Free Grant Budget Template for Nonprofits: Budget Narrative Guide and Examples
By an independent contributor. Written for GrantsMode.
Note: This guide was written for GrantsMode, which makes the grant management tool mentioned near the end.
A great grant budget does three things: it adds up, aligns with the proposal, and most importantly, justifies your cause. Yet, many grant applicants fall into the trap of either overestimating or underestimating their financial needs, costing themselves a funding opportunity. Hence, preparing a well-constructed budget is vital to securing your mission.
This guide provides a free grant budget template with automatic calculations, a complete worked example, grant budget narrative examples, and a checklist of common mistakes. The examples use the template throughout, so you can build your own grant proposal budget as you read along.
Do This First
Before you type a single number, you must carefully read your target funder’s policy. Some grantors will not cover direct costs like food, while others strictly cap the percentage you can allocate toward overhead costs. Failing to understand them early will invalidate your proposal.
Investing time in the guidelines upfront saves hours of stressful revision later. Once you know the boundaries of the playing field, you can build a compliant budget that completely satisfies the reviewer.
What Reviewers Look For in a Grant Proposal Budget
They’re checking:
- Is each cost reasonable?
- Is each cost directly related to the project?
- Finally, is the math working out?
Suppose your proposal promises shelter for 50 cats. The budget then must realistically cover food, litter, veterinary care, staff to feed the cats, as well as housing for all 50 of them. If the proposal says 50 cats and the budget covers feeding fewer than 30, the reviewer will instantly flag the gap, potentially costing you the grant.
How to Prepare a Grant Budget
- List what you’ll do: For the cat shelter: veterinary check-ups, daily care, food and litter, a rented space, and progress checks.
- Attach costs to each activity: Consider the people, supplies, space and services each one requires.
- Show the math on every line: Express it as quantity x cost per unit, like 50 visits x $120. This template calculates the direct cost once you enter both.
- Mark staff costs clearly: Provide personnel with their very own category so that the reviewer can easily identify their salaries and their relationship to the job.
- Total the direct costs, then look at the indirect costs: Indirect costs get their own section below.
Avoid “miscellaneous” lines. If you expect small extra costs, name them, such as printing, and put a figure on them.
Grant Budget Example: A Six-Month Cat Shelter Project
The organisation needs to feed, treat, house and care for 50 cats over six months.
Start by entering the project details: organisation name, project name, funder, project period and indirect cost rate.
Next, enter each expense as its own line.
Here is the complete budget in one table, from direct costs through to the final grant request:
Direct cost is quantity × cost per unit.
Other funding is money from sources other than this grant. Here, $4,000 in donations covers part of the food.
Grant request is the direct cost minus other funding. Food costs $9,000, donors cover $4,000, so the request is $5,000.
Indirect costs are calculated on the lines marked “Yes” in the template’s “In indirect base?” column. Here, all eight lines are included, so the base is $36,600.
How to Calculate Indirect Costs for a Grant
Indirect costs in grant budgets are expenditures which maintain the entire organisation but cannot be associated with any single project, such as accountancy and leadership costs. When an organisation is funded for its program, but not for itself, the organisation will gradually be starved of funds.
Funders usually handle indirect costs in one of three ways:
A funder-specific rate or cap: Many private funders state a maximum percentage and say which costs it applies to. Follow the funder’s guidelines exactly.
A federally negotiated rate: Some organisations have an indirect cost rate agreed with a federal agency. If you have one, use it.
The federal de minimis rate: Under the Uniform Guidance (2 CFR 200.414), eligible recipients without a negotiated rate may charge up to 15% of modified total direct costs (MTDC). The limit rose from 10% for new awards made on or after October 1, 2024.
For a funder-specific rate, the base is whatever the funder says.
In this example, it is the grant-funded direct costs marked “Yes”: $36,600 × 10% = $3,660.
For the federal de minimis rate, the base is MTDC. It generally includes salaries, fringe benefits, materials and supplies, services, travel, and the first $50,000 of each sub-award. It generally excludes equipment, capital expenditures, rental costs, participant support costs, scholarships and tuition remission, and any part of a subaward above $50,000.
To see the difference, apply 15% de minimis to this budget. Shelter rental is excluded, so the base becomes $36,600 − $6,000 = $30,600, and indirect costs are $30,600 × 15% = $4,590.
This is a simplified illustration. Check the current rule and your award terms before using the rate, and always state your method in the budget.
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How to Write a Grant Budget Narrative
The budget narrative explains why you need the amount you are asking for. It is a budget justification for grants.
For each line, explain
- what the expense covers
- the quantity and unit cost,
- how you calculated it, and
- why the project needs it.
For example,
Veterinary checkups:
This line covers an entry exam and treatment plan for each cat. It assumes one visit per cat, 50 in total, at the per-visit fee quoted in writing by our contracted clinic. The total is the number of cats multiplied by that fee. A baseline exam on arrival lets us catch illness early, which protects the other cats and costs less than treating an outbreak.
Caretaker salaries:
This line covers two part-time caretakers for the six-month project period, paid a monthly rate based on local wages for animal care work. The total is the number of caretakers × months × monthly pay. Fifty cats need cleaning and health monitoring every day, and a steady paid team is what keeps that reliable.
Other funds:
This line covers food for 50 cats for six months at a per-cat monthly cost based on our current supplier invoice. The donation shown under other funding reduces the amount we are requesting. Showing both figures lets the funder see exactly what its grant pays for.
They are neither trying to advertise the project nor just repeating the table. After you have prepared these, archive each budget and story together with your application in a shared drive so that your new iteration is built upon this one and not an empty template.
There is a tab named “Narrative Builder” and another named “Sample Narrative” in the template, which will help you write narratives for your lines.
Common Grant Budget Mistakes to Avoid
Inaccurate calculations: Totals that don’t add up, or figures that differ between the budget form and the narrative. Use formulas and recheck every total by hand.
Missing costs: Payroll taxes and benefits, insurance, evaluation and printing are often left out and then absorbed by the organisation.
Unsupported estimates: Round numbers should be backed with quotes, rate cards or past invoices.
Incorrect indirect costs: The wrong base or the same cost counted as both direct and indirect.
Inconsistencies with the proposal: Check staffing (two full-time caretakers in the proposal, half a salary in the budget), numbers served, timeline (a six-month budget paying for work planned later), items the proposal never mentions, and other funding mentioned in one place but missing in the other.
Grant Budget FAQ
What should a nonprofit grant budget include?
Direct costs (personnel, program expenses, supplies, space and evaluation), indirect costs, other funding sources, the grant request and the total project budget. And every line should show how it was calculated.
How do you justify a grant budget?
Write a budget narrative. For each line, explain what the expense covers, the quantity and unit cost, how you calculated it and why the project needs it. Support estimates with quotes or invoices.
What percentage of a grant budget should be indirect costs?
There is no single answer. It depends on the funder’s cap, your negotiated rate if you have one, or the federal de minimis rate of up to 15% of MTDC for eligible recipients. If the funder does not state a rate, check the guidelines or ask the program officer before assuming one.
Download the Free Grant Budget Template
The free grant budget template includes:
- Automatic calculations for direct costs, grant request and totals
- Direct and indirect cost tracking, with the rate entered once and an “In indirect base?” column
- Other funding sources, so you can show what the grant covers and what it does not
- A sample budget on the Worked Example tab
- A Narrative Builder tab and a Sample Narrative tab
- A balance check that tells you whether the budget adds up
It works in Google Sheets.
[Download the free grant budget template]
Keep Budgets and Deadlines Organised
A finished budget still has to stay connected to its application. For a few applications a year, a shared folder and a calendar are enough. Once you are managing many, a grant management tool such as GrantsMode can keep each application’s budget, documents and deadlines in one place, so next year’s budget starts from this year’s version.
Next Steps
- Download the template and enter your project details.
- Complete the budget line by line, then check that the totals balance.
- Write the budget narrative and review it against your proposal.
- Keep each application’s budget, documents and deadlines together in a shared folder or in GrantsMode.
