What is the exact amount that you need to operate your programs? Organizational leaders have struggled with this question for years. In their day-to-day operations some don’t always set aside time to think about and prepare an actual budget for the current operations. Others don’t prepare or plan strategically for the cost of their future endeavors. One thing you want to remember always is that when you are thinking about how much funding to request from a granting agency for your program, is that you are not just asking for the operating budget for today. You are requesting funding to support future activities, typically for the next 3 to 5 years.
This is called forecasting or projecting. Many grant agencies require a forecast of what income and expenses you expect for the future. While some organizations have budgets and forecasts, many other organizations don’t have a clue about projecting out one year, two years, three years or longer. Providing a forecast for your organization takes a lot of time and study of your day-to-day operations, and breaking down what your exact income and expenses are. The next thing that you want to do is look at what population you are currently serving versus the population that you want to serve in the future with your products or services. A forecast will show you how much you will need to get from point A to point B, or from a beginning point to an endpoint, as far as funding is concerned.
When determining how much you need to request in your grant proposal your budget forecast is a critical tool that you will use to express this need. Let’s review a sample budget forecast:
Federal Grants = $50,000
State Grants= $200,000
Corporate Grants = $75,000
Private Foundation Grants = $50,000
Private Donations = $100,000
Total Revenue = $475,000
Salary / Wages = $200,000
Taxes = $56,000
Travel = $34,000
Equipment = $16,000
Supplies = $7,000
Independent Contractors / Consultants = $150,000
Total Expenses = $463,000
Record Current Amounts
Total all current dollar amounts for each category and list them in a column next to each budget item.
Record Forecast Amounts
Determine how far out you want to forecast into the future, such as, 2 years, 3 years, 5 years or longer. Determine how much you think each category will grow or should grow. You can use a percentage for each year and each category, such as, 3 percent. Take each amount listed for each category times 3 percent and this will give you the amounts that you will need at specific points in the future. For example, if you forecast a 15 percent increase on the amount of equipment you need, you will take $16,000 * 15% + 16,000 = 18,400. If you forecast 3 percent increase in the amount of Salary / Wages because you will need to hire more staff, then you total amount requested in this category would be, $200,000 * 15% + $200,000 = $230,000. After doing this calculation for each category in each year, you will then be able to use the final numbers to determine how much money you should ask in a grant proposal.
In the example above, if you forecast expenses by 15% for three years you would need $532,450 ($475,000 * 15%) in the first year. You would need $612,318 ($532.450 * 15%) in the second year. You would need $704,165 ($612,318 * 15%) in the third year. You would add all three amounts to get the total amount needed for your entire project request, which would be $1.28 million. Of course this is only an example. Your budget can be smaller or larger but the procedure will be the same.