In the flurried process of crafting a compelling proposal and constructing a comprehensive budget, it is important to keep track of program costs that may extend beyond your funder’s program period.
These expenses, often referred to as ongoing costs, are paid long after the initial startup costs for new programs are incurred. If, for example, your grant budget includes the purchase of new computers for program staff, your organization may be on the
hook for software subscriptions on those devices – like word processing programs, email access, and cybersecurity protection – once the grant period is concluded. Ongoing costs can quickly eclipse the original grant award if you need to factor in wages for
new personnel, rent for new spaces, and repair/maintenance on new equipment. Examples of ongoing costs include –
- Personnel Costs – Expenses directly related to the employment of staff working on the project
- Operational Costs – Expenses associated with the day-to-day running of the project, excluding direct personnel costs
- Programmatic Costs – Expenses directly related to the core activities and deliverables of the project
- Indirect Costs – Overhead expenses that support the overall operation of the organization, but are not directly tied to a specific project
Considering these expenses are essential to successful grantfunded projects, you may be wondering why funders will not just pay ongoing costs in the first place. Why must their financial contributions be time-bound? Generally, there are three reasons
grantmakers shy away from these enduring commitments –
Adhering to bureaucracy requirements
In many instances, grantmaker support is limited by the basic administrative requirements of their organization. A grant program funded through a legislative measure, for example, will have a concrete ‘sunset’ date that dictates when funding will no longer be available from the government. Similarly, a grant program funded through an annual budget will carry requirements that all resources be spent within those 12 months. To keep their own books in order, grantmakers enforce strict timelines as to when and how long funding support will be available to awarded organizations.
Achieving programmatic goals
Grantmakers want to throw support behind as many excellent projects with clear and measurable outcomes as possible. Ongoing costs present challenges to that goal as (1) they can be seen as less tangible and harder to track as time wears on; and (2) they
increase the overall cost of each project – thus leaving less funding to go around for new ideas.
Building organizational stability.
Grantmakers view their financial support as a small spark that can be fanned into a bright flame. Successful projects are not wholly reliant on their funders – they need a little outside boost. As such, funders expect awarded organizations to provide the time,
care, and kindling (think – coverage of ongoing costs) to keep their program’s flame alive and well.
While all parties may acknowledge that ongoing costs are essential for the long-term sustainability of any project, expect pushback from grantmakers on their ability (or their interest) to fund them.
So, what is to be done? How can your organization plan for large and compelling grant fundable projects, while keeping the reins on its own budget in the long term? Below are a few tips from the Grants Office team –
Tip #1 – Be mindful of the ongoing costs in your proposal budget.
Perhaps the best way to reduce long-term expenses generated by a grant project is not to make them in the first place. It can be tempting to build out large budgets with fun, nice-to-have extra features when you know someone else will be paying for them. Costs for subscriptions, maintenance, repair, and consultant fees will ultimately fall on you once the program is complete. Have clear, direct conversations with each vendor to fully understand the cost breakdown of their solutions before adding them to your grant proposal. Build in opportunities to reflect on each budget line item to ensure it is (1) necessary for the project’s success; (2) the least expensive option available; and (3) cannot be accomplished by an existing person or resource within your organization.
Tip #2 – Ask vendors to bundle costs.
In some instances, vendors provide discounts to ongoing software subscriptions if they are paid at the same time as the hardware. A fixed surveillance system, for example, may be sold as a package of 100 cameras and three years of access to the cameras’
software program for feed monitoring. This process allows your organization to pay for ongoing costs at the same time as one-time start-up costs which are more likely to be covered by the funder. Be sure to consult the program guidance to confirm this practice is allowed by the grantmaker before submitting your proposal.
Tip #3 – Pay attention to the Sustainability section of your proposal.
As noted above, funders will expect your organization to have a concrete plan for program sustainability – including how ongoing expenses will be paid – once their support is over. This question is often located at the very end of the application. Many organizations breeze through it because they are running against a tight deadline or are simply fatigued by writing earlier sections. Avoid this pitfall by writing the sustainability section as you build the proposal budget. This will ensure that you (1) accurately
account for all ongoing expenses; and (2) fill the reviewers with confidence that your project will continue long after their financial support ends.
Tip #4 – Think ahead when planning for match dollars.
Once you are certain that every ongoing cost in your grant budget is necessary for your project, start making plans to pay for them over the next several years. Identify which sections of your annual budget will cover those costs. If that is not possible,
present your budget needs to the school board, town council, or equivalent body as soon as possible. An excellent time to do so is when you request match dollars for the grant application. If you need a 20% match paid over two years for the proposal, for example, bring a detailed breakdown of all ongoing costs to the public meeting. If you receive formal approval for those ongoing costs at that moment, be sure to brag about it in your Sustainability section! Show funders you have already done the work to secure long-term support and funding for your proposed project.
Ultimately, each of these pieces of advice can be boiled down to – plan ahead. Be aware of what you need and minimize the long-term fiscal impacts of those needs on your organization.
Last, but certainly not least, keep in mind that “plan ahead” does not mean your organization will just apply for more grant funding to cover ongoing costs once the first award ends. In the short term, this mindset will reduce your score in the Sustainability section of your proposal. Funders know that winning another grant is not guaranteed and they will fear their funded program will be shut down once support is concluded. In the long term, relying exclusively on new grant funding sources can generate a sense of unease for program staff as they fret over the ephemeral nature of their efforts.
The best grant-seeking organizations understand these limitations and work to address them proactively through strong financial planning and a focus on long-term sustainability – ongoing costs and all.
