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Preface

Chapter 1

Chapter 2

Chapter 3

Chapter 4

Chapter 5

Chapter 6

Chapter 7

Chapter 8

Chapter 9

Chapter 10

Chapter 11

Chapter 12

Chapter 13

Appendix A

Appendix B

Appendix C

Appendix D

Appendix E

References

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Chapter 4: The Dollars and Cents of Proposal Writing

Think of writing and implementing proposals as a type of contracting business.

Moursund, D.G. (2002). Obtaining resources for technology in education: A how-to guide for writing proposals, forming partnerships, and raising funds. Copyright (c) David Moursund, 2002.

Section Headings for Chapter 4

The Costs of Proposal Writing

A Brief Look at an Implementation Budget

Mathematical Expectation

Applications of Mathematical Expectation

Making a Living in the Proposal Business

How Long Does It Take to Write a Proposal?

Proposal Mills

Activities

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Think of writing and implementing proposals as a type of contracting business. As a Resource Seeker, you decide whether to "bid" on a particular job. That is, when the opportunity to write a grant proposal presents itself, you must choose whether to participate in that particular opportunity or wait for a better one.

There are two major costs associated with the proposal business--the cost of writing proposals and the cost of implementing the proposals that are funded. It can cost a great deal to write a proposal. And if you write a winning proposal, you then face the task of actually carrying out the work you proposed. This mail entail expenses above and beyond those provided by the grant.

This chapter examines proposal writing from both a business and a cost/benefit point of view. The types of analyses discussed in this chapter can help you decide whether to compete in a particular competitive grant-writing situation.

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The Costs of Proposal Writing

It takes resources to prepare and submit a proposal. If the proposal is funded, it takes resources to carry out the project.

To illustrate, suppose you are going to write and submit a proposal to a particular funding agency. Based on an analysis of the situation, you decide that it will take about 20 hours of your time to write the proposal. In addition, there will be expenses of $100 for postage, printing, phone calls, travel to a research library, and other miscellaneous costs. You estimate that your time is worth $25 per hour. Using this hourly rate, the completed proposal will represent a personal investment of about $600.

A simple budget is given in Figure 4.1. You will notice that a spreadsheet was used to create this budget. Obviously, such a simple budget is readily done by hand; it is a good idea, however, to learn to create and use spreadsheets to do budgets. They are a versatile and powerful aid to writing proposals.

Figure 4.1. Budget for writing a proposal.

Figure 4.2 illustrates four different categories of grant-writing situations. In category A, for example, there is a high probability of a grant being funded, with the cost of actually producing the proposal being quite low.

Figure 4.2. Four categories of grant-writing situations.

Consider the following scenarios, which correspond to the four boxes in Figure 4.2. In each case, your budget for writing the proposal would be $600.

  • In Situations A and C, the proposal will go to a company that will award $10,000 worth of computer hardware and software to each winner.
    • Situation A: The company will fund one proposal from every school submitting a well-written proposal that adheres to the proposal guidelines.
    • Situation C: The company will fund one proposal from each state. Any school is eligible to submit a proposal.
  • In Situations B and D, the proposal will be submitted to a federal agency that will award a grant of $10,000 to each winner. However, the federal agency will expect a winner to provide 30 contact hours of free, hands-on computer training to at least 50 teachers. The winners will also be expected to provide these teachers with free handout materials and refreshments at coffee breaks.
    • Situation B: The federal agency will fund one proposal from every school submitting a well-written proposal adhering to the proposal guidelines.
    • Situation D: The federal agency will fund the best proposal from each state. Any school in the nation is eligible to submit a proposal.

Situation A is great! For $600 worth of proposal-writing time and materials, your school will receive $10,000 worth of equipment.

But what about Situation C? Suppose you live in a highly populated state that has more than 4,000 schools. Many are likely to submit a proposal because they really need the equipment. Is it worth your effort to write a proposal when there is only a small chance you will be funded?

Situation B is a little more complex than Situation A. You are guaranteed to win if you write a reasonably good proposal. But then you will need to design, organize, and implement an extensive teacher inservice class. You will need to recruit 50 teachers who will volunteer their time to participate in the inservice training. You will need to find an appropriate computer lab that has the needed facilities, and you will need to provide the handout materials for the training. This can probably be done for less than $10,000 worth of time and materials. Thus, you may well decide to pursue this grant opportunity.

Situation D is likely to be a loser. It probably is not worth investing $600 in preparing the proposal because the likelihood of winning is quite small. Of course, if you know that few, if any, schools in your state intend to submit a proposal and you will able to write a really superior proposal, this situation becomes more like Situation B.

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A Brief Look at an Implementation Budget

The ability to quickly create a rough draft of an implementation budget for a project is an important skill. The financial information in your draft budget is critical in helping you decide whether to write and submit a proposal.

Implementing a proposal involves two types of costs--direct and indirect. Direct costs are the funds the Principal Investigator (PI) or Project Director has available to do the work specified in the proposal. Indirect costs (often called overhead) are funds made available to the PI's organization to cover costs incurred for common or joint objectives, which cannot be readily and specifically identified with a particular grant project.

For example, suppose you are a university faculty member and have written a proposal to fund some research. Your proposal asks for money to cover your summer salary and support two graduate research assistants (GRAs) for a 12&endash;month period. These are direct costs in the grant proposal.

You and your student assistants will use, for grant-related activities, the university library, accounting office, computer facilities, office space, and innumerable other resources the university provides. The university has negotiated an indirect cost rate with the federal government to cover the cost of items not listed in the direct costs section of a proposal. Typically, indirect costs are based on percentages of various types of direct costs. Figure 4.3 shows the sample budget for your project.

Figure 4.3. Sample budget for a faculty research project.

This simple example illustrates two important points. First, notice that your proposal includes a budget for your summer salary at $9,000, which includes medical, dental, and retirement benefits. The $9,000 certainly looks like a very small amount when compared to the total budget of $64,400!

Second, notice the indirect costs. If this proposal is funded, the university will receive $14,400 to cover the indirect costs. You can see why the university strongly encourages its faculty to write grant proposals!

The actual overhead rate for organizations varies considerably. Some research organizations have an overhead rate in the 50% to 100% range. Other organizations, such as a school or school district, may have an overhead rate under 10%. Some funding agencies limit the percentage of overhead charges, and many funding agencies do not allow an overhead charge. This is particularly true of private foundations. Their expectation is that the organization submitting the proposal will contribute its overhead charges as part of its contribution to the overall project.

Now, let's make a change in your proposal. Suppose you will submit the proposal to a federal program that limits the size of grants to $50,000. Awards will be made on the basis of the quality and quantity of research that will be completed. Thus, to have a chance of being funded, you must make a commitment to completing a considerable amount of research.

How might the budget be cut to $50,000? Here is where a spreadsheet is very useful. With a spreadsheet, you can easily do some "what if?" experiments. It might occur to you that you would be willing to work for free during the summer, just to have the graduate assistant help and the allocation for travel, materials, and supplies. Figure 4.4 gives the resulting budget.

Figure 4.4. Proposed budget with no summer salary.

Notice that a new column has been added to the proposed budget. In-kind contributions reflect contributions being made by the Resource Seeker to the project. Notice also that even with this generous contribution on your part, the budget still is not balanced. However, a small reduction in the travel, supplies, and materials would bring the total budget down to $50,000.

As an alternative, you might decide to cut out one of the GRA positions. Obviously, this cut is too large. Also, you need the student help. Therefore, you add back in some student wages (at a far less expensive hourly rate than a GRA) and produce the proposed budget given in Figure 4.5.

Figure 4.5. Budget with one GRA and hourly help.

You now have a budget that meets the requirements. Is it worth your while to write and submit the proposal? Do you really want to do all that work--and commit yourself to the research work you will describe in your proposal? Perhaps the method of decision-making analysis suggested by Figure 4.2 is not adequate in your situation. The next two sections present another mathematical approach to analyzing the situation.

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Mathematical Expectation

It is impossible to develop an exact science that will tell you when and when not to submit a proposal. However, you can do some estimates and develop a mathematical computation that will provide you with useful information in making the decision.

We begin with a simple lottery-like example. Suppose that a "scratch and win" game has five spots where you can scratch off one spot to reveal a message. You know that one of the five messages says, "You win $5.00," while each of the rest say, "Sorry, you lose." How much are you willing to pay to play this game?

A mathematician would likely tell you that you should not pay more than $1.00. You have one chance in five of winning. That is, your probability of winning is .20. Your mathematical expectation is .20 times $5.00, which is $1.00. If you pay $1.00 to play the game, and you play many times, you will probably come close to breaking even (winning or losing a small amount). If it costs less than $1.00 to play the game and you play many times, you are apt to come out ahead. If it costs more than $1.00 to play the game and you play many times, you are apt to lose money.

The overall situation is summarized in the mathematical expectation table in Figure 4.6. It lists each possible outcome from playing the game once when you pay $1.00 to play, and it calculates the overall mathematical expectation for the game. The computations were done in a spreadsheet, although such a simple computation is readily done by hand. In spreadsheet notation, a negative number is placed in parentheses. Thus, the ($0.20) in cell E4 (column E row 4) represents -$0.20.

Figure 4.6. Analysis of simple "scratch and win" game.

The $.80 amount given in cell E3 of Figure 4.6 is .20 times ($5.00 - $1.00). Each of the -$0.20 entries is .20 times ($0.00 - $1.00). The total mathematical expectation in this game is the sum of the first five numbers in the far right column. The meaning of the $0.00 total mathematical expectation is that you would expect to approximately break even if you played this game many times.

Now let's complicate the situation a little. Suppose that one of the five scratchable spots says, "Congratulations, you win $5.00. However, you must go to the radio station to pick up your $5.00." The other four spots say, "Sorry, you lose." Now, how much are you willing to pay to play the game?

Suppose you estimate it will cost $2.00 worth of gas and wear-and-tear on your car if you happen to win. (And, of course, it will take quite a bit of your time to drive to the radio station. However, we will ignore this cost in this particular example.) The table in Figure 4.7 analyzes the situation. Again, a spreadsheet was used to do the computation. Notice that the spreadsheet is similar to the one given in Figure 4.6. Cell D3 was changed to $3.00 (that is, $1.00 + $2.00). The spreadsheet software did the calculations.

Figure 4.7. Scratch and win, but it costs to collect.

The meaning of the -$.40 total mathematical expectation computed in Figure 4.7 is that on average you will lose $.40 per play if you played this game many times.

Notice that four rows of the table in Figure 4.7 are identical. This makes it possible to shorten the table, as illustrated in Figure 4.8.

Figure 4.8. Shortened form of table in Figure 4.7.

The second lottery game example is closely related to writing a grant proposal. There are some costs involved in writing a proposal and there are costs in carrying out the work of the proposed project if you win. Thus, you need to think about the cost of writing the proposal, the probability of being awarded a grant, and the cost of carrying out the work if you are awarded the grant. This is illustrated in the next section.

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Applications of Mathematical Expectation

Suppose there is a Request for Proposals (RFP) from your state's department of education. A proposal can request up to $100,000 for computer hardware and software to create a teacher training center. If a school district is funded, it must, for three years, provide free half-day workshops for at least 300 teachers per year from districts that do not receive grant funds. And, of course, it is expected that the teacher training center will be heavily used to train in-district teachers.

This is a competitive grant situation. The state has budgeted $500,000 for this project, so it expects to fund five centers. You check with the state department of education and find out it is expecting about 250 applications. After additional dialogue with the state department you learn that the participants from outside the district will be responsible for their own transportation to the training sessions, but the project must provide them with free instruction, materials, refreshments, and so on.

You begin your analysis of this grant situation by doing two things:

  1. Preparing a budget estimating the cost of preparing and submitting a proposal. For the purposes of this discussion, suppose that you figure this at $2,000.
  2. Preparing a rough draft of a budget for the proposal. Let's say your request will be for $100,000 worth of hardware and software and you estimate a cost of $30 per participant to provide the workshops to the out-of-district teachers. Thus, the total cost of providing this required service for three years will be $27,000 (that is, 300 x 3 x $30).

Figure 4.9 contains the total mathematical expectation analysis of this grant situation. Notice that your cost if you win the grant competition is $27,000 + $2,000 = $29,000, as shown in cell D3. Your probability of winning if winners are selected at random is (5/250), or .02.

Figure 4.9. Analysis of teacher training center proposal.

You might conclude from the analysis in Figure 4.9 that it is not worthwhile to submit a proposal. From a pure mathematical expectation analysis, this is a lottery-type situation with a negative mathematical expectation.

However, your school district might still decide to participate in this RFP for a variety of reasons. For example, district officials may believe that the only way the district will ever get the hardware and software to train its own teachers is to "be lucky" in such a grant situation. Or it may be that your school district has an excellent grant writer who is four times better than pure chance in such a competition. That is, instead of a probability of 5/250 (pure chance) of winning, you estimate that your school district has a probability of 20/250 of winning (Figure 4.10). This leads to a positive mathematical expectation.

Figure 4.10. Analysis of "good grant writer" situation.

The mathematical expectation ideas discussed in this and the previous section are intended mainly to get you to think more deeply about the grant writing "business." Many people think that grants are a source of free money and other resources. They fail to take into consideration the human efforts in writing and implementing the grants proposals. They also fail to take into consideration that the grant "business" is often very competitive. As discussed in the next section, the competition may well come from organizations that are highly skilled in writing and implementing grants.

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Making a Living in the Proposal Business

Many people make a living writing and implementing grant proposals. This is a common occurrence in a research university. It is also a common occurrence in non-profit research organizations that are not affiliated with a university. When you write a proposal, you may be competing with individuals or teams of individuals who make their living writing and implementing grants.

Suppose you want to make a living writing and implementing proposals. How much of your time will you spend writing versus implementing proposals? The question becomes more complex as your goal becomes one of supporting both yourself and a team of people, such as a research group.

You might wonder how a person can be supported on grants and have the time to write proposals. It is standard in the proposal business to assume that a person in a full-time equivalent (FTE) position works 240 days per year, 8 hours a day. This is a total of 1,920 hours of work, or 48 weeks at 40 hours per week. (Actually, one FTE requires somewhat fewer hours of work than this. You are not expected to work during the traditional holidays. Thus, one FTE represents perhaps 46 weeks of work.)

Most people who support themselves in the proposal business put in far more than 40 hours a week. Suppose, for example, that you routinely work a 48- hour week. This means that you could devote an average of 8 hours a week to proposal writing while spending 40 hours a week on implementing the proposals that pay your salary.

Eight hours a week is a significant amount of time. Over the course of a year, this totals about 400 hours. If you are really good at proposal writing, you might be able to write four proposals in this amount of time. Probably you will be writing multiyear proposals. Thus, your typical proposal might be for $200,000 to be spread out over three years. If about one-fourth of your proposals are successful, you could conceivably support yourself and a small research team with this level of proposal-writing effort.

Most people who make a living writing and implementing proposals are really hard workers. They tend to average 50 to 60 hours of work a week. They tend to work on some holidays. They tend to take short vacations. Thus, they can easily devote 40 hours a week to their grant-supported work and still have 10 to 20 hours a week (or more) to write proposals, study, explore new ideas, and otherwise expand their horizons. As they work on their current projects, they are always thinking about future projects.

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How Long Does It Take to Write a Proposal?

It is difficult to estimate how long it will take to write a particular type of proposal because the answer varies tremendously depending on your experience in writing proposals, your speed as a writer, your speed in creating budgets, and other factors. In addition, the first proposal you write on a specific topic will likely take much longer than your second proposal on the same topic.

Figure 4.11 shows some very rough estimates of the time it takes to write various types of proposals. These estimates are for a relatively skilled and experienced proposal writer who has considerable knowledge in the content area of the proposal.

Type of Project Proposal

Size of Proposal

Hours to Prepare

Modest-sized research, development, or implementation proposal to the U.S. Department of Education or National Science Foundation

$50,000 a year for 3 years

120 to 150 hours. (The NSF estimates 120 hours. Literature from the U.S. Department of Education provides a much lower estimate.)

Large-scale implementation proposal to the U.S. Department of Education or National Science Foundation

$1 million a year for 5 years

1,000 to 2,000 person-hours. The NSF has awarded some $50,000 planning grants to aid in writing proposals for $1 million a year for 5 years.

Very large-scale implementation proposal to the National Science Foundation

$1 to $3 million a year for 5 years

2,000 hours or more. The NSF has awarded a number of $100,000 planning grants to sites eligible to apply for the Urban Systemic Initiative Program.

Modest-sized implementation proposal to a private foundation

$10,000 a year for 3 years

30 to 50 hours

Large-scale proposal to a private foundation

$1 million to $5 million or more

500 person hours of writing effort and lots of personal contact time with foundation personnel.

Preliminary proposal (small)

Under $10,000

3 to 5 hours, plus a lot of careful thought

Preliminary proposal (large)

$100,000 and up

10 to 20 hours of writing effort and a medium amount of personal contact time with foundation personnel.

Figure 4.11. Estimated times required to write various types of proposals.

You should view a proposal-writing effort as a learning experience and as a step toward writing the next proposal and the next proposal. The time and effort that goes into writing a proposal is not necessarily wasted, even if the proposal is not funded.

Many proposal writers underestimate the time that it takes to write a good proposal. Thus, as the deadline looms them end up putting in very long days, and they often produce a sloppily written proposal. When you were a student, you may have had the same experience in doing a major term project. There is relatively little value in submitting a proposal that receives a "grade" of B or lower. Typically, funding goes only to those proposals that are ranked at the A, or perhaps even only at the high A level. If you are not willing to put in the effort to write a very high quality proposal, then it usually is not worth the effort of writing a proposal!

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Proposal Mills

The term proposal mill is sometimes used in a somewhat derogatory sense to refer to an organization that derives most or all of its income through grants. There are many research organizations or research and implementation organizations of this sort. They vary in size from a few employees to hundreds of employees. Often these organizations are also interested in contracting to do specific research and/or implementation tasks. They may even be "for-profit" companies rather than nonprofit organizations.

These research and implementation organizations have staffs highly skilled in writing proposals and in implementing the funded proposals. Sometimes these organization specialize in a narrow area, such as research in special education. Larger grant-supported organizations have staffs with a wide range of interests and may seek funding in a broad range of areas.

These research and implementation organizations are truly in the proposal business. If such an organization has survived for a few years, you can be quite sure it has some staff members who are exceptionally good at proposal writing. The organization also has to be quite good at carrying out projects. Its record of accomplishment must look good to people who are evaluating its proposals.

Being in a grant-supported business is not a great deal different from being in other businesses. In essence, the organization is bidding on jobs--much like a contractor might bid on various jobs. If the organization is good enough at writing proposals and carrying out projects, and if its prices are competitive, it will prosper.

Of course, this makes it tough on beginners. Beginners tend not to have the finely honed proposal-writing skills of veterans or the staff support that is so helpful in proposal writing. They may lack skill in building implementation teams. For these reasons, a few federal funding agencies and private foundations have special programs only open to beginners, or that support only quite small grants that are not of interest to people who are trying to make a living in the grant business.

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Activities

  1. Have you ever written a proposal or helped write a proposal? If so, describe the proposal and estimate how many person-hours of work it took to write. If possible, determine the cost of writing the proposal and analyze this with respect to its size.
  2. Select a proposal you might be interested in writing. Briefly describe the project. Based on your current knowledge of proposal writing, do a cost/benefit analysis. Make estimates whenever you are not sure of amounts of time or costs per hour for developing the proposal or carrying out the work.
  3. Interview one or two people who have had significant experience in writing proposals and implementing grant-supported projects. One of the questions you should ask is how they decide whether to respond to a particular RFP. Report on your findings.

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