The Proposal Budget: Planning the Budget

Funding levels in Federal assistance programs change yearly. It is
useful to review the appropriations over the past several years to try
to project future funding levels (see Financial Information section of
the Catalog program description). However, it is safer to never
anticipate that the income from the grant will be the sole support for
the project. This consideration should be awarded to the overall budget
requirements, and in particular, to budget line items most subject to
inflationary pressures. Restraint is important in determining
inflationary cost projections (avoid padding budget line items), but
attempt to anticipate possible future increases.

Some vulnerable budget areas are: utilities, rental of buildings and
equipment, salary increases, food, telephones, insurance, and
transportation. Budget adjustments are sometimes made after the grant
award, but this can be a lengthy process. Be certain that
implementation, continuation and phase-down costs can be met. Consider
costs associated with leases, evaluation systems, hard/soft match
requirements, audits, development, implementation and maintenance of
information and accounting systems, and other long-term financial
commitments.
A well-prepared budget justifies all expenses and is consistent with the
proposal narrative.

Some areas in need of an evaluation for consistency are: (1) the
salaries in the proposal in relation to those of the applicant
organization should be similar; (2) if new staff persons are being
hired, additional space and equipment should be considered, as
necessary; (3) if the budget calls for an equipment purchase, it should
be the type allowed by the grantor agency; (4) if additional space is
rented, the increase in insurance should be supported; (5) if an
indirect cost rate applies to the proposal, the division between direct
and indirect costs should not be in conflict, and the aggregate budget
totals should refer directly to the approved formula; and (6) if
matching costs are required, the contributions to the matching fund
should be taken out of the budget unless otherwise specified in the
application instructions.