This page contains information on what you should know if you have never before prepared a budget for a sponsored project.
Why is a proposal budget important?
- It justifies your request and shows how you calculated costs.
- It provides a financial "blueprint" for your project if you are funded.
- It shows that you—and the University—will manage the sponsor's funds, which are usually public money, responsibly.
Three key words: Allowable, Allocable & Reasonable
If you remember nothing else when calculating costs for your proposal budget, it is this: the Office of Management and Budget (OMB) Circular A-21, Section C says, "The recipient institution is responsible for ensuring that costs charged to a sponsored research agreement are allowable, allocable, and reasonable ...."
What does allowable, allocable, and reasonable mean?
- Allowable: Costs must not be expressly prohibited by the sponsored program regulations, the sponsored agreement, the University's own policies, or the Federal Cost Principles (found in OMB Circular A-21). Costs must be treated consistently by applying the generally accepted accounting principles appropriate to the circumstances (such as the Federal Cost Principles).
- Allocable: Costs are incurred solely to support or advance the work of a specific sponsored research award (and only during the sponsor-approved project period).
- Reasonable: Costs must be able to withstand public scrutiny, i.e., objective individuals not affiliated with the institution would agree that a cost is reasonable and appropriate.
Tips for Budgets
- Calculate what the project will cost, and make sure your budget is realistic; do not "pad" costs - but don't short-change yourself in an effort to be more "competitive" either (though you will want to check whether or not the sponsor has a maximum request amount).
- Be sure everything in your budget is referenced in the project description/project narrative—and be sure everything mentioned in your project description that would incur cost is shown in the budget.
- Discuss your project and its costs with your chair/director and/or your dean.
- Start early!!
- Check to see if cost-sharing is required.
- If so, where will it come from?
- Discuss this with your chair/director and/or your dean.
- Read the sponsor's guidelines!
- Does the sponsor have a minimum and/or maximum request amount?
- Does the sponsor want you to use a specific budget form?
- Do they require a budget justification as well?
- Check to see if the sponsor REQUIRES certain items (example: travel to a conference or planning session).
- Check to see if the sponsor DOES NOT ALLOW certain items (example: salaries & wages, foreign travel, F&A/indirect costs, etc.).
- You may find it helpful to refer to the Start and Manage Projects section of this website when constructing your budget.