Guidance for funders

What to ask of grantees, when to commission an evaluation, and what to budget, written for the funder's side of the table.

Our view: most reporting burden starts with funders asking for more than anyone will use. So the default here is lean, and the calculator rounds down.

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What This Covers

This page is for program officers and grants managers at foundations and other funders who want requirements that grantees can meet without wasted effort. It covers two practical areas of grant design: how indirect costs are covered and what reporting you ask for.

Start Here

Points to consider as you design a grant.

  • Name the cost categories. Say plainly what counts as direct and indirect, so grantees can recover the real cost of delivering the project. Recovering indirect costs shows how grantees work out their rate.
  • Consider unrestricted overheads. One good-practice study on local partners recommends overheads that are unrestricted, and not time-limited or subject to individual project audit. Its reason: fixed spending windows and proof of expenditure cut their value, most of all on short projects. If you fund through intermediaries, see sharing indirect costs with local partners.
  • Design reporting around the reader. A compliance-focused reader needs different framing from a general audience, so decide who reads it and why.
  • Match length to the reader. A short brief built around a few key results suits some readers, and a longer document suits others. Ask for the result first, then the evidence.
  • Invite a balanced account. Leave room in your templates for setbacks as well as successes.

Key Concepts

There are no standardized definitions of cost categories, so what counts as direct or indirect differs between organizations. Treat these as working definitions and check how your grantee defines its own.

  • Direct costs: expenses whose benefit can be tied to a single funding source or program.
  • Indirect costs: shared costs needed for general operation that are hard to assign to one project, such as senior and accounting staff salaries, the annual audit, insurance and board travel.
  • Full cost recovery: securing a project's full cost, including its share of support costs, from the grant or contract rather than from other income (full cost recovery).
  • Indirect cost rate: total indirect costs for the year divided by a chosen direct cost base.
  • Modified total direct costs (MTDC): a base some government funders use for indirect cost rates: a subset of direct costs that leaves out categories such as capital expenditures.
  • Unit cost: actual program cost divided by the actual number of people or targets reached.
  • Exception report: a short narrative that flags significant variances or concerns beside the financial figures.

Templates

AI for This Topic

An assistant can help you write plain definitions for your cost categories, or boil long progress reports down to short briefs with the key findings first.

Read every output before you use it, and check it for requirements that would quietly add burden for small or local organizations.

Right-size the ask

Set the grant size and three facts about it. You get a proportionate requirement set: a results and reporting budget band, what to ask for and what to skip, how heavy that is for the grantee, and whether an evaluation is worth commissioning. Nothing leaves your browser.

$250,000
$10K$3M+
Duration
How proven is the approach?
Your relationship with the grantee

Light ask

Monitoring and reporting budget: Up to about 3%

The low end some private foundations expect.

Worth a little structure, but let the grantee lead. Ask for a few outcomes they already track, not a measurement system built for you.

Ask for this

  • An annual narrative tied to your decisions
  • Three to five outcome indicators the grantee proposes
  • A short internal review at close

Skip it here

  • A mandated indicator list
  • External evaluation
  • Disaggregation you will not analyze

Grantee burden

Modest: a few hours a year

Evaluation: Internal review only

Skip the external evaluator. A structured self-assessment at close gives you enough at this scale.

  • Size sets the ceiling. A $20K grant cannot carry the same reporting load as a $2M one. The ask scales with what is at stake.
  • Risk earns rigor. An unproven approach with a new grantee is where evaluation pays off. A proven model with a trusted partner needs less.
  • The default is less. Borderline answers land on the lighter tier. The burden falls on the grantee, so every requirement has to earn its place.

The tiers are our rule of thumb, not a standard.