Preparing a Budget Narrative

What is a budget narrative?

A budget narrative, also known as a budget justification or budget proposal, is a description seen within grant application requirements that provides the rationale behind a proposed program, project, or service/product's requested funding. In short, your budget narrative gives you the opportunity to sell your idea to the funding agency while explaining why your price is fair and reasonable. This narrative plays a crucial role in clarifying the connection between expenses, the implementation outlined within a proposal for the project or service, and how costs were estimated.

A budget narrative should be concise and connect back to the project narrative. This can be effectively done by building the project narrative before developing the budget. From there, the budget narrative can be built. Even if an application doesn't request a formal budget narrative, building one in unison with the budget can help in the overall budget plan and process.

A strong budget narrative should accomplish the following:

  • Follow the format of the budget by line item, providing explanations to each cost.
  • Be easy to navigate and read.
  • Correspond with the numbers within the budget.
  • Only discuss budgeted items.
  • Be transparent in explaining cost details.
  • Directly align goals and objectives of the project.

Commonly a budget narrative will include details on major costs; salaries, benefits, and wages; equiptment; materials and supplies; travel; and direct / indirect costs. In some responses, a section may require an explanation on matching or leveraged resources. Only provide this narrative if it is requested.

Budget Narrative Best Practices

1. Be specific and concise: Provide details where needed. 

2. Read the notice of funding opportunity or solicitation for specific formatting requirements or potential templates. 

3. Show spending and calculations: Demonstrate how the math is justified for the price. 

4. Build realistic expectations: Research costs for common items and consider economic factors when building estimates. 

5. Review the budget, budget narrative, and project narrative once all are completed to ensure a unified explanation.  

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About the Author

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Bri Hammontree, Proposal Team Lead

Bri is a technical writer at JetCo, where she manages writing and proposals and grant projects, while also meeting and supporting clients throughout the grant and bid process.