How to Write a Budget Narrative for a Grant

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Aligning Costs With the Budget
Aligning Costs With the Budget (Image: money, counting instrument, calculator image by Astroid from Fotolia.com)

A budget narrative is attached to a grant proposal's budget to give a written justification of projected costs. An effective budget narrative explains how the budget would be spent, why the item is needed, and why it is cost effective. Giving proper justification for a budget is essential when competing for large grants. The narrative must tell the reader more then why the costs are needed but give a mental picture of the impact that can be made with the grant funds being requested.

Write each justification for the budget narrative in paragraph form. The budget is used to get a quick idea of costs, the budget narrative is written to give a full explanation of why the cost is needed. Each justification should be full of documented information to support costs.

Categorize each section of the budget narrative separately and in order of how the budget addresses each section. If a single item is an unorthodox purchase or is a large expenditure, address that item directly below the category justification. Some grant guidelines may require all large items to have their own written justification. Grant proposals that request only large items should write a justification for each item and not try to group them into one paragraph.

Justify each item in the budget with cost effectiveness in mind. Show evidence to convince the grant reviewer that the item would make an impact worth the price and is a necessity. (Reference 3) Identify the specific goals and objectives of the grant proposal that corresponds with each category of the budget narrative being requested. State why the item is important to the mission statement.

Give exact prices of the expected costs of the item when writing a budget narrative for a grant. Do not require the reader to look back at the budget. If costs are based on projections only, give details on how the costs was estimated. Attach copies of estimates to the appendix.

Include easy to read charts to explain complicated ideas. Charts can easily be made in a word program to visually show grant reviewers how the grant funds would be allocated into a project. For example, a bar graph can be created to show how the number of people served will grow dramatically if project funds for a specific item can be met.

Give realistic examples on how items will be used. Do not assume that the reader knows what the item is for. Write a short concise example that gives readers the ability to visualize the use of the item. An example is best used when the use of the item requested is not a typical request or the item it self may raise questions of if it is worth the cost.

Double check the budget narrative to make sure the order of the justification and costs given are in agreement to the budget given for the grant proposal. Match the information given in the budget exactly with the information you give in the budget narrative. Always double check numbers, dates, and descriptive names.

Tips & Warnings

  • Write the budget narrative in the same sequence of categories as the line item budget using identical headings.
  • Include the budget narrative to a grant proposal after the formal budget or attach to the appendix.
  • Good grant proposals are routinely rejected due to an unclear or faulty budget narrative.
  • Refrain from going overboard with explaining each item. The budget narrative may have to be limited if pages our restriction due to grant guidelines.
  • An chart and example is not needed for every expenditure justification.

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