- Who can help me with budget development?
- What should I include in my budget?
- What are F&A costs?
- Do I need to include cost sharing in my proposal?
- What can’t be charged to grants?
- What needs to be included in a budget justification?
- When do I use an NIH modular budget?
Budget preparation resources are available on the Division of Sponsored Programs' (DSP) website.
Many departments and colleges have research administrators that provide assistance with developing budgets. If you need additional assistance, please contact DSP at 335-2123 or firstname.lastname@example.org.
Budgets should include direct costs that are reasonably required to support the project and Facilities & Administration (F&A) costs.
Direct costs are directly identifiable project expenses. Major categories include:
- Personnel (See Section 7a: Hiring Staff)
- Fringe Benefits
- Subcontracts and subawards (See Section 5a: Setting up subawards)
- Materials & Supplies
- Participant support costs
- Patient Care costs
- Other direct costs
Indirect costs are explained below.
F&A (Facilities & Administration), also known as indirect costs, are sponsored-project-related expenses that cannot be directly and accurately associated with individual projects, e.g., the costs of heat and air conditioning, electricity, building maintenance, security, libraries, administrative services, etc. Since not all of these costs are accounted for on a project-by-project basis, accurately totaling all indirect costs attributable to each sponsored project would be very difficult. Nevertheless, indirect costs are real costs to the University and the government recognizes the University's right to claim them as expenses related to sponsored projects. To this end, the University and the federal government negotiate four separate rates for indirect cost reimbursement.
Cost sharing should only be included in a proposal when it is either mandatory or strongly encouraged. Once cost sharing is mentioned in a proposal, whether it is mandatory or voluntary, it becomes a commitment to the university. It is important to remember that once the grant is awarded, all cost-sharing amounts are subject to audit, therefore proper documentation must be kept.
The following items cannot be charged to a federal award and should not be included in the project budget submitted to a federal sponsor:
- postage unless the project has a separate and extraordinary need for postage, such as a national survey to be conducted by mail;
- office supplies;
- personal computers, unless a special scientific justification is provided;
- individual membership dues to societies;
- basic telephone service, local line and equipment charges, and local phone calls;
- clerical/administrative salaries, unless properly justified and documented.
The Grant Accounting Office maintains a quick reference for Sponsored Projects Expenditures.
The Budget Justification is a narrative that provides additional detail on line items in the budget. Sections should be included for Personnel, Equipment, Travel, and any other budget categories that may require explanation. If the budget includes costs of questionable items, these must be justified explicitly. Equipment expenses also require careful delineation, since the sponsor approves individual line items in this category.
NIH requires that proposals requesting $250,000 or less in direct costs per year be submitted as “modular grants.” Funds are requested in $25,000 increments, or “modules,” based on an internal detailed budget that is not sent to the funding agency. Ordinarily the same number of modules should be requested in each year of the award period. Additional restrictions and guidelines are outlined on NIH's website.
Key points include:
- The budget narrative must include ALL personnel by position, role, and level of effort. This includes consultants, personnel on any Consortium/Contractual arrangements, and any “to be appointed” positions.
- Any variation in the number of modules requested must be explained in the budget justification. Equipment costs should not be explained unless they result in a variation in the number of modules being requested.
- The inclusion of a subaward does not preclude using the modular submission format. In such cases the proposal should include a statement of intent to establish a consortium between the participating institutions. The subawardee should provide the PI sufficiently detailed (non-modular) budget information so that the cost of the consortium agreement (which includes the subawardee’s associated F&A costs) can be estimated to the nearest $1,000.