Cutting Through Budget Confusion
How do you submit a grant proposal budget for a special project that’s planned for the NEXT fiscal year, when your board has only approved this year’s budget—and next year’s budget won’t be finalized before the grant deadline?
Does this sound confusing? Familiar, perhaps?
Train tracks in Sri Lanka with tropical foliage on either side. Photo credit: Unsplash Images: Raissa Lara Lütolf (-Fasel)
Here’s a real-life budget conversation with a client:
[Timeline]: It’s mid-January.
Client:
The Situation: “Our fiscal year ends on June 30. The board will not approve the budget for the next fiscal year until the end of May. However, the grant proposal deadline is in mid-March.
The Problem: Foundation X is requesting organizational and project budget figures for the next fiscal year.
Complicating Factor: Our board chair believes foundations don’t want to see unapproved budgets and suggests we submit this year’s budget instead, along with an explanation of our fiscal year timeline, and then provide the new budget once it’s finalized.
What do you recommend we do? Please advise”
Recap: It’s January. The grant application deadline in March requires budgets for the next fiscal year; but the client’s next fiscal year’s budget won’t be approved until May. My client needs to provide realistic and compliant budget information to the foundation, but the board chair’s suggestion is throwing things way off track!
My Dilemma: Should we:
Submit this year’s approved budget numbers, which are official but won’t reflect next year’s reality, or
Provide next year’s projected numbers, which are not yet board-approved, but are based on program projections and likely to be more accurate?
Sigh.
What I Did:
I told the client that, based on my reading of the RFP, the funder is asking for budget numbers that align with the grant period. I encouraged my client to check with the foundation’s program officer about their preference for how we should present the budget numbers, given the realities of the nonprofit’s fiscal year and budgeting process.
Let me say that I loved working with this client for many reasons, namely their heart and soul was 100% in the work for the right reasons, and I was well supported on every application which was a total team effort.
But this type of “complication” where we lacked clarity repeated several times.
Reflecting back, I still believe that my advice to request guidance from the funder was the right thing to do in the moment. But it should not have ended there.
There was a deeper challenge. One of misalignment. Without a time frame adjustment on the budgeting process, this situation would keep repeating every year—and I did not call it out.
Non-profit leaders;
This all goes back to basics. Step back. Reflect. Plan.
You DO know when your fiscal year ends (no surprises here), please don’t wait for the last week of your fiscal year to get your next year’s budget approved.
If you know that grant application deadlines for the next fiscal year take place 3-6 months before your fiscal year ends, plan your budget board approval process accordingly.
Also, if your board really DOES need to be involved in grant writing, please have an established process for engagement and approval. Ad hoc ‘support’ from those who don’t understand the budget timeline process is not really helpful.
And most of all, dear non-profit EDs; please don’t put your grant writers in this position of playing detective or chess grand master—where we are rubbing our eyes, trying to figure out how to wangle a budget and make it fit into a shape it’s not cut out for.