Project budgets at the proposal stage provide an estimated, but detailed financial plan of what your project will look like if funded, and a financial blueprint of how you accomplished your goals once your project is complete. As such, budgets should receive careful attention in the proposal development phase of a project and thorough tracking during the life of the project. Remember that external sponsors are truly investing in the ultimate successful outcome of the project. The budget and budget justification are your chance to demonstrate that you intend to use your funder’s investment in a thoughtful, effective, and efficient way and can also greatly add to the funder’s understanding of your project.
OSP Budget Review
The Office of Sponsored Programs at UNCG houses a Grants Specialist dedicated to the pre-award budget review and preparation.
The primary purpose of the OSP budget review process is to check all budgetary components of an application package for accuracy, completeness, and compliance with the financial and budgetary requirements of the program sponsor and UNCG. We also work closely with PI(s) and/or de-centralized pre-award research administrators as needed during the budget development phase of the proposal process.
Beginning with review and approval of an internal budget and a draft budget justification, OSP will provide detailed feedback/suggestions to ensure that the budget materials meet all necessary requirements of the sponsor and the university. Once all feedback has been addressed, the final step is approval of the budget, in submission format, ensuring that the internal budget, justification, and sponsor-required budget forms are all in line with each other and accurate.
Budget Development Help: basic elements of a budget
The budget is one of the most essential components of a proposal. The budget development process can sometimes be difficult because of the various components, policies, rates, and other factors that need to be taken into consideration. The following information is intended to highlight the basic elements included in a budget and provide an overview of the budget preparation and review process at UNCG. The budget is generally divided into two classifications: Direct Costs and Facilities & Administrative Costs (also referred to as “F&A,” “indirect,” or “overhead” costs).
Salaries and Wages. Salaries should be expressed in terms of an “effort” percentage. Include faculty, technicians, post-doctoral associates, graduate students, and other personnel required by the project.
- To determine total salaries and wages, list the amount of time to be spent by each person who will be working on the project. Time should normally be shown in terms of person-months and/or a percent of full-time effort. Show breakdown between summer and regular academic year for faculty.
9-Month Appointment Example ($45,000 annual base, 9-month faculty appointment; proposal is for 15% effort)
$45,000 x 15% project effort = $6,750 project salary request
Person months is calculated by multiplying the percent effort proposed by the individual’s University appointment. Using the above example: 15% project effort x 9-month faculty appointment = 1.35 academic person months.
- No employee may be scheduled for activities in excess of 100% of effort in any given month.
- Sponsored activities may not result in any employees receiving compensation at a rate in excess of their authorized salary or academic rate. For multi-year projects, the budget should take into consideration any possible salary increases. When allowed by the sponsor, the UNCG standard is to include a 3% annual increase.
Fringe Benefits. Fringe benefits include the cost of the University and State retirement programs, health insurance, group life insurance, social security, disability insurance, workmen’s compensation, and unemployment compensation.
- Fringe benefits are a direct cost to a sponsored project, are clearly related to the salaries and wages to be paid, and are shown as a separate entry in the budget. Fringe benefit costs have been calculated based on historical data. The actual costs for fringe benefits are charged (billed) to the sponsored project at the time the costs are incurred. The amount charged is based on salary, selected benefit package, and other variables applicable to the individual employee.
- UNCG’s fringe benefit rates are reviewed on an annual basis and adjustments to the rate will be made based on the claims incurred in past fiscal years.
Fringe Benefit FY 17 Rate EPA Faculty/Staff (>0.75 FTE) Composite Fringe 33% SPA Faculty/Staff (>0.75 FTE) Composite Fringe 37% Students (enrolled/academic year) 0.4% Students (non-enrolled/summer) and Temporary Employees 8.05% (0.4% + FICA)
The above composite fringe rates should be considered the default unless a sponsor specifically requests a breakdown of the fringe benefits calculation. In those cases, the following breakdown applies:
Fringe Benefit Breakdown FY 17 Rate FICA 7.65% Optional Retirement 12.85% State Retirement 15.32% Health Insurance $5,564 (flat rate charge, not %) EPA & SPA Fringe Reserve 2.5% Students and Temporary Employees 0.4% Temp/Student (non-enrolled) 8.05% (0.4% + FICA)
Capital Equipment. “Equipment” means an article of nonexpendable, tangible personal property having a useful life of more than one year and an acquisition cost of $5,000 or more per acquisition.
- Components used to fabricate an item of capital equipment may be considered as capital equipment for budgeting purposes and should be identified for inventory purposes.
- Capital equipment costs are excluded from indirect cost calculations.
Travel. Travel costs are usually budgeted according to domestic and foreign travel.
- Travel should be treated as a direct cost of the grant or contract where such travel will provide direct scientific benefit to the program and is within specific sponsor restrictions.
- Domestic travel is considered travel within the United States and Canada (sponsor may have additional destinations they consider domestic, however, in which case, defer to sponsor guidelines).
- For travel rates, refer to the current UNCG policies found here:
Subsistence rates: https://sys.uncg.edu/travel-policy-5-subsistence/
Transportation rates: https://sys.uncg.edu/wp-content/uploads/2017/01/Travel-Manual_FINAL_Rev-1-17_.pdf
International travel rates: https://sys.uncg.edu/travel-policy-14-out-of-country-travel/
Materials and Supplies (Expendables). These are items, costing less than $5,000, which are directly related to the objectives of the project. Not to include office supplies or any other general purposes supplies/equipment.
- Normally, a research project will consume expendable supplies such as laboratory items, teaching aids, computer software, and office supplies. A reasonable amount should be budgeted for these items.
- Consider the cost of biostatistics; cost of animals; additional data storage hardware, etc.
Publication Costs. Includes costs associated with the publication and dissemination of research results.
- Budget the anticipated cost of publishing the results of the research, keeping in mind that page charges may vary from journal to journal.
- Consider both page charges and reprint costs.
Consultants. Consultants are individuals outside the university, whose expertise and skills will add value to the project. UNCG faculty or other institutional staff should not be listed as paid consultants.
- Normally, consultants are paid a consulting fee (based on a daily rate) plus travel expenses. Many Sponsors do not permit payments to consultants and some restrict or limit such payments. If in doubt as to the allowability of consultants or rates paid to consultants, refer to the Sponsor’s program guidelines or contact the OSP.
- Consultants are never listed in the Salaries & Wages section of a proposal’s budget. Consultant costs plus any associated travel should appear in the separate Consultant category of the budget.
- Whenever possible, identify the proposed consultant by name, indicate the number of days of work, daily rate, and role/description of work in the budget justification.
- To determine whether it’s most appropriate to hire someone as a consultant or to bring them on as an employee, review the UNCG Independent Contractor Checklist.
Subcontracts/Subrecipient Agreements. Some proposals represent a collaboration of work by more than one institution. Costs of such other institutional collaborations are represented in the budget as a single line item and are generally accompanied by a separate subcontractor budget and budget justification.
- The subaward total budget includes both direct and F&A costs in a single line item on the prime institution’s proposal budget.
Other Direct Costs.
- Consider, as appropriate, items such as: animal care per diems; human subject incentive payments; costs for copying, long-distance telephone calls, postage specific to the proposed work.
- In-state and out-of-state tuition and fees charged to regularly enrolled students should be included here. With the exception of tuition requested as part of a Training Grant, tuition costs are excluded from indirect cost calculations. Charges to this cost category are often subject to specific program restrictions and reference should be made to sponsor guidelines to determine allowability of charges.
- Services and Service Centers: within the university are various centers from which a variety of services may be purchased to support research activities; the services have set fees/fee schedules which aid in the estimate of budget costing. Some examples include: Use of Biology Microsope; Psychology Clinic; Speech and Hearing Clinic, etc.
Facilities & Administrative Costs
Facilities & administrative costs (F&A, “overhead,” “indirect”) are incurred for expenses that cannot be identified readily and specifically with a particular sponsored project. The cost of building operations and maintenance, equipment upkeep, general and departmental administrative expenses, sponsored projects’ administration, and library expenses are usually considered indirect costs. These costs are essential to the support of sponsored program activities.
F&A Guidelines. UNCG’s F&A rates are based on a federally negotiated agreement that is unique to UNCG. One important element of federal guidelines is that we apply our negotiated F&A rates similarly across all sources of funding. To remain in compliance with federal policy, our federally negotiated rates must be used in all sponsored agreements unless the sponsor has an explicit policy regarding indirect costs that dictates another rate be used by all proposal applicants.
- Sponsors with explicit policies regarding indirect costs can dictate another rate. In these cases we will apply the sponsor’s stated rate (please include the sponsor’s documentation in your proposal routing). This situation is more likely to arise with working with non-Federal sponsors (e.g., State of North Carolina agencies, local governments, industry and foundations). However, there are situations in which federal agencies will cap the amount of F&A they allow. This information will be stated explicitly in the RFA/RFP. Where the federal sponsor’s stated indirect cost rate is less than the University’s approved rate, the sponsor’s limited rate should be applied. Some examples of federal limitations are training grants and research career development awards, which limit indirect cost recoveries to 8% of total direct costs. If you are unsure of an organization’s policy related to F&A, please contact your Proposal Specialist. They can reference previous agreements to determine F&A rates and/or contact organizations to inquire about their policy.
- Requesting a reduced F&A rate. If you wish to request a reduced F&A rate, you must submit a written request to the Vice Chancellor for Research and Economic Development. This request will be considered by the VCRED and the Associate Vice Chancellor for Business Affairs, and both individuals must agree to the request for it to be granted.
- On- and Off-Campus Rates. Off campus rates are generally used when the sponsored research takes place (or predominantly takes place) in a facility not owned by the University and to which rent is directly allocated to the project. Please note that rates on an individual project may no longer be split between on- and off-campus rates. If more than 50% of a project is performed off-campus, the off-campus rate will apply to the entire project. Otherwise, the on-campus rate applies. Prior to submitting your proposal, please contact OSP for assistance.
Calculating F&A Costs. UNCG’s federally negotiated on-campus research F&A rate is 45.5% of Modified Total Direct Costs (MTDC). To calculate the F&A costs for a project:
- Calculate the Total Direct Costs (TDC) which is simply the sum of all direct costs (salaries, benefits, supplies, equipment, etc.).
- Calculate the base against which the F&A rate will be multiplied by subtracting exempt items (e.g., capital equipment, graduate student tuition and required fees, and subcontract/subrecipient agreement costs in excess of the first $25,000 of each subcontract/subrecipient agreement over the life of the subcontract/subrecipient agreement) from TDC. This will give the MTDC.
- Apply the F&A rate against the MTDC base to calculate the F&A costs for the project.
- Add the TDC to the F&A to calculate the Total Project Costs.
Matching Funds/Cost-Sharing. If sponsor guidelines require cost-sharing or matching funds (cash contribution or donation of in-kind services such as contributed time and effort by the Principal Investigator and research group members), you must ensure that the monetary value of the matching funds is accounted for in the budget and in RAMSeS. All matching funds or cost-sharing commitments based on the faculty member’s academic time and effort should be approved in advance by the Principal Investigator’s department chair and dean. If the sponsor does not require cost-sharing or matching funds, it is generally discouraged to obligate UNCG to committed cost share. Please consult with OSP staff to ensure that cost share accounting is handled correctly.