Managing exchange rates can be a big challenge when receiving a grant in a foreign currency. This starts from before the grant is approved, already when you are budgeting for your proposal. At that time, you are ‘translating’ your local currency prices into the foreign currency of the grant. Management of exchange rates continues from receiving foreign currency installments on your bank account to spending money for the project all the way to reporting on this to the funder.


Most funders have clear rules about how you can (or must) convert your local currency to their grant currency. For instance, the EU requires you to use their InforEuro converter. This provides a monthly rate.

Other funders require use of official rates of their national bank, while other might allow you to use the rate of the foreign currency received on your bank account. Some may allow you to use the rates of the day, as can be found on oanda for instance.

Most donors do not want to cover currency exchange losses, this type of cost is usually ineligible.

The first thing to do, therefore, is to check what rules your funder applies to currency exchange rates and risks.

Assessing risks

The second thing to do is to assess the risks. Has the exchange rate been stable in the past two years or have there been big fluctuations? (You can download all monthly rates from March 1994 to date per currency at InforEuro) Check what would happen to your budget in case of the worst possible rate as realized in the past two years for instance. Would that have a significant impact on the available local currency? Can you use a conservative rate for budgeting, to minimize the risks of a bad rate during implementation?

Obviously, risks will be smaller or non-existent if you can use the rates as realized when receiving a foreign currency installment or if the donor allows you to charge exchange rate losses to the project grant.

If you think the risks are high, you should consider not applying or you may enter in a conversation with your prospective funder to see if the risks can be mitigated somehow through an adjusted set of rules.

And yes, I say on purpose “consider not applying” because you should really assess possible exchange rate issues carefully when applying for a grant and be sure you do not apply for a grant that means trouble for you in case your application is successful. Sometimes it can be better to not apply, really!


Some organisations contract all services and partners in foreign currency contracts in the currency of the contract, making them invoice or report in that currency, too. This can help a bit in managing the risks, as you can ensure that you do not spend more money in the contract currency than you have been awarded. However, it only works perfectly if you have a bank account in that currency, too, and pay everything through that account. Otherwise you may still run into exchange rate issues.


Sometimes it is possible to open a foreign currency account for your organization to receive the foreign currency amounts and maybe to pay in the same currency your service providers and partners, see under contracting as well. However, sometimes it is not easy or not possible or not worthwhile if it concerns a small grant against serious costs and administrative hassles.

Sometimes you can make arrangements with the bank about receiving foreign currency on your local currency bank account. They can guarantee a certain rate, if they know the amount in advance and the estimated date of receipt.


Being prepared is important. But equally important is that you make sure you monitor foreign currency rates and grants carefully, and very regularly. Be sure that if a big fluctuation to your disadvantage occurs you see it immediately. So that you can contact the donor immediately to discuss mitigation of negative consequences on the project implementation.

Part of monitoring is drawing up financial reports regularly, so you can check grant currency expenses against budget. This way, you can also compare local currency expenses to what you had foreseen at the time of budgeting. That way you can keep an eye on how your budget assumptions work out in real life. Make sure you keep track of any lessons learned in this regard, to be used next time you need to make a budget for a proposal!

For more tips for budgeting, download my Ten Tips to Make Clever Project Budgets here.