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The vocabulary of budget development is part of the language required for writing successfully funded grant proposals. This set of entries covers words and phrases from H-M.

HARD FUNDS: The funding of staff positions or other resources using annual tax levies or similarly predictable and renewable revenues rather than by grant funds; its character reflects the premise that such assets are more secure, over the long term, than those funded using grant funds. Also see: Soft Funds.

IN-KIND CONTRIBUTION: A non-cash donation of labor (paid staff or unpaid volunteer), facilities, equipment, materials, or supplies to carry out a project. Applicants for grants must exercise extraordinary care in calculating the cash value of in-kind contributions and in identifying, tracking, and reporting the sources of such contributions. Also see: Matching Funds.

INDIRECT COSTS (IDC): A cost category for costs that are not readily allocable to or identifiable with operating a specific grant program; it is also often called overhead. Indirect costs = direct costs x approved indirect cost rate. Such costs commonly relate to administration and facilities. Generally, a government grant-maker reimburses indirect costs only after it has negotiated and approved an indirect cost rate with the grant recipient. As grant-makers, foundations are less apt to allow full or partial recovery of an organization’s indirect costs than are units of government. Also see: Direct Costs.

INDIRECT COST RATE: An annually revised percentage established by a unit of government for a grant recipient that the recipient uses in computing the amount it charges to a grant to reimburse itself for indirect costs it incurs in doing the work of the grant-funded project. A foundation grant-maker also may solicit and approve an applicant’s proposed indirect cost rate before it considers a proposal from it or awards a grant to it.

INVITATIONAL PRIORITY: An area of special focus which a grant-maker would prefer to see an applicant address in its proposal, but which does not affect the review, rating, or rank ordering of proposals.

LEAD AGENCY (Applicant): The organization that submits a proposal on behalf of a partnership of two or more organizations and that serves as the grant recipient. If funded, the lead agency is legally responsible for implementing and administering its funded project, for properly managing all grant funds, and for submitting all required reports.

LEAD AGENCY (Grant Maker): Particularly in federal grant making, the agency or program office with the primary responsibility for approving or funding a project; it reviews the proposals, coordinates with other involved agencies, and notifies the applicant of its funding outcome.

LETTER OF COMMITMENT: A brief official letter that conveys the willingness of a partner organization to commit cash or other resources to a proposed project; it specifies the terms and conditions of the commitment, the precise resources to be offered or delivered, and the actual or estimated values of those resources. Also see: Letter of Support.

LETTER OF INQUIRY (LOI): A brief, but formal, mode of grant application, typically one to five pages long, often used when an applicant seeks a grant from a foundation; it commonly includes an introduction, a problem statement, objectives and activities, an evaluation plan, an organizational capacity statement, and a budget. The letter of inquiry often forms a basis for deciding whether the foundation will request a full proposal from an applicant. Informally, also known as an LOI.

LETTER OF INTENT: A brief official letter or e-mail (or other specified form of notification) from a potential applicant to a grant-maker that conveys its intention to apply for funding. The grant-maker may request or require the letter of intent to gauge the number of applicants likely to be competing for funding in a given grant program. Alternatively, some grant-makers may use the term as a synonym for letter of inquiry.

LETTER OF SUPPORT: A brief official letter that conveys the enthusiasm, endorsement, and encouragement of an individual or an organization for an applicant’s proposed grant project and for its request for funding, but does not explicitly commit resources to it. Also see: Letter of Commitment.

LEVEL FUNDING: An amount of grant funding that does not change from year to year during a multiyear grant.

LEVERAGING: A measure of the potential role that a given grant award is likely to have in attracting other funding or resources to a proposed project or initiative. As the specific grant-maker requires, an applicant may present either a ratio of requested grant funds to total project funds or a ratio of requested grant funds to funds from other sources.

MARKET VALUE: The economic value of a resource (e.g., volunteer labor at minimum wage) as determined up to the date and time an applicant submits a proposal (e.g., the wage rate in effect on or before that date); often, an applicant determines market value by checking an official government publication or website or by reviewing a grant program’s regulations.

A later post will cover entries in this glossary starting with letters M–P.

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