Developing a budget is an important part of the proposal process, and your budget must conform to established federal, UNH, and other sponsor requirements.
Grant and Contract Administrators (GCAs) provide one-on-one assistance with budget development. Contacting your GCA early and often will smooth the budget development process for you.
GCAs are assigned responsibility for specific departments/programs/campus offices.
Costs, Considerations & Resources
Common Elements of a Budget
Budgets generally include two different types of costs: (1) direct costs and (2) facilities and administrative (F&A) costs.
Common Direct Costs include:
Salaries and Wages
Salary and wages for faculty, technicians, graduate students, and other personnel, including (occasionally) administrative and clerical personnel
- Faculty Salary & Effort
Proposals should accurately represent the amount of direct research effort that key personnel are committing to the project. The amount of effort committed to a sponsored project is based on a best estimate of the actual effort required to meet the goals and outcomes of the proposed project.
For federally funded projects, effort for all key personnel and in particular for faculty must be budgeted minimally at 1% or greater. For more details, see the policy entitled, Proposing, Managing, and Certifying Effort for Employees Engaged in Externally Sponsored Programs.
Personnel effort on all ACTIVE awards plus teaching load cannot exceed 100%. In other words, summer salary + committed academic year research effort + Teaching load + Outreach + other obligations = 100%.
Faculty academic year (AY) and summer effort should be budgeted as separate line items.
Show basis of effort in accordance with sponsor guidelines – this is either represented on either a “person month” basis or % of effort.
Effort charged to sponsored projects must be allocable, allowable, reasonable, and if awarded consistently reported and tracked in the Banner effort reporting system.
Some sponsors have salary caps or limitations on the amount of salary that may be charged to a grant. Refer to sponsor guidelines.
Research Faculty/Other Key Personnel may not request, in a single proposal, to receive externally-sponsored salary support for more than 95% of his/her IBS.
If budgeted as summer effort, effort must be committed during the summer. If budgeted as summer salary, effort cannot be committed during the academic year and paid out as summer effort/compensation.
Keep in mind that if 3 months of summer effort is budgeted in any given year, no non-sponsored project activities can take place during the period of compensation (no vacation, course planning, etc.)
- Administrative/Clerical Positions
Non-federal sponsors: Administrative/clerical costs may be budgeted on non-federally funded projects as long as there are no restrictions in the sponsor guidelines and funding is not also prime federal. Be aware of federal flow downs in the guidelines.
Federal Sponsors: Departmental administrative and clerical staff salaries are considered Facilities and Administrative costs (indirect costs) and are not typically charged to sponsored projects. If the sponsored agreement has specific requirements that mandate the use of administrative and clerical staff, or if the project requires significantly more administrative effort or expense, this need must be documented in accordance with the OMB Uniform Requirements and specifically identified in the sponsored agreement. These atypical administrative costs must be described in the budget justification.
- Graduate Assistant Stipends
A full time graduate assistant devotes one-half time to studies and one half-time to graduate assistant duties. During the summer, graduate assistants can work 40 hours per week. Graduate students should be budgeted at the minimum levels reflected on the rate sheet.
NIH Awards: maximum amount awarded by NIH for graduate students supported on research grants or cooperative agreements is tied to the zero level National Research Service Award (NRSA) postdoctoral stipend in effect at the time the grant award is issued.
The fringe benefit rate covers expenses associated with salaries, such as insurance, retirement benefits, etc. These 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.
UNH has adopted the definition of equipment as an article of non-expendable, tangible personal property having a useful life of more than one year and an acquisition cost of $5000 or more.
UNH’s equipment policy provides a comprehensive explanation. Purchases of major equipment are subject to agency/sponsor regulations and award terms and conditions. Estimates should be based on written quotations or catalog prices
Before budgeting equipment on a sponsored project, assure that the:
- Equipment is necessary for the performance of the project
- Equipment is allowable
- Cost of equipment is reasonable
- Equipment purchase is allocable to the project (i.e., equipment benefits this particular project)
- Timing of the purchase is consistent with the project's period of performance
General purpose (non-scientific) equipment budgeted in a proposal will require an especially careful budget justification. A similar type of justification is needed if you are proposing to purchase general purpose equipment. Office equipment is normally considered an indirect cost.
Equipment is excluded from the F&A cost base
Many research projects include the design, development, and building of equipment that is not available commercially. Equipment that cannot be purchased “off the shelf,” and is built by the research team, is called “fabricated equipment.”
If fabrication of equipment at UNH is anticipated, a cost estimate of the completed equipment should be developed based on required materials and components.
Characteristics of fabricated equipment:
- Unique, specialized equipment
- Not commercially available
- Useful life of more than one year
- Aggregate cost of materials and services is $5,000 or more May require sponsor approval.
Fabricated equipment is considered equipment for F&A purposes. If the cost of the fabrication is more than $5,000, the fabricated equipment is excluded from the F&A calculation. If the cost of fabrication is less than $5,000, the fabricated equipment is included in the F&A calculation.
Fabricated items delivered to sponsors or sponsor directed third parties are not be considered Fabricated Equipment. Instead the items will be coded as Sponsor Deliverable Equipment and will incur F&A.
Supplies are defined as expendable property with an acquisition cost of less than $5,000 per unit and/or a life expectancy of less than one year.
- General Purpose Supplies
General-purpose office supplies are usually considered facilities and administrative costs, and are therefore not allowed as direct costs. When items normally considered office supplies are purchased for technical or scientific use on a project, charges may be allowable as direct costs if appropriately justified. Office supplies paid from a sponsored project must be consumed within the life of the project.
The category of office supplies also includes general-purpose software and site licenses (e.g., Word, Excel, GroupWise, etc.), and these items are not normally allowable as direct costs. Software is only allowable if it is special-purpose software required for data acquisition or interpretation for a sponsored research project.
The budget narrative should list each item being requested along with its unit cost. A justification is required which describes the circumstances of the project and demonstrates why the items are needed and how these charges comply with university policy
General purpose supplies can be proposed to non-federal sponsors that do not prohibit it as long as they directly benefit the project.
- Technical Supplies
Technical supplies is a broad category of costs that contains the following.
- all non-capital items
- laboratory materials and supplies
The project needs will drive what you can budget in this cost category. The costs must benefit the project, and be specifically identifiable to the project.
- Communications (Cell phone/Telephone)
Due to the difficulty in identifying portions of a communications bill to a specific award or other university activity with a high degree of accuracy and certainty, communication expenses are generally included in the indirect cost calculations and treated as indirect costs.
What communication costs can be charged as a direct expense?
Communication expenses that can be linked to a specific sponsored project with a high degree of accuracy and are used primarily for the sponsored project may be charged as a direct expense. Examples of communication expenses that may be charged as a direct cost include the following:
- Itemized long distance telephone charges for communication related specifically to an award
- Communication devices used exclusively for conducting surveys
- Telephones and PDAs used exclusively to manage a multi-site research project
- Dedicated telephone lines set up to receive data feeds from the field or conduct surveys
- Incremental expenses for international coverage for UNH employees in travel status
- Cell phones in remote locations where communication infrastructure is limited
Computing devices are defined as machines that cost less than $5,000 and are used to acquire, store, analyze, process, and publish data and other information electronically, including accessories or peripherals for printing, transmitting and receiving, or storing electronic information.
University policy which reflects the Uniform Guidance defines computing devices as supplies that may be charged directly to federal and non-federal sponsored awards.
Federal Sponsor Proposals - Computing devices can be charges as supplies, however, the rules governing their allowability and allocability has not changed and may be direct charges to the project under the following circumstances:
- Essential for the purposes of carrying out the specific aim(s) of the project
- Above and beyond what is normally provided by the department for academic use; and
- Charged to the grant in some reasonable proportion relative to how much it is used for the funded project.
All three items should be addressed in your budget justification.
Non-Federal Sponsors - Budgeting of computing devices to a non-federal sponsor is appropriate if the computing device benefits the project. Some non-federal sponsors may have specific requirements for direct charging of computing devices.
Consultants are independent contractors, not employees, who provide a service that cannot be performed satisfactorily by existing University personnel during the performance of the project. The consultant costs should include the period of service or the number of days on the project, the professional fee, travel expenses and other related expenses.
Note that some sponsors limit the rate at which consultants can be paid.
Domestic and foreign travel should be shown separately.
List the name, destination, and purpose of the trip. Include transportation costs (e.g., coach airfare), registration fees, accommodation fees, and other related expenses. Base the estimate on actual projected costs for the likely destination.
Budget all travel estimates in compliance with the USNH Travel Policy
In addition to meeting institutional policy requirements, travel costs charged to grants and contracts are subject to specific limitations and restrictions, in accordance with terms set by the sponsor. Travel policies of federal and non-federal sponsors vary. Travelers on University trips that are funded directly or indirectly by a federal grant or contract must abide by the federal rules on air travel.
Fly America Act: For international air travel, federal requirements state that American carriers be used when a traveler is flying between the U.S. and another country or between other countries to the maximum extent possible. Convenience and/or expense are not considered appropriate reasons for not using U.S. carriers. Foreign travel paid from federal contracts and grants requires advance approval by Accounting and Financial Compliance and often the sponsoring agency.
Subawards (or subcontracts) are agreements by which some scientific or programmatic aspects of an award made to the University are contracted out to another organization or institution under the direction of a non-University investigator.
The subrecipient (subcontractor or subawardee) is expected to work with autonomy and take full responsibility for its portion of the work. This level of independence and participation in the development and execution of the project distinguishes the subrecipeint from the provider of a purchased service (vendor).
The primary proposal submitted to the sponsor should include evidence of commitment from the subawardee, including a statement of work, proposed budget and evidence of institutional endorsement.
The subrecipient budget is inclusive of the subrecipient's F&A. The subrecipient's direct and indirect costs are included in the University's budget as direct costs.
The University applies F&A on the first $25K of the total subcontract budget.
Other costs could include items such as animal care, long distance telephone charges, duplicating costs, leases/rentals, etc.
In-State Tuition and some fees may be charged directly to grants but only up to the percentage of effort the graduate student devotes to that grant.
Participant Support Costs
Direct costs for stipends or subsistence allowances, travel allowances, and registration fees paid to or on behalf of participants or trainees (but not employees) in connection with conferences or training projects.
Participant support costs are allowable if the project includes an education or outreach component, the costs are separately budgeted, and the agency approves the cost.
Include the following in budget justification: “The inclusion of the participant support costs in the budget and the subsequent award by agency will be considered prior agency approval.”
Facilities and Administrative (F&A) Costs
Facilities and Administrative (F&A) costs, also known as "indirect" or "overhead" costs, are project-related expenses that cannot be identified readily and specifically to a particular sponsored project, e.g., the costs of heat and air conditioning, electricity, building maintenance, security, libraries, administrative services, etc. Accurately attributing each of these costs to each sponsored project would be very difficult. Nevertheless, indirect costs are real costs to the university and the government recognizes the university's right to claim them as expenses related to sponsored projects.
To this end, the university and the federal government negotiate rates for F&A cost reimbursement based on a.) the type of work being done, i.e., research, instruction, other sponsored activities (public service/outreach) and b.) whether the majority of the work is being done on- or off-campus, with “off-campus” defined as facilities not owned or leased by the university.
How to determine which F&A rate to apply
At the University, the majority of externally sponsored projects (i.e. grants, contracts and cooperative agreements) support Organized Research activities, but a smaller amount may be classified as Instruction or Other Sponsored Activities. The categorization of the sponsored activity determines the appropriate facilities and administrative rate (F&A) to be applied. Within each category, projects are further defined as on-campus or off-campus, based on the primary location of a majority of the project’s activities and UNH personnel effort.
F&A rates applicable to each type of sponsored project are outlined in UNH’s negotiated rate agreement. If a project includes any Organized Research component then the project must use the Organized Research F&A rate.
The Office of Sponsored Programs Administration (SPA) is responsible for determining applicability of the appropriate F&A rate. Principal Investigators who believe an off-campus F&A rate is applicable to their project should carefully review this guidance. If an off-campus rate appears applicable, the PI should contact their GCA early in the proposal/budget development process to secure SPA approval of the off-campus rate. This approval must be in place prior to routing a proposal for submission to the sponsor.
I. Organized Research
Organized Research and related scholarship activities include the rigorous inquiry, experiment or investigation to increase the scholarly understanding of the involved discipline. These activities may be sponsored by federal and non-federal (i.e. private, foundation) organizations.
The following are examples of Organized Research (OR):
- Scientific laboratory or field research
- Searching for applications of new research findings or other knowledge
- Conceptual formulation and design of possible product or process alternatives
- Statistical studies
- Literary interpretations or criticisms
- Health-related studies
- Research on teaching effectiveness
- External funding to develop and maintain facilities or equipment and/or operation of a center or facility which will be used for research
- Creation of academic and professional publications
- Scholarship or writing of books, when the purpose of the writing is to publish research results
- Awards to departments, centers or schools for the support of the training of research techniques of students or postdoctoral scholars, e.g., research training grants
II. Other Sponsored Activities
Other Sponsored Activities are defined as projects funded by sponsors that involve the performance of work other than Organized Research. These activities may be sponsored by federal and non-federal (i.e. private, foundation) organizations.
The following are examples of Other Sponsored Activities (OSA):
- Health service projects
- Community service projects
- Community health clinics
- Public broadcasting services
- Museum and gallery exhibits
- Conferences, seminars and workshops
- Special events open to the public
- Travel Grants
Instruction means the teaching and training activities of an institution financed by federal, state and private agencies and organizations. Except for research training as described above, this term includes all teaching and training activities, whether they are offered for credits toward a degree or certificate or on a non-credit basis, and whether they are offered through regular academic departments or separate divisions, such as a summer school division or an extension division. It includes activities that are part of the University’s instruction program to communicate educational content for-credit and not-for-credit courses.
- Course and curriculum development
- Academic advising and development
- Activities performed in facilities not owned by UNH and to which rent is directly allocated to the project.
- More than 50% of the project activities and effort are performed off-campus.
In cases where activities are performed in facilities not owned by UNH and space-related costs are not directly charged to the program, the determination of off-campus or on-campus will be based on project facts and circumstances presented within the proposal, consistent with the categorization of costs as submitted in the F&A rate proposal.
All federal sponsors are expected to pay the federal negotiated indirect rates; exceptions will be documented in the Program Announcement or Solicitation. All direct nonfederal sponsors (i.e. funds are being "passed through" from a federal agency) are expected to pay the university's fully burdened F&A rate.
Please view detailed information on the F&A Rates.
Estimating the cost of a research project is an inherently unpredictable exercise; primarily because the manner in which a research endeavor progresses is itself unpredictable. Experience makes the exercise easier to carry off and liberal rebudgeting authority from sponsors (when it is offered) makes precise estimating less critical.
Federal agencies will generally provide either a form or a prescribed format for estimating and presenting cost; it is important to follow their instructions explicitly. Many agencies that haven’t developed their own forms use this as their standard format.
Cost sharing is the portion of the total project costs of a specific sponsored agreement that is borne by the University rather than the sponsor. Cost sharing normally represents a reallocation of resources, e.g., RC Unit to partially support an externally sponsored project. You can propose cost sharing for only those expenses that would qualify as allowable project costs.
Step One: Determine if cost-sharing is mandated by the sponsor.
Cost share only when required by the sponsor. Unless mandated by the sponsoring agency, do not cost-share.
Unnecessary cost sharing adds an administrative cost and burden to the principal investigator, the college, the Controller’s Office, and other administrative functions on campus due to the need for creating an adequate and auditable trail for those costs.
Undocumented or improperly documented cost sharing leaves UNH vulnerable to audit findings. Mandatory or voluntary? Cost sharing is classified as either “mandatory” or “voluntary”.
- If the published sponsor guidelines include language that either requires cost sharing, cost sharing is considered “mandatory.”
- In the absence of sponsor published guidelines supporting the need to cost share, cost sharing would be seen as “voluntary” and therefore strongly discouraged by the University.
- Some sponsors require proof of “institutional commitments,” but this requirement does not necessarily mandate the inclusion of quantifiable cost sharing. Instead, it generally calls for non-monetized commitments in support of the project. For example, a statements from the Principal Investigator’s Chair for protecting a faculty member’s time for research that would ordinarily be committed to teaching. When cost sharing is not mandated by the sponsor, but institutional commitments are required, do not provide monetized descriptions of institutional support. When in doubt, consult with your Grant and Contract Administrator.
Conclusion: the sponsor must have a requirement within the solicitation in order to cost share.
Step two: Identify eligible budget categories to cost share and secure approvals.
Mandatory cost sharing can include direct cost budget items and F&A (indirect) costs, depending upon the specific requirements of the sponsor.
- Cost sharing must be from non-federal sources
- Cost-shared personnel and items must contribute directly to the project
- Cost sharing is expended during the project's period of performance
- All cost sharing amounts and their associated account numbers must be listed on the Cost Sharing Form. This cost sharing must also be authorized with a signature, where indicated, by the individual authorized to commit the shared funds. Typically for salaries, it is the department head or dean.
- Cost sharing of salaries is allowable for the portion of salary associated with any UNH employee's effort committed to the proposed project.
- Cost sharing of salaries must be from a non-federal account.
Only cost share fringe that is associated with cost-shared salary.
Equipment can be cost shared only if it meets the following criteria:
- Has not already been purchased.
- Will be purchased specifically for exclusive use on the project.
- Purchased during the project’s period of performance.
- Ownership of equipment will remain with UNH at the end of the project period.
- Must be cost shared from a non-federal account, and approved by the account owner on the Cost Sharing Form, typically the department chair if shared with departmental funds. The form must include account number from which the equipment will be paid.
Other Direct Costs
Examples of Allowable Cost Sharing:
- Material and supplies
- Other project expenses
F&A (Indirect) Costs
- Unless the guidelines explicitly state otherwise, cost sharing can be claimed on the indirect costs associated with the direct charges being shown as UNH’s cost share.
- Should the indirect cost rate the sponsor allows be lower than the University’s negotiated rate, the difference between the two rates may also be used as University cost share. In the event of an indirect cost waiver from the Senior Vice Provost for Research, those indirect costs may also be cost shared.
- If it is anticipated that an Indirect Cost Waiver or reduction will be requested, follow the Procedure for Indirect Cost Waiver. (section 7)
Subcontractor Cost Share
If the budget includes a subcontract to another organization, that organization can include shared costs in their own budget if the following is observed:
- The cost sharing is specifically signed off by the authorizing official of that organization, their SPA equivalent.
- Costs must be auditable. A rule of thumb to follow is to show only those type of costs allowed by UNH (salaries, fringe, F&A costs, etc - items with audit trails).
Third Party Cost Share
When necessary to meet mandatory sponsor requirements, cost share provided by third parties is allowed. Please note, should it not come through, or be disallowed by the sponsor, the amount of cost share must come from other University sources, or will result in a cost disallowance and payback to the sponsoring agency.
The third-party cost-share request should include:
- The third-party contributor must provide SPA with a letter of support/commitment. This letter would provide detail about the resources committed and should be signed by the individual authorized to make such commitments.
- Shared costs must be auditable and directly allocable to the project and documented in the letter of support/commitment.
- Third-party cost sharing offered voluntarily in a proposal—as with all UNH-offered voluntary cost sharing—becomes a commitment under the terms of the award, and represents a binding obligation of the University.
- Estimating Costs
- UNH Policy, Forms, Mileage Rates, Per Diem Rates, and Other Useful References
- Fly America Act
- Value of Volunteer Time (This standard is used by the Federal government and provides state-by-state values.)