How to Write a Grant Budget for a UK Charity

A strong grant budget is the financial version of your delivery plan: what the work needs, how you calculated each cost and which income will pay for it. For a UK charity, CIC or social enterprise, an honest, clear budget helps a funder judge whether the request is realistic—and helps your team deliver without quietly subsidising the project.

Funder rules vary: check current guidance and award terms before you submit. Examples are for planning, not accounting or tax advice.

Start with eligibility and the funding terms

Before calculating totals, read the funder's current criteria and application notes. Confirm that your legal form, location, beneficiaries, project dates and requested amount fit. Then check which costs are eligible, whether the grant can pay for existing activity, and whether there are caps, match requirements or restrictions on reserves, equipment, capital works or fundraising costs. If anything is unclear, ask the funder before building a budget around an assumption.

Be precise about what “restricted” means in this application. A restricted grant must be spent on the purpose and within the conditions set out in the award; it is not automatically limited to direct, frontline costs. Some funders allow a contribution to management, premises or other shared costs, while others define eligible costs narrowly. Unrestricted funding can generally be used for the organisation's charitable purposes, subject to its governing document and any specific terms. Do not label a grant unrestricted unless the funder has confirmed that status.

Build the budget from the delivery plan

Work out what the project will do before deciding what it should cost. Define activities, period, location, people involved and expected volume. Turn each activity into units you can count: sessions, staff days, participant places, travel journeys, venue hours or items of equipment. This is more useful than starting with a round grant figure and trying to make the costs fit.

Use a cost formula for each line

A good line can usually be described as quantity multiplied by rate. For example, 24 workshops × £45 room hire per session = £1,080. A travel line might be 18 return journeys × an evidenced average fare; materials might be 60 participant packs × the current supplier price. Show enough detail for a reviewer to follow the arithmetic, but group small related items where that makes the form easier to read.

Use recent actual costs, supplier information, published rates or quotes where appropriate. State whether a quote is an estimate, how long it remains valid and what happens if the price changes. Include only costs that are necessary and proportionate to the work. Avoid padding a line with a contingency unless the funder permits it; where uncertainty is material, explain the risk and the method used to set the amount.

Cost staff time fully and fairly

People costs are often the largest part of a delivery budget. Start with the role, salary or sessional rate, the time needed and the share of that time spent on this project. Include relevant employer on-costs, such as employer National Insurance and pension contributions, where applicable, as well as any other employment costs you routinely budget for. Use your organisation's actual payroll assumptions rather than treating salary as the whole cost of employing someone.

If a member of staff works across several activities or funding streams, allocate only the proportion reasonably attributable to the grant-funded work. Record the basis—for example, planned project hours, days in a work plan or an established time-recording method—and use it consistently. Do not charge the same hour to two funders. If a role is part-time or shared, make the calculation visible rather than presenting an unexplained fraction of a salary.

Include a fair share of shared costs

Rent, utilities, insurance, finance, governance, IT, safeguarding and management can all help make delivery possible, even when they are not visible in a session. Full cost recovery means understanding the reasonable costs of delivering the work, including a defensible share of the resources it uses. It does not mean adding an arbitrary “overheads” percentage or charging a funder for costs already covered elsewhere.

Choose an allocation basis that reflects how the project uses the resource. Depending on the cost, that could be floor area or room use for premises, staff numbers or users for some shared services, or recorded staff time for management and finance support. Explain why the basis is reasonable, use a consistent method and retain the underlying calculation. If the cost is directly attributable, budget it directly rather than allocating it again as overhead.

Some funders cap or disallow overhead contributions. Do not hide shared costs inside vague direct-cost lines or claim that your project is cheaper than it is. Ask whether a permitted contribution can be included, or whether the funder will consider another basis. If not, decide whether another confirmed income source can cover the gap and whether the work remains viable. If no responsible plan exists, reduce or redesign the activity—or do not accept an award that would leave an unfunded commitment.

Handle quotes, in-kind support and VAT carefully

Use quotes for significant or variable purchases where the funder requests them or your procurement policy requires them. Record what the quote covers, its date and any assumptions such as delivery, installation or renewal. A quote is evidence for a cost, not proof that the item is eligible or that the organisation has already committed to buy it.

Keep cash match and in-kind contribution distinct. Cash match is money available to contribute to eligible project costs, from your own unrestricted funds or another source; identify whether it is confirmed, pending or sought. In-kind support is a non-cash resource such as volunteer time, donated venue use or equipment. Describe and value it transparently, but include it as match only if the funder allows it and explains how it should be valued. Do not count the same contribution against two awards or present unconfirmed income as secured.

Decide whether budget amounts include VAT. If your organisation can recover VAT on a purchase, it may not be an eligible project cost; if it cannot recover some or all of the VAT, the irrecoverable amount may affect the cost. VAT recovery depends on the organisation's activities and circumstances, including possible partial exemption, so do not assume that charity status alone determines the answer. Check the funder's rules and take appropriate finance or tax advice.

Make income and expenditure balance

Show the full project expenditure and all the income expected to meet it. The total sources of funding should equal the total project cost. State the amount requested from this funder, confirmed contributions, pending applications and any contribution from your organisation separately. If the grant is only part-funding a larger project, show the whole cost and explain what each source will pay for.

A balanced spreadsheet is not enough if the plan depends on income that may not arrive. Identify what you will do if another application is unsuccessful or delayed: phase the work, find a replacement source, scale activity with the funder's agreement or postpone the start. Do not commit to spending a grant on a cost that another award already covers. Your notes should make it possible to trace every income line to the costs it supports.

Plan sensible costs across multiple years

For a multi-year award, show costs by year as well as the total. Use current prices as your starting point, then explain any increase using a relevant basis: a known salary review, a supplier renewal, a lease term, a planned change in volume or an explicit estimate for future prices. Apply an increase only to the lines it affects and state the assumption. Do not imply that a general inflation figure is guaranteed to match your actual costs.

Separate fixed and variable costs. A role may increase if pay changes; participant travel may vary with take-up; a one-off equipment purchase may not recur. If the funder offers a fixed multi-year amount, show whether each year remains deliverable at that amount and what you would review if prices or demand change. Agree any material budget variation with the funder rather than assuming you can move restricted money freely between lines or years.

A project budget is not a cash-flow forecast

A budget tells you whether income is expected to cover costs over the project period; a cash-flow forecast shows when money arrives and bills fall due. A project can balance on paper but face a shortfall if the grant is paid in arrears or instalments. Map receipts and payments by month, including payroll, deposits and supplier terms.

Before accepting an award, check the payment schedule, start date, reporting conditions and whether the organisation can bridge any gap without putting other services at risk. If not, discuss an advance or different schedule before signing. Do not bridge the gap by borrowing from another restricted grant.

Write clear justification notes

A reviewer should not need to guess what a line buys or why. For each significant item, record its purpose, calculation, period, evidence and allocation basis. Connect it to a delivery requirement and explain any non-obvious assumption. Notes can be brief: “24 weekly workshops × 2 hours; venue quote dated 12 May; includes accessible room and basic equipment” tells a reviewer more than “venue: £1,080”.

Keep working papers, quotes, salary calculations, time-allocation records and the final submitted budget together. Use consistent naming, retain the version submitted and make sure the narrative uses the same figures. If the application asks for a short budget justification, explain the largest or least obvious costs first.

Funder-ready grant budget checklist

• We meet the funder's eligibility criteria and have checked restricted-cost rules, caps and required match.
• Every cost comes from a delivery activity, quantity and rate—not an arbitrary round figure.
• Staff costs include the right salary share, employer on-costs and a documented time-allocation basis.
• Shared costs use a consistent, defensible allocation basis and are not counted twice.
• Quotes, price assumptions and any in-kind valuation are recorded; in-kind is included as match only where permitted.
• VAT treatment reflects our recovery position and the funder's instructions, with advice sought where needed.
• The expenditure total equals the complete income plan, with confirmed and pending funds clearly distinguished.
• Multi-year increases are explained by relevant assumptions, and the budget remains deliverable year by year.
• We have checked cash timing, payment conditions, risk scenarios and the ability to cover any funding gap.
• The figures agree across the budget, application narrative, board or management approval and working papers.

A budget is strongest when it is both financially credible and easy to connect to the difference you intend to make. If the wider application still needs work, see our practical guide to writing a winning grant application. To frame the need and why your organisation is the right one to respond, use the case for support guide. And if the budget highlights a recurring gap in essential costs, explore core funding for a UK charity as part of a balanced funding strategy.

Frequently asked questions

Should I include overheads in a grant budget?

Include a fair, evidenced share when it is necessary for delivery and the funder permits it. Check the funder's terms, explain the allocation method and do not use a blanket percentage without a defensible calculation.

Can a UK charity include VAT in its grant request?

It depends on whether the organisation can recover the VAT, the particular purchase and the funder's rules. Confirm your own VAT position with a qualified adviser and follow the funder's instructions; charity status by itself does not settle recoverability.

Can volunteer time count as match funding?

Sometimes, but only where the funder permits in-kind contributions and specifies or accepts a valuation method. Record the time and basis clearly, and keep it separate from cash income.

What if the funder will not pay the full project cost?

Identify the genuine funding gap, confirm which other income is available and decide whether the activity can be reduced or phased without weakening outcomes or safety. Do not submit a knowingly unworkable budget or rely on an unconfirmed contribution as if it were secured.

Make the numbers tell the same story

A good grant budget is not about making every line look small. It is about showing the resources needed to deliver well and making assumptions visible. Start with the plan, cost people and shared resources fairly, then reconcile the request with other income and cash timing.