Budgeting for Sponsored Programs
First Rule
If the funder provides specific guidelines related to format or contents of your budget…FOLLOW THEM!
Otherwise, your proposal may not make it out of the screening phase.
Costs
In preparing a budget, the investigator needs to be concerned with two types of costs:Direct CostsIndirect Costs
Direct Costs + Indirect Costs = Total Budget
Direct Costs
Costs that can be identified as necessary to complete a specific sponsored project or activity.
Assignable with a high degree of accuracy anddirectly related to the project.Typical direct costs include salaries and fringebenefits, materials and supplies, travel, andequipment.
Direct Costs
Costs directly charged to a project must pass four tests:
ReasonableAllocableConsistentAllowable
Direct Costs
Reasonable Costs:those which a prudent person would expect to incur during completion of a similar project.
Is the expense necessary to complete the project?Is the budgeted item appropriate for the project?Does the cost of the budgeted item reflect marketconditions?
Direct Costs
Allocable Costs:Assignable to a specific objective withinthe project.
Solely intended to achieve proposal objectives.Benefit both the proposed project and theinstitution as a whole.ORNecessary for operations of institution but alsoassignable to specific objectives of the project.
*Expenses cannot be shifted between projects to cover cost overruns. Each expense must be allocable to the project to which it is charged.
Direct Costs
Consistent Costs:treated in accordance with accepted accounting practices appropriate to the project.
Institution must treat costs in a similar mannerregardless of the project to which they areassigned.
If an item is treated as an indirect cost by theinstitution under one program, it must betreated the same under all programs.
Direct Costs
Allowable Costs:Expenses that are reasonable, allocable and consistent and which conform to the guidelines of the institution and project sponsor.
Take special note of exclusions, limits, andconstraints that a sponsor lists in its Requestfor Proposals.
Direct Costs
Typical direct costs include:
SalariesFringe BenefitsEquipmentTravelParticipant CostsOther Direct Costs
Direct Costs
Salaries
Full and part-time salaries of CooperativeExtension personnel.Considerations: Annual salaries andwages of individuals involved in project; number ofmonths project will take; percentage of time eachindividual will be involved in the project based on a226-day year.
Total time allocated to sponsored projectscannot exceed 100% of a staff member’spaidwork hours.If project spans fiscal years, allow for salaryincreases.
Direct Costs
Fringe Benefits
Health insurance, unemployment insurance, workercompensation, social security, retirementcontributions, and other benefits provided byemployer.Based on percentage of total salary.For Fiscal Year 2012 fringe benefits rate are30.4% for salaried employees (24.61% if NIFAsponsored) and 7.6% for temporary employees.
Direct Costs
Equipment
A single item with a useful life of more than one year anda cost exceeding $5,000.Line-item each piece of equipment in budget.Equipment requested must be necessary and justifiablefor completion of project.
Direct Costs
Travel
As necessary to complete project or report findings.Air fare, lodging, meals, mileage, registration fees,ground transportation, etc.Based on per diem rates or actual expenses.Budget in-state and out-of-state travel separately.Use reasonable estimates of expenses based on currentmarket conditions and rates.Federally-funded air travel must be via a U.S.-ownedcarrier.
Direct Costs
Participant Costs
Expenses incurred by project participants who arenotCooperative Extension employees.Study subjects, students to be trained, programattendees, etc.Stipends, travel, supplies, education materials, etc.
Direct Costs
Other Direct Costs(list is not all-inclusive)
Materials and Supplies necessary to complete project thathave a useful life of less than one year and a cost of lessthan $5,000.Publications associated with reporting research findings,distributing information, or providing educational materials.Professional/Consulting services at prevailing market ratesand not to exceed the consultant’s normal compensationrate.Freight and Postage if significant and beyond thoseanticipated as a cost of normal office operations.
Direct Costs
Other Direct Costs, continued
Advertising and Public Relations fulfilling obligations ofsponsored agreement including recruitment ofpersonnel, bid announcements, and educationalmessage dissemination. Promotional items are notallowable.Sub-awards “passed through” to another institution tocomplete specified components of project. *See indirectcosts for limitations associated with sub-awards.
Indirect Costs
Costs that contribute to a project but are difficult to allocate in exact proportions.Includes utilities, administration, clericalassistance, depreciation, computers, officesupplies, etc.Does note include cost of equipment, capitalexpenditures, rental of off-site facilities,scholarships, and each sub-award amountexceeding $25,000.Treatment of costs must be consistent; itemstreated as indirect under one project mustalso be indirect under other projects.
Indirect Costs
Costs are normally calculated based on “Modified TotalDirect Costs” (MTDC)Total Direct Costs minus equipment, capitalexpenditures, rental of off-site facilities, and sub- awards to the extent they exceed $25,000Indirect cost calculations are based on negotiatedpercentages of MTDC or limits designated by projectsponsor.
Donations
Cash, property, services, volunteer labor, etc.Not treated as direct costs.Useful in calculation of matching funds that maybe required for a project.Must be non-federal and not used as matchingfor any other federally-funded project.Value based on current market prices, appraisal,or labor rates.
Multi-Year Projects
Include separate budgets for each year and a summarybudget for entire project.Account for inflation, salary adjustments, and otherunpredictable cost increases.For Fiscal Year 2012, a reasonable rate of increase is 3%annually.
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