Many organizations require a project budget as part of their grant applications, but creating one is easier said than done. We know that accounting for the unknown can be a daunting task, but there are ways to structure and plan a budget that make it less about guesswork and more about smart planning. We’ve compiled some advice to help you create a realistic budget for grants or your own personal use.
A budget has a number of uses beyond understanding how much it will cost to produce a project. We’ll discuss how to calculate your artist fee; how to represent in-kind donations, income, equipment, and other factors; what to do about self-financed projects; and how to account for studio space that is also your living space. Finally, we offer some sample budgets for different project disciplines.
How Can Budgets Help?
The budget isn’t only a way to give an idea of how much a project costs, it also allows granting foundations to see how realistic you are about what the project entails. Artists can use itemized budgets as a management tool to set milestones throughout the life of a project. For example, a successful budget can function as a launching pad for fundraising—it gives you goals to work toward. Budgets can be used as a flexible document to use as check-ins and to update as the scope and timeline of a project changes.
Budget Rule Number One: Pay Yourself
When writing a budget, artists must make sure they pay themselves and all of their collaborators. This may be a new concept for some artists, but it’s important. It makes sense to figure out what your time is worth at the beginning of the project rather than to under-budget and wind up dipping into your personal finances. A budget that includes a fee that compensates artists for their time will look more informed to evaluators than one that doesn’t have an artist fee at all.
How to Represent an Artist Fee
Of course, there is more than one way to figure out what an artist fee looks like. Here are two ways to calculate the fee for your budget:
If this project is the artist’s primary source of income, time spent can be represented as a percentage of a reasonable, annual salary. For example, if $35,000 is your annual salary, and you estimate you will spend six months working full-time on this project, your fee—one-half of the “annual salary”—would be represented in the budget as follows:
Artist’s fee for six months: 50% of $35,000 = $17,500
If this project is not the artist’s primary source of income—perhaps you are working on it concurrently with other projects or if you have a full-time job that supports you—the artist can represent time spent as a percentage of the total project budget.
Organizations and individual artists typically budget 15-25% of a project’s costs to cover administration and overhead (also known as A&O). Even if the project budget pays for expenses in other ways—by covering items like travel, and research costs—the A&O line will compensate the artist for the time spent planning and fundraising for the project.
Artist fee (2) for six months: 20% of $250,000 = $50,000
**This line item assumes two collaborators receiving $25,000 each
Whichever way you choose to represent the artist fee in the project budget, the goal is to compensate yourself and your collaborators fairly.
Do You Self-Finance Projects?
It’s easy to forget that “self-financed” expenses are still project expenses, and need to be accounted for in your project budget. If you’ve been using personal finances (like credit cards or personal income) to cover creative expenses, check your receipts and add them to your total expenses.
However, we discourage all artists from self-financing their projects.
Include Income You Will Make from the Project
A complete budget includes expenses and income. Make sure that you include all possible income and designate sources as confirmed, projected, or pending. If you still need to raise money for your project but don’t have an identified source, you can write “to be raised” followed by the amount.
There are two important things to remember about in-kind goods and services:
- In-kind goes in as income and comes out as an expense at the same amount
- This dollar amount should represent the fair-market value of the in-kind goods or service
Because it may take time to figure out the fair-market value of a tool donated to your project, such as a used computer, it’s helpful to separate the in-kind budget. Unless you have no in-kind funds, your complete budget will have three distinct sections: expenses, income, and in-kind. If you’re not yet sure of the fair-market value of your in-kind line items, you can write “value to be determined,” and add the dollar amount once it’s confirmed.
Other Things to Know
As you’ll see in the budget examples we provided below, income should equal (or exceed) expenses. Simply designate any un-raised funds as “to be raised.”
If you’re using your personal computer, equipment, etc., for the project, you can note this in the in-kind section of your budget. While it may be impossible to figure out the dollar amount of your equipment’s depreciation due to project-related wear-and-tear, your budget will at least reflect your “loan” to the project. If you believe that you will need to replace or upgrade your personal equipment as the direct result of heavy use during this project, it’s a good idea to include an “equipment replacement” line in the expenses section of your budget, just in case.
If you work out of your home, you can figure out the value of your workspace and include it in the project budget. The formula is similar to the one for figuring out your fee: what percentage of your home are you using for what period of time? This does not mean that you can claim your entire rent as a project expense. Instead, this is similar to the home-office deduction allowed by the IRS. In addition to listing home office your studio use as an expense, you should also determine the extent to which you will use your home phone or internet connection for project-related communications.
Here are some sample budgets across disciplines that you can use as a guide. Please note that the sample budgets are quite simplified.
- Performing Arts Sample Project Budget (Theater, Dance, etc.)
- Visual Arts Sample Project Budget (Painting, Sculpture, etc.)
- Moving Image Sample Project Budget (Video art, Filmmaking, Documentary, etc.)
- Literature Sample Project Budget (Screenplays, Novels, Poetry, etc.)
- Emerging Fields Sample Project Budget (Tech, Multimedia, Digital Media, etc.)
Any questions, or is there something else you’d like to see? Let us know in the comments below!
Image above: Creative Capital Awardee Jennifer Reeder on the set of Signature Move.