Budget Preparation

Office of Research

U N I V E R S I T Y O F

N O T R E D A M E

Elements of a Budget

There are a number of elements that are important to building a budget. These include:

Let’s explore each of these…

Direct Costs

Cost SharingIndirect Costs

But first, a word or two on allowable and allocable costs…

All costs associated with sponsored research must fall into both of these categories:

Allowable and Allocable Costs

AllowableThose project costs that are eligible, reasonable, necessary, and allocable to the project.

AllocableCosts that are assignable or chargeable to one or more cost objective in accordance with the relative benefits received or other equitable relationships defined or agreed upon by contractual parties.

Meaning: The cost has to be clearly related to the scope of the research project within the parameters agreed upon by the researcher and the sponsor.

Costs

The following are some examples:

Allowable and Allocable Costs

Allowable• Advertising – Recruitment & Procurement• Conference & Convention Registration Fees• Contractual Services/Consultants• Equipment• Express Mail• Freight Related to Goods Purchased• Honoraria Payments to Study Subjects• Laboratory Supplies• Printing, Binding, Publication, Reproduction• Salaries/Benefits of Faculty• Salaries/Benefits of Graduate Assistants• Stipends• Telephone Toll Charges• Travel

Not Allowable• Administrative Costs• Alcoholic Beverages• Covering Overruns on Other Sponsored Projects• Donations and Gifts• Entertainment Costs• Fines & Penalties• First Class Travel• Fund Raising• Goods & Services for Personal Use• Lobbying• Memberships in Social & Civic Clubs• Office Supplies• Official Function – Receptions & Events• Postage• Pre-award Costs (unless approved by sponsor)• Subscriptions• Telephone Equipment, Pagers, Cell Phones

Direct CostsTa

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Identify Direct Costs

Defi

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nDirect costs are clearly identifiable costs related to a specific project

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If a cost can be identified specifically with a particular sponsored project, an instructional activity, or another institutional activity, or that can be directly assigned to such activities relatively easily with a high degree of accuracy, then it is most likely a direct cost.

Direct Costs

Salaries and Wages Equipment Participant

Support Costs Tuition

Fringe Benefits Supplies Publication Costs Sub-Contracts

Contractual Services Travel Computer

Costs Rental Costs

General categories of direct costs include but are not limited to:

Direct Costs

• The money that is paid to personnel associated with the proposal.

• Salaries and wages are related to effort.• Effort is defined as the portion of time spent on a

particular activity expressed as a percentage of the individual's total activity for the institution, or as total months (calendar, academic, or summer) spent working on the project.

• It’s also related to the appointment of faculty members contributing to the project—whether a faculty member has a 9- or a 12-month appointment impacts the way that salary is calculated.

• Faculty on a 9-month appointment generally request summer salary in their grants (for June, July and August)

Salaries and Wages

Examples - PI (Principal Investigator)- Co-PI- Post Doctoral Staff- Graduate Research Assts.- Undergrad Research Assts.- Exempt Staff- Non-exempt Staff

NOTE: Only individuals who are currently on Notre Dame’s payroll would be budgeted under the salaries/wages category. This category would not include extern-al consultants and sub agreements.

Direct Costs

• Fringe benefits comprise a normal and required direct cost category for most educational institutions. These costs need to be estimated for all employees proposed to work on a project. It comprises the employer-paid portion benefits and taxes for each employee. These costs are listed separately from the personnel salary on the proposal budget.

• Notre Dame has specific percentages of salary it uses as fringe benefits rates, depending on the position of the individual. These rates are determined on a yearly basis by the University.

• For the most current list of fringe benefit rates, please look at http://or.nd.edu/proposal-preparation/budget-preparation/fringe-benefits/.

Fringe Benefits

Examples - FICA/Social Security taxes- Unemployment insurance- Worker’s Compensation- Health, dental, life insurance- Retirement benefits

Direct Costs

• Contractual services are the money that is paid to individuals who have been contracted to perform certain aspects of the research project

• Generally defined as consultative work• Note: Consultants are required to provide their daily

rate as part of the budget development process

Contractual Services

Examples - Any service directly related to the project

Direct Costs

• Equipment is defined as an item of property that has an acquisition cost of $5,000 or more and an expected service life of more than one year.

• It is important to note that the acquisition cost of equipment includes modifications, attachments, and accessories necessary to make the property usable for the purpose for which it was purchased.

• Allowable items ordinarily will be limited to research equipment and apparatus not already available for the conduct of the work.

• General-purpose equipment, such as a personal computer and office furnishings, are not eligible for support unless primarily or exclusively used in the actual conduct of scientific research.

Equipment

Examples - Scientific and technical- Computer /software

(dedicated to the project)- Rental costs- Alterations/Renovations for

equipment- Maintenance contract

(dedicated-equipment)

Note: Requires justification explaining the expenditure’s direct application to the federal award.

Indirect Costs are generally not applied to Equipment costs.

Direct Costs

• Supplies (and materials) are defined as tangible personal property, other than equipment, costing less than $5,000, or any other lower threshold consistent with the policy established by the proposing organization, used during the research project.

• For some sponsors, cost estimates must be included for items that represent a substantial amount of the proposed line item cost.

• Caution: Do not confuse supplies with equipment. While the wording seems similar, they play different roles in the research project and the budget.

Supplies

Examples - Research data collection

- Chemicals, pharmaceuticals- Glassware - Field supplies - Compressed gases and

liquids- Radioactive material - Software directly associated

with scope of work- Rare and precious metals &

non-precious metals

- Animals- Books and reference

materials dedicated to project - Non-administrative supplies

Direct Costs

• The estimated travel costs for a proposal budget. • For many agencies, travel costs must be separated into

domestic travel and international travel. • Additionally, there may be certain guidelines on what

travel costs are allowable, depending on the sponsor. Research administrators should always check the program guidelines or with a program officer if they have questions.

Travel

Examples - Airfare- Ground transportation- Fuel costs- Lodging

Direct Costs

• This budget category refers to costs for participants or trainees (but not employees) in connection with sponsored conferences, meetings, symposia, training activities and workshops.

• For some educational projects conducted at local school districts, however, the participants being trained may be considered employees. In such cases, the costs must be classified as participant support if payment is made through a stipend or training allowance method. The school district must have an accounting mechanism in place (i.e., sub-account code) to differentiate between regular salary and stipend payments.

Participant Support Costs

Examples - Stipends- Travel to/from training- Meals during training- Lodging during training- Space rental costs- Materials/supplies for trainees

Note: Indirect Costs are generally not applied to Participant Support costs. Specific program guidelines should be referenced.

Direct Costs

• The costs associated with disseminating research results from a particular project

• The proposal budget may request funds for the costs of documenting, preparing, publishing or otherwise making available to others the findings and products of the work conducted under the grant.

Publication Costs

Examples - Documenting- Printing- Binding- Copying- Journal costs- Necessary illustrations- Data clean-up- Data storage- Indexing of data/databases- Software development, etc- Indexing of physical specimens, collections, etc

Direct Costs

• For some sponsors, the cost of computer services, including computer-based retrieval of scientific, technical and educational information, may be requested. Generally, this is acceptable only where it is institutional policy to charge such as direct costs.

• General purpose (word processing, spreadsheets, communication) computer equipment should generally not be requested.

• Special purpose or scientific use computers or associated hardware and software, however, may be requested as items of equipment or supplies (based on the actual cost of the item) when necessary to accomplish the project objectives and not otherwise reasonably available.

Computer Costs

Examples - Mainframe Computer Time- Research Core Services- Leasing equipment- Computer maintenance

and/or repairs

Note: Must be directly related to project only.

Direct Costs

• It is the current policy of Notre Dame to provide tuition waivers (through the Graduate School) for graduate student researchers funded on sponsored programs and may also be shown as cost sharing.

• When using the value of a tuition waiver for cost sharing, care should be taken to use a tuition waiver value that accurately reflects the student’s expected course load.

• When the sponsor specifically allows the budgeting of a program or institutional allowance that may be used to defray tuition costs (e.g., NSF IGERT) this cost should be included in the sponsor budget.

• For more information visit the OR website: http://or.nd.edu/policies-and-procedures/procedures/cost-sharing-guidelines/

Tuition

Examples - Undergraduate Tuition- Graduate Tuition

Note: Be careful when using this as cost share because if the University fails to meet the guaranteed amount, severe financial repercussions may result and these must be resolved by the department and college.

Indirect costs are generally not applied to tuition costs.

Direct Costs

• A subcontractor is a sub-recipient of proposal award funds.

• To qualify as a subcontractor, the following must be met: – Subcontractor services are uniquely designed in response to each

project and not provided commercially; – Subcontractor technical lead is usually a scientific collaborator, or

even a co-Principal Investigator ("PI") on a project taking place at Notre Dame;

– Subcontractor retains rights to intellectual property; – Subcontractor participates in development and execution of the

statement of work; – Subcontractor's results are likely to be published in the scientific

literature and/or subcontractor is likely to be co-author on a Notre Dame publication.

Sub-Contracts

Examples - Universities- Other institutions who meet the subcontractor guidelines

Direct Costs

• Rental costs are those that are project-specific and rented off-campus from a 3rd party.

• Rental costs include any direct-costed rent of non-University owned space and the cost of maintenance, if it is included in the rental agreement.

• This category does not include other kinds of rental or lease costs such as hotel rooms, equipment or automobiles. These other kinds of costs are direct costs subject to overhead.

• Rent is automatically included in the On-Campus Facilities and Administration Costs and will be paid out of the Facilities and Administration (i.e., Indirect) Costs recovered.

Rental Costs

Examples - Space- Equipment- Vehicles

Direct Costs

• Any other cost directly associated with the project not attributable to the previous categories

Other Direct Costs

Examples - Consultant fees

- Printing- Reprints and page charges - Photography- Photocopy charges- Repairs/maintenance (related to scientific-technical

equipment)- Animal care- Lab testing services- Computing network charges of dedicated computing

equipment- Recruitment of approved personnel- Promotion of conference, workshop, seminar- Long Distance Telephone (including fax) toll charges- Lab, scientific, and field non-capital equipment - Lease/rental of vehicles and other equipment

- Lease/rental of off-campus facilities- Subcontract costs- Subject pay for survey, project participation- Consortia fees- Postage / Printing / Copying

- (if the volume is ‘beyond routine’ it is an unlikely circumstance)

- Freight/express deliveries when needed to transport project material in a timely manner

- Justification/certification form required to be maintained with the invoice in the award file

- Telephone:- Long distance (Project specific)- Cellular (project specific, rare circumstances)

- Consultants- Service Center Charges

Direct Costs

Cost SharingIndirect Costs

Direct Costs

• Each of these individual costs together equal the Total Direct Costs of the proposal budget.

Direct Costs

Salaries and Wages Equipment Participant

Support Costs Tuition

Fringe Benefits Supplies Publication

Costs Sub-Contracts

Contractual Services Travel Computer

Costs Rental Costs

Total Direct Costs

Indirect CostsTa

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Identify Indirect Costs

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Indirect costs are those costs related to expenses incurred in conducting or supporting research, or other externally-funded activities, but not directly attributable to a specific project. W

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If a cost cannot be identified specifically with a particular sponsored project, an instructional activity, or another institutional activity, then it is most likely an indirect cost.

Indirect Costs

• General categories of indirect costs include:

General Administration

(accounting, payroll, purchasing, etc.),

Sponsored Project Administration

Plant Operation and Maintenance Library Expenses

Departmental Administration

Expenses

Depreciation or Use Allowance for Buildings and

Equipment

Student Administration and

ServicesEtc.

Indirect Costs

• Indirect costs cover a variety of different facilities and administrative costs (F&A) including the following examples:

- Administrative and clerical salaries, wages, fringe benefits - General purpose/admin. equipment- Copier, printer- Office furniture- Computer- Software (e.g., Microsoft Office)- Maintenance contracts (admin. equipment)- Maintenance and/or repairs- Parts and supplies for admin. equipment- Office Supplies- General computer costs- Lab supplies (administrative)- Custodial supplies - Forms - Books and reference materials - Dues/memberships

- Recruiting costs- Public relations- Legal and financial services - Insurance - Printing/photocopy charges - Freight- Postage (including express couriers) - Computing network charges- Heating- Lighting- Other utilities- Telephone—basic service, installation, repair, and line charges (including ATS, WATS, fax, pagers, Internet and cell phones) - General purpose non-capital equipment

Indirect Costs

• Indirect costs are not figured individually like direct costs, but are figured as a percentage of total direct costs.

Direct Costs

Cost SharingGeneral Admin. Sponsored

Project Admin.Operation and Maintenance

Library Expenses

Dept. Admin. Expenses

Depreciation or Use Allowance

Student Admin. and Services Etc.

Indirect Costs

Indirect Costs

But first:• In order to determine the Indirect costs, the Modified Total

Direct Costs need to be figured, as follows:

Direct Costs Equipment TuitionParticipant

Support Costs- - - =Modified

Total Direct Costs

Indirect Costs

• The Indirect Costs are then figured as follows:

x =Modified

Total Direct Costs

Indirect Costs

F&ARate

Indirect Costs

• This rate is a percentage that has been negotiated between Notre Dame and the Department of Health and Human Services—Notre Dame’s cognizant agency

• Check http://or.nd.edu/award-management/award-management/ to see Notre Dame’s most recently negotiated rate.

Cognizant Agency: To simplify relations between Federal grantees and awarding agencies, the US Office of Management and Budget (OMB) established the cognizant agency concept, under which a single agency represents all others in dealing with grantees in common areas. In this case, the cognizant agency reviews and approves grantees’ indirect cost rates. Approved rates must be accepted by other agencies, unless specific program regulations restrict the recovery of indirect costs. The cognizant agency for non-profit organizations is determined by calculating which Federal agency provides the most grant funding.

F&ARate

Indirect Costs

Indirect Costs

• In some very specific instances, the F&A rate will be different than the negotiated federal rate.

• Reference the program guidelines or consult with a program officer to identify these unique situations.

• Waiving of Indirect Costs happens very rarely and under very strict circumstances.

• Research administrators should speak with Director of Pre-Award regarding the waiving of Indirect Costs.

Cost SharingTa

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Identify Cost Sharing

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Cost sharing, or "matching,“ refers to that portion of project or program costs is not borne by the funding agency. It includes all contributions, including cash and in-kind, that a recipient makes to an award. W

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Notre Dame will sometimes “share” in the cost and pay an amount of money (or effort) towards a project as part of its funding. This is sharing is sometimes required by the sponsor and sometimes it is volunteered support by Notre Dame.

Cost Sharing

If the award is federal, only acceptable non-federal costs qualify as cost sharing and must conform to other necessary and reasonable provisions to accomplish the program objectives.

Cost sharing effort is included in the calculation of total committed effort.

Cost sharing is auditable and must be allowable under cost principles and verifiable to records.

Some Important Comments about Cost Sharing:

Cost Sharing

Mandatory cost share: Cost sharing by the Notre Dame that is required by the

sponsor.

Voluntary cost share: A contribution to a sponsored project or program offered

by the PI (or by Notre Dame) but not required by the sponsor as a condition of obtaining the award. Voluntary cost

sharing is classified as either committed or uncommitted.

Committed: defined as those resources that are committed and

budgeted for in a sponsored agreement

Uncommitted: defined as university faculty effort that is over and above

that which is committed and budgeted for but not charged to the

sponsored agreement. Voluntary uncommitted cost sharing should not be recorded as organized research.

Cost sharing can be identified within one of two categories:

Cost Sharing

• All mandatory and voluntary cost sharing is identified in the budget.

Direct Costs

Cost SharingIndirect Costs

Cost Sharing Mandatory Cost Share

Voluntary Cost Share

Cost Sharing

• The Office of the Vice President for Research has established some important policies that act as guidelines to help the research community at Notre Dame determine how to properly allocate and manage cost sharing.

• These guidelines can be found at: http://or.nd.edu/policies-and-procedures/procedures/cost-sharing-guidelines/

NIH Modular Budgets

• Modular budgets are applicable to certain research grant applications to NIH requesting $250,000 or less per year for direct costs.

• Modular budgets are simplified; therefore, detailed categorical information is not to be submitted with the application.

• For all modular budgets, request total direct costs (in modules of $25,000), reflecting appropriate support for the project. There will be no future year escalations. A typical modular grant application will request the same number of modules in each year. Provide an additional narrative budget justification for any variation in the number of modules requested.

NSF Budgets

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The budget data should then be added for the budget period in the corresponding budget areas…

Note: The internal budget should contain all of the budget areas found in an NSF budget. Be sure to use the internal budget as a guide when entering data into FastLane. This will help to ensure accuracy.

NSF Budgets

NSF Budgets

NSF Budgets

NSF Budgets

MODIFIED TOTAL DIRECT COSTS (MTDC)

To properly calculate the indirect costs, the F&A rate and the Modified Total Direct Costs (MTDC) must both be entered in the Indirect Costs section.

NSF Budgets

To calculate the total Direct and Indirect Costs, click here…

NSF Budgets

When all budget data has been entered, the Calculate & Save button must be clicked in order to save all data. Once it has been saved, click the Go Back button and follow the same process for subsequent budget years.

Managing resources

Identify all your options

Look ahead to deadlines for your next phase or next project

Use the right resource at the right time