When you submit a proposal to a potential funder, and you submit a project budget with that proposal, you often will want (or need, or be required) to submit a budget narrative. While the idea of writing a budget narrative may strike fear in the hearts of some, it’s actually a good thing! A budget narrative is a way to tell the story, in words, that the budget is telling in numbers. It also is a way for YOU to control the narrative, rather than waiting for red flags, doubts, and scary questions to emerge. So what’s a budget narrative, and how do you write one? Here’s a beginner’s guide:
Numbers tell the story, and so does your budget narrative
Your proposal narrative (the main, written part of the proposal) tells the story of what your organization wants to do, why you need to do it, why your organization is best suited to do it, what the outcomes will be, etc. The project budget tells a story, as well. Sometimes, that story is obvious. Sometimes, the budget’s story won’t make sense until you can provide some additional details or put things in context. You want to get ahead of the story by creating a clear, concise, and compelling budget narrative.
Think of it this way: You know how sometimes when celebrities have babies, they pay a magazine for the first photos of the baby (and hopefully donate the proceeds to charity)? They do that because they want to control when and how those photos are taken, rather than being hounded by paparazzi.
No, I’m not saying that your potential funder is an overly aggressive photographer! I’m saying that by getting out ahead of any questions, concerns, or confusion that might arrive when an outsider looks at the project budget, you are further shaping the story that the budget tells.
What questions should the budget narrative answer?
To clarify: the aim of a budget narrative is NOT to write an explanation of every single line item in the budget. Your organization’s potential donor doesn’t need to know how many pencils you plan to purchase. And they might not even need to know the full salary of each individual person on the team — you can combine all salaries into one line item in your budget.
The aim of the budget narrative is to briefly clarify how you plan to spend the donor’s money, while giving you another opportunity to drive home the messaging of the proposal narrative.
- How do we plan to spend the money?
- Why do we need to spend money on these various items?
- Are there certain line items or budget categories where it’s not immediately obvious why we need to spend on that? (Often, the budget narrative preemptively addresses “red flags.”)
- What has been our rationale behind how we want to allocate the money in the budget? e.g. are there expenditures that can only happen in year 2, after certain things in year 1 have happened?
- If the amount of money we are asking this donor for is less than the total amount of money in the budget, how are we expecting to raise the rest of the money? (i.e. We may be asking this donor for $2 million for a specific area, but the overall budget for that area is actually $3.4 million. How will we raise the rest?)
How long should the budget narrative be?
NOT LONG. Unless instructed otherwise, the budget narrative should be relatively short. Maybe some footnotes, or a couple of paragraphs. The budget narrative is not a re-tread of the entire proposal. This is not the place to reiterate the rationale for the project, background statistics on the cause or population served, or your organization’s mission. The budget narrative is specifically focused on the operational plan that you will undertake when you execute your project, and how the money will be spent.
Do I really have to create a budget narrative?
Not always. Sometimes the budget is simple enough, and the proposal narrative is compelling and detailed enough, that you don’t need to write a budget narrative. For a more complex program, a larger “ask,” or a project where you might want to explain the rationale for how you plan to spend donated dollars, you might want to think about including a brief budget narrative.
A budget narrative is an opportunity, not a burden
While it may feel overwhelming to write about the budget, remember that it’s an opportunity to drive your point(s) home and to build trust and transparency with your potential donor. Don’t let that opportunity slip away! By writing a brief, convincing budget narrative, you’ll save time and generate good will in the long run.
Don’t miss out on new ideas and great tips on fundraising, leadership, writing, philanthropy, and lots of related topics. Join the PITCH list to get Lauren’s monthly newsletter delivered straight to your inbox, and get a free gift when you sign up!