Why Your Budget Matters
Many applicants treat the budget as an afterthought — something to fill in after the narrative is written. This is a mistake. Experienced grant assessors often read the budget first because it reveals more about your project than any narrative description. A budget that does not match the activities described in your application raises immediate red flags. If you say you will run 40 workshops but only budget for one facilitator working two days a week, assessors will question your credibility. Equally, a budget that is vague or rounded to suspiciously neat numbers suggests a lack of planning. Your budget should tell the same story as your narrative — just in numbers. The two must be completely consistent, and together they should give the funder confidence that you have done your homework.
Standard Budget Categories
Most funders expect budgets to be organised into standard categories. The main ones are: staff costs (salaries, National Insurance, pension contributions), direct project costs (materials, equipment, venue hire, travel, participant expenses), overheads and management costs (a proportionate share of rent, utilities, insurance, IT, and senior management time), monitoring and evaluation (data collection tools, external evaluators, reporting time), and capital costs if applicable (equipment, vehicles, building work). Some funders provide their own budget template — always use it if they do. If no template is provided, create a simple spreadsheet with columns for budget line, unit cost, number of units, total cost, amount requested from this funder, and amount from other sources. This format is clear, easy to read, and allows funders to see exactly what their money will pay for.
Calculating Staff Costs
Staff costs are usually the largest budget line and the one assessors scrutinise most carefully. For each staff member, show the full-time equivalent (FTE) allocation to the project, the annual salary, and the pro-rated cost for the project duration. Always include on-costs: employer National Insurance contributions (currently 13.8 percent above the threshold) and pension contributions (minimum 3 percent under auto-enrolment, though many charities pay more). If you are budgeting for a post that does not yet exist, benchmark the salary against similar roles using data from NCVO's annual pay survey, CharityJob salary benchmarks, or Charity People's salary guide. Be transparent about pay scales — funders are increasingly uncomfortable with large salary disparities within organisations. If your project involves sessional workers or freelancers, show their day rates and the number of days budgeted.
Direct Project Costs
Direct project costs are the expenses tied specifically to delivering your activities. These might include venue hire for workshops, materials and supplies, travel expenses for staff and volunteers, refreshments for participants, printing and publications, specialist equipment, DBS checks for new staff, and participant-related costs such as childcare, transport subsidies, or accessibility support. Be specific: rather than "materials: 2,000 pounds," write "art therapy supplies for 30 participants over 24 sessions at 2.50 per person per session: 1,800 pounds." This level of detail shows you have costed the project from the ground up rather than guessing. Research actual costs by getting quotes from suppliers. Include participant expenses like travel reimbursement — these costs are essential for inclusion and funders understand this. If your project involves digital delivery, include software licences, platform subscriptions, and data costs.
Overheads and Management Costs
Overheads — also called indirect costs or core costs — are the organisational expenses that support project delivery without being exclusively tied to one project. These include premises costs, IT infrastructure, insurance, governance, finance and audit, HR, communications, and senior management supervision. Calculate your overhead rate using the NCVO full cost recovery method: total indirect costs divided by total staff time, then allocated proportionately to each project based on the staff time it uses. Present overheads as an itemised list, not a single percentage. Many funders now accept overhead rates of 15 to 25 percent. If you are applying to a funder that caps overhead contributions, you may need to absorb some costs from other income or reduce your overhead allocation. Always be transparent about this — do not hide overheads within direct cost lines, as assessors will notice and it damages trust.
Monitoring and Evaluation Budget
A credible monitoring and evaluation (M&E) budget shows funders that you take learning and accountability seriously. Budget for staff time spent on data collection, analysis, and report writing — this is real work that takes real time. If you plan to use an external evaluator, get a quote and include it. Typical costs for an independent evaluation of a small to medium project range from 3,000 to 15,000 pounds, depending on scope and methodology. Include costs for data collection tools: survey platforms like SurveyMonkey or Typeform, outcome measurement tools like the Outcomes Star, or bespoke questionnaire printing. Budget for participant incentives if you plan to conduct interviews or focus groups — a 10 or 20 pound shopping voucher significantly improves response rates. NCVO and the Evaluation Support Scotland website offer free resources on designing proportionate evaluation frameworks. A good M&E budget is typically 5 to 10 percent of total project costs.
Contingency and Inflation
For projects lasting more than one year, budget for inflation on staff costs and key expenses. The standard approach is to apply an annual uplift of 2 to 3 percent, though in periods of higher inflation you may need to adjust this. Be explicit: show "Year 1: 28,000, Year 2: 28,840 (3% uplift)" so funders can see your reasoning. Some funders allow a contingency line of 5 to 10 percent for unexpected costs, while others do not — check the guidance. If contingency is not permitted, build modest buffers into individual budget lines rather than adding a separate contingency total. For capital projects, contingency is essential and should be at least 10 percent. Always show the total project cost, the amount you are requesting from this funder, and confirmed or pending income from other sources. This gives the assessor a complete picture of your funding strategy and financial planning.
Presenting a Trustworthy Budget
A trustworthy budget is detailed, consistent, realistic, and transparent. Round figures to the nearest pound, not to the nearest thousand — precision signals careful planning. Make sure the budget totals add up correctly (a surprising number of applications contain arithmetic errors). Cross-reference every budget line with a corresponding activity in your project plan. If the funder asks for match funding information, show each co-funder by name, the amount, and whether it is confirmed or pending. Include in-kind contributions — volunteer time, donated venues, pro bono expertise — valued at market rates. This demonstrates resourcefulness and community support. Finally, prepare a brief budget narrative: a short paragraph for each major category explaining the assumptions behind your figures. This is especially useful for funders who assess applications by committee, as not every committee member will read the full narrative. A strong budget narrative converts numbers into a compelling story of careful stewardship.