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.
In preparing a budget, the investigator needs to be
concerned with two types of costs:
• Direct Costs
• Indirect Costs
Direct Costs + Indirect Costs = Total Budget
Costs that can be identified as necessary to
complete a specific sponsored project or activity.
• Assignable with a high degree of accuracy and
directly related to the project.
• Typical direct costs include salaries and fringe
benefits, materials and supplies, travel, and
equipment.
Costs directly charged to a project must
pass four tests:
• Reasonable
• Allocable
• Consistent
• Allowable
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 market
conditions?
Allocable Costs: Assignable to a specific objective within
the project.
• Solely intended to achieve proposal objectives.
• Benefit both the proposed project and the
institution as a whole.
OR
• Necessary for operations of institution but also
assignable 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.
Consistent Costs: treated in accordance with accepted
accounting practices appropriate to the project.
• Institution must treat costs in a similar manner
regardless of the project to which they are
assigned.
• If an item is treated as an indirect cost by the
institution under one program, it must be
treated the same under all programs.
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, and
constraints that a sponsor lists in its Request
for Proposals.
Typical direct costs include:
• Salaries
• Fringe Benefits
• Equipment
• Travel
• Participant Costs
• Other Direct Costs
Salaries
• Full and part-time salaries of Cooperative
Extension personnel.
• Considerations: Annual salaries and
wages of individuals involved in project; number of
months project will take; percentage of time each
individual will be involved in the project based on a
226-day year.
• Total time allocated to sponsored projects
cannot exceed 100% of a staff member’s paid
work hours.
• If project spans fiscal years, allow for salary
increases.
Fringe Benefits
• Health insurance, unemployment insurance, worker
compensation, social security, retirement
contributions, and other benefits provided by
employer.
• Based on percentage of total salary.
• For Fiscal Year 2012 fringe benefits rate are
30.4% for salaried employees (24.61% if NIFA
sponsored) and 7.6% for temporary employees.
Equipment
• A single item with a useful life of more than one year and
a cost exceeding $5,000.
• Line-item each piece of equipment in budget.
• Equipment requested must be necessary and justifiable
for completion of project.
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 current
market conditions and rates.
• Federally-funded air travel must be via a U.S.-owned
carrier.
Participant Costs
• Expenses incurred by project participants who are not
Cooperative Extension employees.
• Study subjects, students to be trained, program
attendees, etc.
• Stipends, travel, supplies, education materials, etc.
Other Direct Costs
(list is not all-inclusive)
• Materials and Supplies necessary to complete project that
have a useful life of less than one year and a cost of less
than $5,000.
• Publications associated with reporting research findings,
distributing information, or providing educational materials.
• Professional/Consulting services at prevailing market rates
and not to exceed the consultant’s normal compensation
rate.
• Freight and Postage if significant and beyond those
anticipated as a cost of normal office operations.
Other Direct Costs, continued
• Advertising and Public Relations fulfilling obligations of
sponsored agreement including recruitment of
personnel, bid announcements, and educational
message dissemination. Promotional items are not
allowable.
• Sub-awards “passed through” to another institution to
complete specified components of project. *See indirect
costs for limitations associated with sub-awards.
Costs that contribute to a project but are difficult
to allocate in exact proportions.
• Includes utilities, administration, clerical
assistance, depreciation, computers, office
supplies, etc.
• Does note include cost of equipment, capital
expenditures, rental of off-site facilities,
scholarships, and each sub-award amount
exceeding $25,000.
• Treatment of costs must be consistent; items
treated as indirect under one project must
also be indirect under other projects.
• Costs are normally calculated based on “Modified Total
Direct Costs” (MTDC)
•Total Direct Costs minus equipment, capital
expenditures, rental of off-site facilities, and subawards to the extent they exceed $25,000
• Indirect cost calculations are based on negotiated
percentages of MTDC or limits designated by project
sponsor.
• Cash, property, services, volunteer labor, etc.
• Not treated as direct costs.
• Useful in calculation of matching funds that may
be required for a project.
• Must be non-federal and not used as matching
for any other federally-funded project.
• Value based on current market prices, appraisal,
or labor rates.
• Include separate budgets for each year and a summary
budget for entire project.
• Account for inflation, salary adjustments, and other
unpredictable cost increases.
• For Fiscal Year 2012, a reasonable rate of increase is 3%
annually.