Getting a handle on grant proposal budget basics is a must for research-intensive hospitals, universities and other organizations. Grant proposals include key financial data such as the requested amount which is then typically supported with a line item budget and budget justification.
In terms of budget information, most sponsors and federal granting agencies issue detailed instructions and specific formats or forms for budget preparation. To ensure proposal success, best practice dictates familiarity with the agency guidelines before preparing a proposal budget.
Sponsor guidelines often restrict what direct costs can be charged. For example, some sponsors have policies that specify only a certain portion of salary costs may be incorporated or whether or not certain travel is allowable. Thus it’s critical to thoroughly understand funding restrictions prior to preparing a project budget and submitting a proposal.
Budget proposals generally include two basic categories of costs: direct costs of the proposed project and facilities and administrative (F&A) or indirect costs.
In terms of direct costs, this category of costs is incurred during the performance of the project and must be directly attributable to the project. Direct costs must be considered allowable, reasonable, and directly allocable to the specific project. Items that are generally deemed direct costs are: salaries, fringe benefits, equipment, consultant costs and research supplies specific to the project.
Grant Proposal Budget Basics: Projecting Personnel Costs
As a key part of the proposal budget process, calculating the amount of salary to be paid during specific budget periods is fundamental to recovering the true cost of the research.
However, the process typically involves addressing numerous issues and complex calculations. Some of the more challenging issues involved with projecting personnel costs include difficulties with calculating personnel costs that include both salaries and fringe benefits. It can also be a challenge to base projections on individual grant budget periods which may not align with an institution’s fiscal year.
Further complexities arise when grants and research teams include multiple employees; employees who are simultaneously paid from multiple funding sources; and employees who are paid on different pay periods.
Automating Brings Benefits
Given the complexities noted above, many of the research organizations we team with turn to a suite of grant management solutions to calculate and project personnel costs.
Specifically, these software solutions automate the projection process. Automation completes the calculations faster, with less errors, and also addresses the most challenging issues at the same time. A system that offers specific projection features eliminates the need for duplicate data entry, manual assembly of data, stand-alone spreadsheets and paper-based reporting. A grants accounting software solution quickly applies the calculations to reports and creates materials in the required format.
Next Steps: Grant Proposal Budget Basics
In all, generating accurate projections of personnel costs is a key component for research teams during the proposal process. When you consider that personnel costs make up 70 to 80 percent of most grant budgets, the generation of accurate projections is of utmost importance – thus the need for automated solutions.
For additional information related to budget proposals for federal contracts and grants, see Title 2 of the Code of Federal Regulations (CFR). This “Uniform Guidance” combines and replaces circulars and requirements related to the proposal process.
For more information regarding projection features, contact the IT Works team.