How to Write a Budget Narrative for a Grant

When you apply for a grant, you will usually be required to submit a proposed budget along with the rest of your proposal. In almost all cases, that budget needs to be accompanied by a budget narrative. This section of your grant proposal package helps explain and, more importantly, justify the numbers in your proposed budget. A strong, supported and well-written budget narrative helps convince the people in charge of awarding the grant that your organization and project are the winning bet among a diverse pool of candidates.

While grant programs often require applicants to meet program-specific guidelines, most grant packages request that the proposal include a planned budget and an accompanying budget narrative. The narrative may be contained in a separate section of the proposal, or it could be appended to the budget as bullet points or notes attached to specific budget items. While the purpose of the budget section is to give the reader an instant-look impression of the numbers themselves, the narrative should be designed to justify the budget, both in total and in an itemized manner. Adequately and accurately justifying each budget item is particularly important for large grants. The narrative details must help explain for readers how and where the grant funds will make a positive impact, should the proposal be accepted.

The purpose of the budget narrative is to both explain and justify the projected costs for the proposal’s plan. To be effective, a budget narrative must be written clearly and succinctly in plain language. The narrative explains why each specific cost is necessary to achieving the proposal’s goals and the grant program’s objectives. To make the job both easier and simpler, create both your budget and your budget narrative at roughly the same time. The work you do to create one section will necessarily inform and shape the other, and vice versa.

Generally speaking, budget narratives will be organized along the lines of the budget’s organization, since its purpose is to clarify and justify the budget. Creating a narrative that mimics the organizational structure of the budget itself helps reinforce your data and the sense of a cohesive proposal for your reader.

Start by categorizing each part of your narrative in line with the way the budget itself does. You may want to write a separate section for unusually expensive items, instead of grouping them into a single paragraph. Otherwise, for the most part, each item should be covered in its own paragraph, under the appropriate category. Include specific information about why that specific cost is necessary, how it relates to your program and how it furthers the grant’s objectives. Additionally, include documented support for the item, its cost and specific source, if applicable.

One example of a budget breakdown includes the following categories:

• Personnel and Consultants (or alternately break these into two separate categories)
• Fringe Benefits
• Travel
• Other Contracts and Services
• Tools/Equipment
• Supplies and Materials
• Program Income
• Miscellaneous

The grants for which you are applying may have their own specific requirements for the proposal in general or the budget and budget narrative in particular. Always check your grant’s requirements before finalizing the proposal and budget narrative. Most grants expect budget items to be categorized.

To be effective, the content of a budget narrative should be specific, reasonable, practicable and well-organized. Keep in mind that the purpose of the narrative is to justify the costs and expenditures proposed, and to prove that they are both warranted and necessary. To create a draft of the narrative for each section and budget item, approach the task as if you were explaining to an interested friend who is completely unrelated to the program, your company, the grant or the funding organization. This person wants to know more but lacks the professional background or vocabulary to understand your goals instinctively. You’ll need to explain it to this interested, inexperienced friend using clear, simple terms and straightforward reasoning.

Write each narrative section as if you were speaking directly to this person. This will help you create a process narrative with a conversational flow using simple, clear language. Once you have written a complete draft narrative using this approach, you can go back and revise the text to flow more smoothly and correct any readability issues.

Repeat the exact prices in your narrative, assuming your narrative will be in a separate section of your proposal. This makes it easier for the reader to understand your budget and the details of how the funds will be put to use. If your budget is based on projections, explain how you estimated the costs, and if you have any written quotes or estimates from outside providers, attach those to your proposal as appendices.

Additionally, proceed on the assumption that your reader will not necessarily understand how each item is to be used or what its purpose is in achieving your goals. Include clear descriptions of how the item will be used, or what the service contributes to your proposed program.