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Budget Development and Budget Justification

A budget is a best estimate of the total costs needed to complete objectives identified in a proposal. Below is guidance on developing a budget and preparing a budget justification.

Brief Overview

General Budget Development Information

Costs included in a proposal budget must be necessary to accomplish the project and must directly benefit the support activity. A proposal budget:

  • Is a key element of a grant proposal.
  • Consists of all direct costs, F&A (indirect costs) and cost sharing commitments.
  • Provides a realistic estimate of financial resources needed to accomplish a project.
  • Is self-explanatory.
  • Must include costs that are allowable, reasonable, allocable, necessary and consistently treated.
  • Can become the actual awarded budget. Sponsor approval of a budget may not guarantee allowability of items.

Specific guidance related to Personnel and Non-Personnel direct costs are include in separate tables on this page.

Facilities & Administration Costs (F&A)/Indirect Costs (IDC)

F&A, also known as indirect costs, are charges that cannot be directly tied to a project. However, a portion of these costs are recovered by NDSU through our federally negotiated F&A rate agreement. Types of activities (research, instruction, other) are defined in NDSU Policy 813.

  • The inclusion of F&A is required on every proposal, unless such costs are specifically prohibited by the sponsor.
  • If a funding opportunity has an F&A limitation/restriction, PI's should provide a copy of the funding opportunity with that section clearly marked.
  • If a sponsor has an F&A limitation/restriction, PI's should provide a copy of the sponsor's policy.
  • In most cases activities are considered to be on-campus. Departments that are off-campus include Research Extension Centers, Forest Service, and Agronomy Seed Farm.
  • NDSU's federally negotiated F&A rate agreement can be found on the Sponsored Programs Forms page.

 Current NDSU F&A Rates

Sponsored ActivityOn CampusOff Campus
Research (effective 7/1/2014-6/30/2018)*   45.0% of MTDC  26.0% of MTDC
Instruction (effective 7/1/2014-6/30/2018)* 50.5% of MTDC  26.0% of MTDC
Other Sponsored Activity (effective 7/1/2014-6/30/2018)*  43.2% of MTDC  26.0% of MTDC
*Effective dates are for projects starting within the date range specified.

Budget Templates

SPA has created several budget templates, which can be found on the Forms page. All templates are available in Excel and contain formulas to assist with single year budgets, multi-year budgets and inclusion of mandatory cost share.

Budget Justification

A budget justification is a written explanation that relates the budget to the scope of work. The justification should indicate why the requested funds are necessary for the project and how the amounts were determined. A well-developed justification should be concise and:

  • Explain how costs were estimated and why each cost is essential
  • Justify any unusual items
  • Follow the order of the detailed budget page
  • Ensure dollar amounts tie back to budget

To assist faculty and staff in the development of budget justifications, SPA has created NSF, NIH, SF 424 budget and general budget justification templates.

Cost Share/Match

Cost share should only be included in a budget if the application guidelines indicate cost share is mandatory or if the guidelines indicate cost share is strongly encouraged. PIs are responsible for identifying and obtaining all cost share sources.

  • Sponsors may have specific requirements for a certain percentage or type of cost share; be sure to read the guidelines carefully.
  • Typical cost share items include: PI and Co-PI salary/fringe benefits, F&A associated with the salary/fringe benefits, and tuition remission.
  • Any quantifiable cost share described in the proposal, including in the budget justification and/or institutional commitment letters, becomes a condition of the resulting award and must be documented and reported to the sponsor.


Mandatory equipment match
: some funding opportunities will have a mandatory match requirement. NDSU has a limited pool of central funds that may be available to assist in meeting the match requirement. If you have a grant proposal with an equipment match requirement: 

  • Submit a written request to the VP for Research for consideration of up to 1/3 of the required match.
  • Identify the other sources (department, college, development funds, etc.) that will make up the remaining match.
  • Request should be submitted at least 3 weeks prior to the proposal deadline.

Personnel Category

Salaries and Wages

Personnel salaries and benefits are typically the largest categories of expenses. Salary costs must be appropriate for the effort committed, consistent with the individual's base salary, and accurately reflected in the budget. Personnel time spent working on a project should be expressed as hours, days, or months and/or academic, summer or calendar year, as determined by the employee position type and sponsor requirements.

Typical personnel categories include:

  • Key/Senior Personnel: For each NDSU PI and NDSU Co-PI, list name, title, and amount of time committed to the project.
  • Other Personnel: Undergraduate Students, Graduate Students, Post-Doctoral Associates and other project personnel costs can be included as needed.
  • Administrative and Clerical: These salary costs generally are not allowable on grants.

The budget justification should include a brief description of each person's role and responsibility.

Fringe Benefits

If you are budgeting employee salaries (faculty, technical staff, students, etc.) to be paid from a sponsored project, you must also budget a proportionate amount for fringe benefits. Due to the increasing costs of employer paid benefits, fringe benefit rates change from time to time.

  • NDSU's Human Resources/Payroll Office has developed spreadsheets to be utilized in order to determine the appropriate level of fringe benefits for all NDSU personnel included in your budget. Due to the great variance in fringe benefit ranges and the various employee benefit circumstances, it is best to calculate fringe benefits as close to actuals as possible in order to avoid a shortfall in funds available for fringe benefits.
  • As an additional resource, the fringe benefit ranges listed below can be used for proposal budgeting purposes. Please be aware that the lower the annual salary, the higher the fringe benefit rate.

Note: Whether you utilize the Human Resources/Payroll Excel spreadsheets or the fringe benefit ranges listed above, these percentages are just estimates. NDSU charges the actual cost of each fringe benefit directly to projects.

 Fully Benefited Positions:

Annual Salaries (above $100,000):30%
Annual Salaries (between $75,000 and $99,999):30 - 38%
Annual Salaries (between $50,000 and $74,999):38 - 48%
Annual Salaries (between $25,000 and $49,999):48 - 78%
Annual Salaries (below $24,999):78%

Non-Benefited Positions:

Full-time graduate or undergraduate students:
   (Students taking classes during the semester they are employed.)  
3%
Part-time staff/students that do not meet ACA guidelines:
   (Includes students NOT taking classes during the semester they are 
   employed, such as summer.)
10%
Part-time staff/students that do meet ACA guidelines:10% + $4,564

Salary Caps

Some sponsors impose a limit (or cap) on the annualized rate of salary amount that can be charged for identified effort on a project.  The difference between the allowable salary charged (the capped amount) and the unreimbursed salary (the amount above the cap) must be funded by an unrestricted/local account and recorded as cost share.  The PI/other key personnel must still devote the full identified level of effort committed in the proposal.  It is important to review sponsor policies/guidelines to determine whether a salary cap applies to an identified funding opportunity.  NIH's current salary cap levels can be found on their Salary Cap Summary page - current NIH salary cap is $189,600.

See salary cap example below:

  • Calculate annualized base salary.

    • contract salary ÷ # contract months = monthly salary

      • $150,000 ÷ 9 months = $16,667

    • monthly salary x 12 calendar months = annualized base salary

      • $16,667 x 12 = $200,004

  • Determine total person months and calculate total salary committed to project.

    • monthly salary x # of person months = total comitted salary 

      • $16,667 x .75 = $12,500

  • Calculate and identify total requested salary and total above cap salary.

    • [annualized base salary - sponsor salary cap] ÷ annualized base salary = % above cap salary

      • [$200,004 - $189,600] ÷ $200,004 = 5.2%

    • monthly salary x % above cap salary = above cap salary (must be charged to non-grant funds)

      • $12,500 x 5.2% = $650

    • monthly salary - above cap salary = requested salary (allowable amount on grant)

      • $12,500 - $650 = $11,850

  • Enter base salary, person months and requested salary on sponsor budget form.
  • Include a statement in budget justification indicating PI/other Key Personnel are over the salary cap and requested salary is adjusted accordingly.  Supporting information such as an individual's base salary and appointment period may be included.

Non-Personnel Categories

Materials/Supplies

Materials and supplies are expendable items with a useful life of less than two years or a cost of under $5,000. Direct charging of supplies is allowed if they can be readily and specifically identified to a project. Cost estimates and a description of the items should be included in the budget justification.

Common examples of material and supply costs may include:

  • Project Specific Expendable Supplies: lab resources, research tools, agronomy materials, animal costs, etc.
  • General Office Supplies: pens, paper, toner, etc. generally are not allowable on federal grants. However, those related to specific project activities rather than general departmental activities may be allowable. Budgets that include such items must provide a description in the budget justification explaining how the items are related to the project objectives.
  • Printing: Costs for typesetting or other design work necessary to create a master copy and reproduce the master copy to create the end product.
  • Copies/Duplication: Typically copy costs are not allowable. However, costs associated with paying fees for the use of photocopy machines that are billed based on project usage costs may be allowable if they are an integral part of specific tasks associated with a project.
  • Computers and Electronic Devices: Typically unallowable as a direct cost. However, when the principle use of the computer/electronic device directly supports the purpose, goals and activities of the project and is essential to the project activities, costs may be allowable. Rationale, quantity, and price should be included in the budget justification.

Travel

Many sponsored projects involve travel for research, collaboration, conference attendance, and other project-related purposes.

When budgeting for travel:

  • Explain the need for travel and how the travel will benefit the project's aims.
  • Break out costs by airfare, hotel, per diem, etc. and identify location, if known.
  • Conference costs and field work costs should be identified separately in a budget justification.
  • Conference costs must be necessary to accomplish proposal objectives or to disseminate project results.

Domestic

  • ND State fleet rental rates are location on NDSU's Facilities Management webpage under Motorpool.
  • Guidance related to employee and non-employee travel can be found on NDSU's Accounting webpage under Travel.

International

  • Identify international travel separately from domestic travel in budget and budget justification.

Equipment

Equipment is defined as any one item, or one item fabricated from several required components, having a unit cost of $5,000 or more and a useful life of one year or more. 

When budgeting for equipment:

  • List individual items in excess of $5,000. Include hidden costs such as shipping, set-up and manufacturer's technical support or maintenance.
  • Some equipment may be fabricated. Include the cost of all required components.
  • Exclude all equipment costs from F&A calculation.

Consultants/Professional Services

Consultants are external individuals/entities that provide professional advice or services consistent with their normal course of business and typically are paid a fixed rate. Consultants do not make project decisions, or have responsibility for the scope of work, and cannot be authors on publications.

  • Cost estimates including the work to be performed should be explained in the budget justification.
  • NDSU faculty/staff may not be paid as consultants in a sponsored project. NDSU personnel devoting time to a sponsored project should be included in the personnel line of the budget.

Subawards

A subaward is a formal written agreement necessary when NDSU pays an external organization or entity to help carry out the technical and scientific aspects of a project, as compared to simply providing goods or services. A subaward relationship is generally described at the time of proposal submission and included in the budget, but is not formalized until after the award has been made to NDSU.

The subawardee:

  • Must be identified in proposed budget to ensure that costs are calculated correctly and so that appropriate documentation can be included in the proposal.
  • Must provide a statement of work, detailed budget, and signature approval of their authorized representative.
  • Has considerable discretionary judgement and responsibility for programmatic decision making.
  • Contributes to the scholarly/scientific conduct of the project as described in the statement of work for the prime award.
  • Investigator would be considered as a co-author of publications resulting from the work performed under the prime award.

When budgets include subawards, apply NDSU F&A rate but only to the first $25,000 of each subaward.

Publication Costs

Publication costs are incurred in the publication of project results, including an article or reprint of such article. The purchase of a series of published material from an organization or society necessary to conduct or complete a project would also be categorized as publication costs.

Participant Support Costs

Participant support costs are costs charged to a sponsored project to support individuals who are receiving training as part of a workshop, conference, seminar, symposium or other short-term instructional or information-sharing project. Costs may include stipends or subsistence allowances, travel allowances, and registration fees paid to or on behalf of particpants.

Participants are not NDSU employees. Also, F&A is generally not charged on participant support costs.

Participant support costs are:

  • Stipend: A set amount of dollars to be paid directly to a participant for attending a project training activity.
  • Subsistence Allowance: The cost of participant housing and per diem expenses to attend project training activities. Costs are limited to days of attendance.
  • Travel: Includes the transportation costs to attend a project training activity.

Participant support costs are not:

  • Subject payments used for survey participants.
  • Speaker fees.
  • Project materials and supplies (these should be listed under the materials/supplies budget category).
  • Travel for PI or other project staff.

Other Direct Costs

This category generally includes direct costs which do not readily fit within other budget categories or a sponsor's defined budget template. Other direct costs should be listed in the budget and described in the budget justification.  It is important to review sponsor guidelines for any allowability guidance.

Examples may include:

  • equipment repair and maintenance
  • computing time
  • publication costs
  • animal care
  • NDSU recharge center costs using established rates
  • Human Subject incentive payments - cash or other payment given to participants in research consistent with an approved IRB protocol. (Include in budget justification the correlation between the payment and research activity.)
  • meals

    • generally allowable

      • Food charged as part of conferences sponsored by NDSU.  Primary purpose is dissemination of technical information.

    • generally not allowable - non-travel meal costs.

      • Working breakfasts/lunches/dinners
      • Coffee breaks
      • Staff meals
      • Routine or recurring meetings to discuss the progress of research/project

  • other costs associated with completing the project

Tuition

Tuition for graduate students working on a project may be an allowable cost. These costs should be called "tuition" rather than "tuition remission" in the budget justification. Tuition is excluded from F&A calculation.

Current tuition rates can be found on NDSU's Office Admissions webpage.

Rental Costs

Rental costs are incurred when renting or leasing equipment or space from a third party. These costs must be properly apportioned to specific project(s) based on project activities. Rental costs are excluded from F&A calculation.

Examples of lease/rental include:

  • Equipment
  • Meeting room
  • Land
  • Building/office/lab

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Last Updated: Tuesday, June 19, 2018 2:33:00 PM
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