The phrase “lump sum budget” refers to very general, non-specific approach to budgeting which leaves a great deal of discretion to the owner of the grant. As opposed to a more specific line item budget where the salaries and fringe benefits are broken out by individual, a lump sum budget might group them together into one round figure: $35,000.

Though the lump sum budget might have categories of spending, those might be very generally defined. For instance, there might be $50,000 in a Research Project category. This broad category could include salary, travel and equipment depending on the specific project that is eventually funded.

Typically lump sum budgets are supported by foundations where the financial reporting may not be as rigorous and the use of funds may be much more flexible than would be required on a federal grant.