I am frequently asked as a grant writer to explain the differences among the questions in an RFP related to operational budget, program budget and amount asked.
These questions may take slightly different forms from different potential funders. Other words used to ask these same questions might be organizational budget, total activity cost and project budget.
Let’s tackle what operational or organizational budget means first, and what the funder is really looking at when they review your application.
When an organization asks for your operating budget or organization’s budget, they want to know how much it costs your organization every year to do everything it needs to do, from all personnel costs (not just those related to the program you are pitching), to utilities, to equipment, and to every other cost your organization has. This is the budget your board of directors approved. Sometimes program leaders are concerned that if their annual operational budget is too large, funders will think they don’t really need their investment. This is usually not the case. In fact, funders want to be sure that their investment won’t fundamentally change an organization’s day-to-day operations. For example, if an organization runs on a shoestring $100,000 budget, but is asking for a $100,000 grant to implement a new program, the funder is going to be very skeptical that the organization can handle the doubling of its resources overnight.
The program budget/project budget/total activity cost is where you explain exactly how much you need to accomplish everything in the proposed program. This may take a one-year approach or longer. While many funding organizations limit grants to one year, many others allow requests for as long as three years.
The grant request is the amount you are asking from the particular potential funder. Frequently, I will see someone try to fit a budget to the amount they are asking. In other words, if the funder only makes grants up to $10,000, they will create a $10,000 program budget. But your budget for the program should be your ideal budget to accomplish everything you are setting out to do. Think of it like a puzzle. Several funders or sources come together to make the program possible. Very few, but not all, grant-making organizations want to be the sole funder. They like to see that the organization requesting funds prioritizes the program enough to put some of their own resources into it. Ideally, you will have an additional source or two for funding as well. This shows the reviewer that your program is sustainable even if they exit the program after funding it for one or two years.
Putting it all together: Let’s picture that a library is requesting funds to implement an innovative after-school reading program. Their responses to the various budget questions will look something like this:
Operational (or annual or organizational) budget: $1.2 million
This would include the cost of all personnel, their benefits, rent and utilities, the cost of purchasing and repairing books, subscriptions, equipment, etc. in a fiscal year. Remember, this will be the budget that a board of directors approved.
Program budget: $50,000
This would include all the additional costs associated with implementing the after-school program, including the need to hire an additional part-time employee, purchasing books to give away, supplies and printing costs associated with advertising the program to parents, snacks to serve at meetings, etc.
Proposal Request: $15,000
This is the amount you are asking this particular funder to provide. Depending on the format of the RFP, you may be able to show that your organization is providing $10,000 in personnel costs, that another $10,000 is coming from a participation fee, that additional donations of $15,000 from another foundation was received for this, and that this $15,000 is the final piece needed to make this program a reality.
I’d love to hear what your greatest challenge is.
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