How to build a project budget for a grant application

A grant project budget is a list of the costs of one specific project, split into what the funder will pay and what you and your partners will pay. It should include only eligible costs, each one backed by a quote or a clear calculation, and it must match the project you describe in the application. A good budget also plans for cash flow, because most programs reimburse you after you spend.

Why does the budget matter so much?

Reviewers often read the budget as closely as the project description. It shows whether you understand the work, whether the costs are reasonable, and whether you can deliver. A budget that doesn't add up, includes ineligible items or doesn't match the plan is one of the most common reasons an application is sent back or scored low.

The budget also becomes part of your contribution agreement if you're approved. Your claims will be checked against it, so a realistic budget now saves trouble later.

Where do I start?

Start with the program's rules, not with a spreadsheet:

1. Read the applicant guide and the program page. Note what costs are eligible, what is excluded, and how much of the cost the program will share.
2. Write down the project activities: what will be done, by whom, and when.
3. For each activity, list the costs it needs.
4. Sort each cost as eligible or ineligible.
5. Get quotes or work out estimates.
6. Decide who pays for each cost.

If a program provides a budget template, use it exactly. Don't change the categories or formulas.

What counts as an eligible cost?

Each program defines this itself; check the program page. Common eligible categories include:

• wages and benefits for staff working directly on the project
• contractors, consultants and professional services for project work
• equipment, software and materials needed for the project
• marketing, travel or trade show costs (often in export programs)
• training directly tied to the project
• energy efficiency equipment and installation (in energy programs)

What costs are usually not eligible?

Again, each program sets its own list, but these are often excluded:

• costs incurred before approval (retroactive costs)
• ongoing operating costs not tied to the project, such as regular rent or existing staff doing their usual work
• refundable sales taxes
• buying land or buildings
• paying off debt, fines or interest
• costs already paid by another program
• entertainment, gifts and alcohol
• fees paid to someone for writing the application, in many programs

If you're unsure whether a cost counts, ask the program before you submit. Read our guide on how to read eligibility rules.

How do I estimate each cost?

Show your work. Reviewers want to see where each number comes from.

• Wages: list each role, the hours or share of time on the project, and the hourly or salary rate. Benefits and payroll costs may be eligible separately.
• Contractors and services: get written quotes. Many programs ask for more than one quote for larger purchases, or expect you to explain why you chose a supplier.
• Equipment and software: use supplier quotes or published prices, and say whether you're buying, leasing or subscribing.
• Travel: list trips, people, and a reasonable cost per item. Some programs set their own travel rates.
• Materials: estimate quantities and unit prices.

Keep the quotes. You may need to attach them, and you'll need them again when you claim.

What is cost-sharing?

Cost-sharing means the funder pays part of the eligible costs and you cover the rest. Each program sets its own share of costs; check the program page. Your budget should clearly show:

• the total eligible project cost
• the amount you're asking the program for
• your own contribution
• any contributions from partners or other funders

The numbers must add up, and your share must be real money or resources you can show.

What are matching funds and in-kind contributions?

Matching funds are contributions from you or other sources that the program requires alongside its own funding. Some programs want matching funds in cash; others accept a mix.

In-kind contributions are non-cash resources, such as donated space, volunteer time, equipment or professional services given for free. Many non-profit and community programs accept in-kind contributions; many business programs don't count them. When you include in-kind:

• list each item separately
• give it a fair market value and explain how you set it
• keep records, such as volunteer timesheets or a letter from the donor

Don't count the same contribution twice, for example as both cash and in-kind.

Should I include a contingency?

Ask the program. Some allow a small contingency line for unexpected costs; many don't, and prefer accurate quotes. If contingency isn't allowed, build realistic estimates instead and know which costs you could reduce if prices rise. Remember that most programs won't increase their funding if your costs go up, so any overrun is usually yours to cover.

How do I plan for cash flow and claims?

This is where many projects run into trouble. Most programs pay by reimbursement: you spend first, then submit a claim with receipts and proof of payment. Some hold back part of the funding until the final report is accepted; this is a holdback.

To plan:

1. Map when each cost will be paid, month by month.
2. Note when you can submit claims, according to the program.
3. Allow time for each claim to be reviewed and paid.
4. Make sure you have cash, a line of credit or a loan to carry the costs until you're reimbursed.

Read getting paid: claims and reports and what happens after you apply.

What about other funding for the same project?

Many projects combine more than one source. That's often allowed, but there are limits on total public funding and rules against two programs paying the same cost. This is stacking. In your budget, list every other source, whether confirmed or pending, and show which costs each covers. Read can you combine grants?.

What are the most common budget mistakes?

• Budgeting costs you've already paid, or will pay before approval. See apply before you spend.
• Including ineligible items, such as sales tax you get back or regular rent.
• Totals that don't add up, or that differ between the form and the attachment.
• Costs with no explanation or quote behind them.
• A budget that doesn't match the activities and timeline in the application.
• Counting the same cost under two programs.
• Overstating in-kind contributions.
• Forgetting cash flow, then running out of money while waiting for a claim.
• Rounding everything up. Inflated budgets are easy for reviewers to spot.

How should the budget connect to the rest of the application?

Every major cost should link back to an activity in your work plan, and every activity should have its costs in the budget. Use the same names for activities in both places. A reviewer should be able to read the plan, then the budget, and see the same project. Our post on how to write a grant application and the grant application checklist cover the rest of the file.

Where can I find a program to budget for?

Run the funding check to see programs that fit your organization, browse growth programs, or see funding for small businesses and funding for non-profits. Each program page lists what it covers and links to the funder.

Frequently asked questions

Can I include my own time in the budget?

Sometimes. Some programs allow wages for owners or existing staff working on the project; others don't, or limit them. Check the program page and the applicant guide.

Do I need quotes for every cost?

Not always, but you need a clear basis for every number. For larger purchases and contracts, many programs expect written quotes. Keep them for your claims.

Can I change the budget after I'm approved?

Usually only with the funder's permission. Many agreements let you ask to move money between categories. Ask before you make the change, not after.

Is sales tax an eligible cost?

Often only the part you can't get back as an input tax credit or rebate. Each program sets its own rule; check the program page and ask your accountant.