17 Feb Understanding and Articulating the Financial Needs of Projects by Julie Alsup, GPC

Many seasoned grant reviewers will tell you that they start with the budget. I believe this is why a discussion of GPC competency two, assessing an organization’s readiness to obtain funding to implement specific projects, should also begin with a discussion of budget. A deep understanding of the budget is necessary to communicate need to potential funders. The grant writer can help assess and advance readiness in the following ways.

Can the agency provide an income/expense budget?

• Once an organizations’ annual budget is approved by the board, request the income/expense budget for each of the agency’s signature programs. Larger organizations with robust financial software systems often assign cost centers to each signature program, allowing for reports to be run showing budgeted (and actual) income and expenses by center.
• Clarify with finance any revenue line items for which you need further explanation. If the budget is balanced (i.e., net zero), confirm what percent of the foundations and grants line items has been secured and how much is still pending.
• If a program budget shows a deficit, ask the development director or the finance department how the agency realistically covers that loss. For example, do undesignated annual fund revenues or program fees support the program on an ongoing basis or when budgeted revenue line items fall short?

If an agency cannot supply a program/project budget, help them create one. 

• If it is an existing program, start with the budgeted expenses of the organization. First ask the program/project director about any and all staff that expend time and effort implementing the program/project. If a staff person has multiple responsibilities, ask for the best estimate (percentage) of the time and effort spent on the specific program/project and begin to carve these direct expenses out of the larger organizational budget.
• Ask to see the organization’s audit and look to see if there is a statement of functional expense. If so, this is a great starting point as it is the auditor’s portrayal of program expense compared to administrative/fundraising expense.
• Ask the director to confirm any direct expenses incurred by the organization for the sole purpose of that program/project. This might include a curriculum purchase, a contract service fee, or transportation charges.
• Then ask them about any expenses that are unbudgeted. This is for new programs, and or existing programs that the agency wants to expand or scale. Do they have a wish list for professional development or new supplies? Do they need to hire more people?

Once you have this information from the program/project director, confirm the details with operations and finance staff and discuss the existing revenue sources designated for the program/project. Ask where additional grant dollars could fit in and whether they are needed at all. If the program is already funded by designated dollars, perhaps additional grant dollars can be requested to replicate or scale the project. Caution should be exercised to prevent supplanting designated funds if forbidden by the request for proposal. Finally, if existing designated dollars currently fund the project, ask when those dollars will be fully expended and perhaps a new grant can be requested to continue the project once those funds expire.

Confirm the project scope.

As much as nonprofit executive directors would love to have grant writers secure funds for core operations, funders often want to fund a project. That may require replicating or scaling an existing program or starting something new. Understanding the agency’s signature programs and the respective budgets further equips the grant writer to address the topic of scopes for expanded or new projects.  If the project is new, the grant writer should ask the following:

• Does the project scope align with organizational priorities and/or the strategic plan?
• Does this project leverage an existing project scope/budget of a signature program? For example, is the project focused on providing trauma-informed professional development for the staff in the agency’s core childcare program? If so, you can leverage the agency’s focus and commitment to childcare and create a project scope that includes the childcare program with the additional expenses of the professional development.

Incorporating some of these strategies can help organizations better understand and articulate the financial needs for their programs.

Competency 2.2: Assess organizations’ readiness to obtain funding to implement specific projects