Most sponsors require you to submit a budget justification (sometimes also called a budget narrative) in addition to an itemized budget. This allows you to explain the need for each line item in the budget, as well as show the breakdown of calculations used to arrive at the amount in each line of the budget.
Click here for an example of a budget justification (PDF) that you may want to use as a general outline of what to include in your budget justification.
- When constructing a budget justification, follow the same order as that in the itemized budget or sponsor's budget form, so reviewers can easily compare the two documents.
- Check to see if the sponsor limits the page length for the justification.
- Be sure everything in your budget and budget justification is referenced in the proposal description/narrative as well—and be sure everything mentioned in your proposal description that would incur cost is explained in the budget and budget justification!
- Double-check what expenses the sponsor will and will not allow, as these differ from sponsor to sponsor.
- Remember, all costs must be reasonable, allowable, and allocable:
- Allowable refers to costs that may be charged to a grant or contract.
- Allocable refers to costs that are necessary for the success of the project.
- Reasonable refers to actions a prudent business person would employ.
- You may also find it helpful to refer to Start and Manage Projects when constructing a budget.