It may be easier to think of this section as a review of Relevant Literature." Cite previous projects and studies that are similar to what you are proposing. Show the funding agency that you know what you are proposing because you are familiar with what has preceded you.
Try to be careful in your use of language. It can very helpful to have a friend, outside of your area of focus/expertise, read your proposal to make sure that the language is readable and minimizes the use of:
jargon
trendy or "in" words
abbreviations
colloquial expressions
redundant phrases
confusing language
Position your project in relation to other efforts and show how your project:
a) will extend the work that has been previously done, b) will avoid the mistakes and/or errors that have been previously made, c) will serve to develop stronger collaboration between existing initiatives, or d) is unique since it does not follow the same path as previously followed.
Use the statement of the problem to show that your proposed project is definitely needed and should be funded.
It is essential to include a well documented statement of the need/problem that is the basis for your project. What are the pressing problems that you want to address? How do you know these problems are important? What other sources/programs similarly support these needs as major needs?
Check to see that the potential funding agency is committed to the same needs/problems that your proposal addresses. Clearly indicate how the problems that will be addressed in your project will help the potential funding agency in fulfilling their own goals and objectives. As you write, keep the funding agency in your mind as a "cooperating partner" committed to the same concerns that you are.
Is there a special reason why you and/or your organization are uniquely suited to conduct the project? (Geographic location, language expertise, prior involvements in this area, close relationship to the project clientele, etc.)
When you get to the Methods Section of your proposal it will be important to refer back to the needs you've identified in this section (and show how your methods will respond to these needs).
It can really help gain funding support for your project if you have already taken some small steps to begin your project. An excellent small step that can occur prior to requesting funding is a need assessment that you conduct (survey, interviews, focus groups, etc.). Write up your need assessment as a short Report, cite the Report in your proposal, and include a copy with the proposal.
This is an excellent section to have the reader begin to understand that an ongoing approach to the problem is essential (assuming that you are proposing a project that is ongoing in nature) and that short term responses may have negligible effect. This can begin to establish a rationale for why your project needs external funding - it seeks to provide a long term response.