Why including a budget in your RFP matters

An RFP budget is a foundation for transparency and trust in a vendor relationship.
Nov 28, 2023
7 minute read
Project Management • Strategy • Websites

If only there were an RFPs 101 instructional course, I'm sure many nonprofit professionals and their consultants could have been saved from countless headaches.

Unfortunately, that is not the case, and we've all become familiar with the daunting process of creating a request for proposals. RFPs are instrumental, and sometimes even required, for soliciting services and products, especially in the nonprofit sector. However, there is one ingredient that is often left out, leading to missed opportunities for partnership and increased inefficiency: the budget.

For any nonprofit professional searching for the best-outsourced support or software purchase, the budget is essential to making an intelligent request that gets the proper responses. From my decade-long experience supporting the nonprofit sector, I've learned that a budget can make or break an RFP and redefine the course of a partnership.

Budget transparency signals an informed request

Although today's market can make it feel impossible, let's pretend we're buying a house. If I were looking for a 3-bed, 2-bathroom home with a backyard in a great location, I would expect my realtor to ask, "What is your budget?" If my answer was, "Let's see what you can come up with, and we'll decide based on that," you can probably guess the response.

RFPs are no different! Whenever we communicate our expectations, especially regarding financial constraints, we create clarity and lay the groundwork for mutual respect. Potential consultants and agencies invest substantial time in understanding a project's depth, scope, and nuances. Without clear financial guidance, this can be akin to navigating in the dark.

Considering that a website (to name just one type of popular RFP) can cost anywhere from a few hundred dollars to millions of dollars, it is imperative to include a budget range. Several years ago, Chris Steins made this point on the NTEN blog in highlighting the five most common mistakes in website RFPs

According to research from Prosal, not being upfront about budgets can hinder fruitful partnerships from the outset. Nearly 50% of potential consultants and agencies will refuse to respond to an RFP that does not include a clear budget. And it's not about pride or unwillingness to negotiate; it's about efficient resource allocation and alignment of expertise.

How to become an informed estimator of budgets

Offering a specific or informed budget outline can sometimes feel more challenging than it is, especially when you're requesting in an area outside your domain expertise.

The first time I created an RFP was when I was a 22-year-old assistant manager at a large environmental organization. I was tasked with finding someone to build a website for our campaign only weeks after learning what WordPress even was. I felt like I was learning to speak a new language when I had to figure out what to ask for and how much to spend, though our VPs' statement, "We have $20,000 for this," helped me narrow down the set of services.

Others have likely experienced this, wondering what their budget can achieve or not even knowing when to start. The RFPs that follow those cases can read something like "We need a new website. How much should it cost?" or "We can afford $8,000. That's the budget." While the honesty is appreciated, this is not the best way to make this request.

Instead of publishing a partially informed request, do a bit of research on your needs and what solutions are available. As Maureen Wallbeoff and I discussed in this recording from last year, the RFP should be your second step.

Start with Google and graduate to ask colleagues at your workplace, consultant friends at agencies or on Prosal, new friends at conferences like NTEN, and professional listservs like Progressive Exchange. Whatever the need, someone else has likely had it before. Once you have done some research, you will at least understand what some of the different solutions tend to cost, and you can begin to narrow down what will be most helpful for your case.

Inclusion for a diverse partnership landscape

It's not only about efficiency but also about equity. By offering a clear budget or a budget range, you can help level the playing field. Unlike their larger and generally white, male-owned or -led counterparts, small businesses can't cover the costs of unbillable hours in responding to every RFP that comes across their inbox.

Smaller and more diverse agencies are generally more careful about where they dedicate their limited business development resources. By being transparent about your budget, you send a message that you respect their time and resource constraints. It's a gesture that makes your RFP more accessible to a diverse range of agencies, thereby fostering inclusivity.

More importantly, including a budget can allow for easy self-qualification or disqualification, which can save time for an agency in responding to your RFP or moving to the next opportunity. This act of respect and inclusion leads to more satisfaction with the process and your organization.

Flexibility vs. precision: striking a balance with ranges

There's a natural hesitancy around disclosing exact budget figures, often stemming from concerns about receiving responses that skew toward the high end of the budget. It's a fair critique since it's not uncommon to share a budget limit of $20,000 and receive the most responses with a proposed budget of $19,990. However, it's essential to strike a balance between flexibility and precision.

If your concern is skewed responses, opt instead for a budget range. A budget range is flexible in that it incorporates potential variables and uncertainties that might arise during the project's lifecycle. It also invites proposals from agencies across the price range that feel they can compete and deliver on the project within the available budget. This strategy ensures that the proposed project budgets remain fairly distributed across the spectrum rather than skewing towards a maximum.

From my work at Prosal and conversations with serial RFP issuers, I can vouch for the importance of this balanced approach. It fosters open discussions, allowing agencies to propose solutions that align with the nonprofit's expectations and financial capacities.

Beyond numbers: The ripple effects of transparency

What better way to start a partnership than a process grounded in truth and transparency? Including a budget in your RFP transcends the mere transactional nature of numbers. It's a testament to your organization's commitment to transparent communication and effective collaboration. It's about creating relationships anchored in mutual respect, understanding, and a shared vision for impact.

By omitting a budget, we inadvertently erect barriers to great partnerships and miss out on opportunities to tap into a reservoir of diverse expertise. But by being forthright, we pave the way for richer collaborations, reduced inefficiencies, and elevated project outcomes.

Closing thoughts

Budget transparency in RFPs is not a mere best practice but a critical cornerstone for fostering genuine, equitable partnerships. From my vantage point at Prosal, I've witnessed the transformative power of such transparency. Businesses grow, knowledge is shared, opportunity is created, and abundance trumps scarcity. It's more than just numbers on a page; it's a beacon of respect, inclusivity, and mutual growth.

So, the next time you draft an RFP, remember the implications of including a budget. It's the bridge that can connect your nonprofit's aspirations with the expertise and dedication of potential partners who are as committed to your mission as you are.

Alfredo Ramirez

Alfredo Ramirez

he/his

Co-Founder / CMO / COO, Prosal

Alfredo Ramirez is the co-founder and COO of Prosal and President of ALRAS Digital. He is a multilingual grassroots advocacy and digital strategy expert that has supported mission-driven organizations on the frontlines of changemaking. Having founded and served in leading roles at various organizations and initiatives, Alfredo has spent a decade advocating for equitable solutions to problems from climate change to the gender wage gap and strengthening democracy in the U.S. and abroad. He is committed to self-transformation through continuous learning and traveling, which Alfredo has enjoyed as a globetrotting backpacker, cross-country road tripper, and backcountry hiker.

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