When do you develop your budget?

Right after the first-draft Abstract (and Logic Model, or at least some kind of goal statement)!!!

Developing your budget even before you write your proposal can save a lot of time and headaches.  It will also greatly assist you in crafting the details (work plan) of your proposal.  Why?  Because devising a budget requires you to think very specifically about what you actually want to try to do in your project.  If you identify what you actually want to spend money on (why you need a grant!), and how much of your and others’ time will be required to do the work (labor is usually the biggest expense) you’ll have the outline for your work plan before you’ve even tried to write it.

 

What can you do with grant funds?

Note! Funders vary in what kinds of expenses they will or won’t fund, so read their instructions and limitations closely!

  • Salaries - may include:
    • Project Director
    • Faculty collaborators (Co-PIs or Co-Investigators)
    • Students (graduate and undergraduate)
    • Professional (and sometimes clerical) staff
  • Consultants or Contractors
  • Travel
  • Participant support costs (refers to costs of engaging non-MSU folks in meetings or workshops; separate from "Human subjects incentives")
  • Communications (e.g. conference calls, video-conferencing, film, layout and graphics, etc.)
  • Supplies (includes small equipment such as computers)
  • Equipment (single items above $5000)

 

Thinking through the project’s expenses

What do you need in order to accomplish any or all of your objectives?  Thinking this through will help you get concrete about the inputs (e.g. staffing), activities and outputs of your project, and help you write your project narrative.

 

Inventing a Budget

How do you know what numbers to use in crafting a budget? 

 

What are the funders’ budget constraints?

  • Amount allowed for your type of proposal – especially if you're a new PI you might do better by aiming low.
  • Allowed percentage for Facilities & Administration (F&A or Indirect Costs, also known as IDCs or “overhead”). Fill in the correct ratio so the spreadsheet template calculates properly.
  • What kinds of items will they fund or not fund? (restrictions often include equipment)
  • Remember that once you have a funded budget, most funders will allow you to shift expenses from one category to another as long as the amount you shift is not more than 10-25% of the total budget. But this is something you should check out with each grant contract.
  • Examine the funder’s budget form so you’ll know what you’re working toward.
  • Check your funders’ limitations on expense categories (such as mileage rates)

 

Who will do the work and how much time will it take?

  • Use salary figures with a formula so you can go back and change it as you try to adjust the proposed budget to the available funds.
  • If you have benefits ratios, set the spreadsheet to automatically plug in the correct benefits rates for different personnel.
  • Note that the benefit calculations shown on the OSP Information Sheet are for full-time personnel and use average salary rates for different categories of workers (professional versus classified). If you have a less than full-time or low-paid position budgeted, it is advisable to use the MSU Benefits Calculator worksheet.
  • Line up the expenditure for labor with the timing you expect to get the work done (this is a federal “Time and Effort” requirement).
  • What services will you need to contract for and what will be done by your organization’s employees? Even if MSU employees are acting as “consultant,” funds for them are listed with personnel, not with contracted services.  (List non-MSU consultants on “Contract Services” worksheet).

 

What  Supplies and Communications will you need?

What will be your telephone (including conference calls), internet, printing and mailing costs? What materials and supplies will you need to accomplish your objectives?  Do you need to include human subjects incentive payments?

  • General materials and supplies (incidental office supplies, use of a computer or photocopier, etc.) should be covered by your department.
  • A single item over $5000 is considered Equipment (and not subject to IDCs).
  • Use the “Communications/Supplies” worksheet and your totals on that sheet will transfer to your primary budget overview sheet.

 

Who will travel, where, and how often?

  • If at MSU, be sure to refer to OSP’s Information Sheet for details on allowable travel expenses.
  • Use the “Travel” tab in the EHHD budget worksheet and your totals on that sheet will transfer to your primary budget sheet.

 

Will you need special equipment specifically for this project?

  • Funders generally expect your major equipment to be covered by other funds – this should be built into an F&A or overhead rate.
  • Federal funders consider the category of “equipment” to be something that costs $5000 or more for a single unit. So generally a computer, for example, would be considered a supply.

 

Are you planning for Awards, Stipends and Tuition?

  • graduate student tuition
  • awards that may be made to project participants
  • Note: tuitions for workshops you may plan to attend should generally be included in your travel budget

 

Are you planning for Participant Expenses?

Include items for non-employees, such as:

  • travel funds for project participants to attend meetings;
  • lodging and food expenses (sustenance);
  • stipends to cover lost income (for example, for farmers or others who aren’t making money when they’re not working); or
  • stipends that offer participants an incentive for participating (differentiate from consulting personnel).

 

Will you have one or more Subcontracts (Subawards)?

These are formal arrangements to have another organization carry out a portion of the work plan.

  • Generally the difference between a “subcontractor” and a “contractor (or contracted service provider)” comes down to whether that other organization is a collaborator, accountable to the terms of the whole proposal and responsible for supervision of a major chunk of work (subcontractor), OR responsible for a specific product that you have specified and you approve or supervise (contracted service provider).
  • For MSU budget writers, subcontracts appear twice on the budget spreadsheet template because, per federal rules, only portions of subcontracts over $25,000 are included in the total on which MSU calculates its F&A percentage. This is because it does cost MSU to set up, administer and track a subcontract, but most of the work of the subcontractor will occur off campus.  So amounts up to $25,000 are subject to F&A percentages, but any amount beyond that is not.  That is, the difference between a subcontract of, say, $40,000 and $25,000 (i.e., $15,000) is the amount not included in figuring the total F&A for the proposal.  Note, however, that if a funder requires use of an F&A rate different from MSU’s relevant federally negotiated rate, F&A MUST be charged against ALL direct costs, including the full amounts of subawards, fellowships, tuition, and participant costs.

 

What are "MTDC" (Modified Total Direct Costs) and IDCs (Indirect Costs)?

  • There are other kinds of expenses besides subcontracts that are not subject to F&A percentage calculations on government grants. These are the items listed under the “Indirect Costs” line on the budget spreadsheet because they’re not included in the IDC or F&A calculation.  MTDCs are those costs subject to F&A percentages.  In some cases OSP will require you to charge F&As against Total Direct Costs (TDCs) if the funder’s allowed IDC rate is lower than MSU’s federally negotiated rate.
  • Indirect Costs (IDCs), also known as Facilities and Administration costs (F&As) or Overhead, are those that are incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project, an instructional activity, or any other organizational or institutional activity. Most agencies allow IDCs to be included in the grant as a percentage of “direct costs” (those costs identified specifically with the proposed project).  Percentage of IDCs allowed varies by agency or funder.  MSU has standard rates that apply when the funding agency does not specify a rate.

Will your budget require Cost-Sharing (Match)?

Note, MSU rules do NOT allow for ANY match unless the funder REQUIRES it.  If you’re submitting your proposal through MSU Foundation, it’s a different story.

Cost sharing is the contribution to a sponsored project that supplements agency funding. At MSU, because match must be auditable (and therefore can require substantial paperwork), MSU allows cost-share only if the funder requires it. Cost-share must be documented during the project, whether it takes the form of actual funds or in-kind contributions. 

Match should be detailed on the ePCF cost-sharing page.  You will need index numbers if any of the match is to be charged to existing MSU accounts.  Note that foregone IDCs can often be used for match (if the funder’s rate is lower than MSU’s federally negotiated rate, and the funder allows use of foregone IDCs).  If your match will be from a third party or in-kind, you will need signed documentation of agreement to this. 

Use the EHHD budget template with subaward and costshare to help you calculate needed costshare.

 

How will you write your Budget Justification?

A “Budget Justification” or “Budget Narrative” should:

  • Be written in the order of the funder's budget form.
  • Amply explain items in the budget (within page limits, if any) – how the numbers are derived and what they represent.
  • Help funders judge appropriateness of budgeted items.  So you should explain how much of different people’s time you’re budgeting for (and generally their pay rates and benefits rates), explain how you’re calculating projected travel, describe any specific significant supplies or communications expenses needed for the project, etc.  Think about what you as a reviewer would want to know about how the budget was constructed, and write that into the justification.

 Advice on writing the Budget Justification

Start writing the justification as you draft the budget, to remind yourself how you arrived at the figures in the spreadsheet, even though you may go back and change both the numbers and the narrative later.

 

When to transfer your working budget to the funder’s budget form?

Why not develop the budget with the funder’s form?

  • Most of the time the form is not provided as an electronic Excel spreadsheet, so as you adjust your figures, you have to recalculate and re-type every affected figure. That’s the great thing about using Excel – if you enter formulas, and use the formulas intrinsic to the template, it’s easy to experiment until you find the balance you want to achieve.
  • Doing your own spreadsheet allows a cross-check with the fillable Funder form (if it auto-calculates), while providing yourself with budget detail you can’t put into the Funder form.
  • Transfer your numbers to the Funder's form when you think you're done.  The funder's form will eliminate some cost fractions (you enter whole numbers, not formulas) so you will likely find category totals that are off from what your spreadsheet says by a dollar or two.  Be sure to use the funder's form numbers in your budget justification.

 

How do you amend your budget for different funding streams?

  1. Build your project in funder-specific chunks
  • Break your total project and budget into discrete segments that can survive on their own.
  • Adapt the right segment to the most appropriate funding stream. You can use other segments and funding streams as part of your argument for how your project or program is broadly supported (most funders don’t want to fund something all by themselves).

       2. Imagine your project in different ways that require more or less funds.

  • If you have to pare down, what budget items or project components can you realistically live without?
  • Can find a different way to do what you want that is less resource intensive?
  • Reduce your budget by preparing for start-up time (e.g. hiring staff can take 2-3 months).
  • If you have more room in the budget, what could you do with more of a staff person’s time, for example?

 

REMEMBER: Funders want to see a realistic budget – your proposal can get downgraded just as easily for not budgeting enough resources as for appearing to pad the budget.