily program activities, and tracking participant attendance and progress. Salary is based on the organization's established pay scale and is consistent with comparable positions in the local labor market."

For more guidance on budget construction, including cost-sharing strategies and multi-year forecasting, see our advanced guide on advanced grant budgeting strategies.

Common Budget Mistakes to Avoid

• Math errors: Always double-check your calculations. A budget that does not add up signals carelessness.
• Rounding too aggressively: A budget line for "supplies: $5,000" without detail looks like a guess. Break it down into specific items.
• Budget-narrative disconnect: If your narrative describes hiring three staff members but your budget only includes two, reviewers will notice.
• Unrealistic costs: Research actual market rates for salaries, equipment, and services. Lowballing costs to fit within a budget ceiling backfires when you cannot deliver the program for the amount requested.
• Forgetting fringe benefits: New grant writers frequently budget salaries but forget the associated fringe costs, which can add 25 to 40 percent to personnel expenses.
• Ignoring indirect costs: You are entitled to recover indirect costs. Not including them shortchanges your organization and may make your direct costs look inflated.

Aligning Budget and Narrative

The strongest proposals demonstrate a seamless connection between the budget and narrative. Every activity described in your project design should have corresponding costs in the budget, and every budget line item should be traceable to a specific activity. The Proposal Builder's step-by-step structure helps maintain this alignment by prompting you to develop both sections in parallel.

Before finalizing your proposal, cross-check your budget against your narrative. Use the GrantCraft Readiness Checklist to verify that your budget is complete, and review the Tips section for additional budget strengthening advice.

Learn more about grant writing strategies at Subthesis.

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