When you prepare a budget for a grant application, especially one tied to federal or state funding, they often focus on programmatic expenses: staff time, supplies, equipment, and direct services. But one frequently overlooked category that can—and often should—be included is attorneys’ fees.
Yes, attorneys’ fees can be a legitimate, allowable cost when bidding on a grant in the U.S. Here’s what you need to know about including legal expenses in your grant proposal and budget.
Why Legal Costs Belong in a Grant Budget
Legal services can play a crucial role in the success and sustainability of a project. Consider just a few examples:
- Comprehensive Financial Planning: By accounting for potential legal expenses, your organization can ensure that all foreseeable costs are covered, thereby avoiding unexpected financial burdens during the grant period.
- Enhanced Transparency: Including attorneys’ fees in the budget demonstrates a commitment to transparency. It shows potential grantors that your organization is thorough in its financial planning and is prepared to address any legal issues that may arise.
- Risk Management: Legal challenges can occur at any stage of a project. Allocating funds for attorneys’ fees helps mitigate risks by ensuring that your organization has the resources to address legal matters promptly and effectively.
What kind of legal services are commonly included in a grant budget?
- Contract review and negotiation for vendors, partnerships, or leases related to the project.
- Compliance guidance on regulatory requirements tied to the grant.
- Employment law advice when hiring or managing new staff for the grant-funded work.
- Intellectual property protection if the project involves original content or technology.
Failing to account for legal needs can lead to unexpected costs—or worse, noncompliance issues that jeopardize the grant.
Further, you want to be upfront that your own intellectual property that you bring to the social impact work is yours—and will continue to be yours after the grant is done.
Best Practices for Including Attorneys’ Fees in a Budget
- Grantor Guidelines: It is essential to review the specific guidelines of the grantor to ensure that attorneys’ fees are an allowable expense. Some grantors may have caps or restrictions on the types of expenses that can be included in the budget (sometimes itemized as an indirect cost).
- Budget Justification: Clearly justify the inclusion of attorneys’ fees in your budget proposal. Describe the legal support anticipated and link it directly to the goals of the grant.
- Provide Cost Estimates: If possible, get a quote or retainer estimate from a law firm or in-house counsel.
- Explain the Role of Counsel: In your budget narrative, explain how legal advice will support compliance, operations, or risk management.
- Documentation: Maintain detailed records of all legal expenses incurred. This will facilitate accurate reporting and compliance with grantor requirements.
In Summary
Social enterprises and nonprofits bidding on grants in the U.S. can—and often should—include attorneys’ fees in their proposed budgets, especially when legal guidance is essential to executing the program. By planning ahead and being transparent in your budget narrative, you can ensure your organization has the legal support it needs without scrambling to find resources later.
Need help figuring out how to include legal fees in your next grant budget? Connect with us for more information.
