Budgets

Suggestions for Building a Strategic Budget

A proposal’s budget is a careful calculation and documentation of all the money needed to conduct a proposed project. It has two parts: budget and budget justification. Both are important elements of a persuasive proposal.

A persuasive budget flows logically from the proposal's research and methods. It is broken into one-year segments and presents each line item separately.
A strategic budget accurately fits the proposed project. In review, an unrealistically skimpy or unduly padded budget can count heavily against the project. An unrealistic budget suggests that the investigators don’t know what they’re doing.
The budget is both an estimate and a firm offer on the part of the University. Once an award has been made, changes to the budget must be renegotiated in light of the funder’s guidelines.
Some sponsors establish dollar limits for first-year direct costs, with maximum increases for following years. Proposals that exceed the limits may be rejected.
A strategic budget complies with the sponsor's guidelines. If the sponsor will not allow office equipment purchases, or limits such costs as travel or publication support, follow the instructions!
A persuasive budget anticipates all costs that should be covered. For details and a sample budget, link to: General Principles of Budgeting at the University of Minnesota
Do not neglect to include indirect costs. Check the F&A (indirect) Cost Rate Chart for current rates. If the sponsor allows only a certain rate, get that rate in writing and submit the document to SPA with your proposal.
Use current inflation and fringe rates. EGMS will automatically calculate correct rates for budgets prepared online.

Budget justification

Most federal agencies require applicants to justify the need for each budget line item. To identify which items must be justified and what information to include, read the grant application instructions carefully.

The budget justification is usually a separate prose section of the project description. When the justifications are brief and straightforward, they may be inserted in the budget itself beneath each line item.

Generally, one should justify the following costs:

Personnel (position title, % effort or person months, name of each person if known)
Fringe benefits (list rates used)
Honoraria (by name of each person, if known)
Travel (destinations, durations, transportation, lodging, meals)
Equipment (individual pieces listed separately)
Materials (specific types)
Subcontracts (name of company, tasks, duration)
F&A (indirect) cost rates and base.
Special categories related to the project, such as photocopying or reproduction; fees (e.g., at archives), consultants, participant incentives, etc.

What are the most common budget problems?

Incorrect fringe benefit or F&A (indirect) cost rates. Generally, the EGMS budget calculator automatically inserts the correct rates. To double check, link to the University academic/administrative policy on Charging of Direct and Facilities and Administrative (Indirect) Costs.
Insufficient breakdown of costs. Or individual line items combine different types of costs. Be sure to break down Salary and Fringe; Travel, Lodging, and Meals; individual equipment items, etc.
Vague or incomplete budget justifications. Or line items that do not directly reference the proposal.

Building Your Budget – Links to Useful Information

Many people use the stand alone budget function in the Electronic Grants Management System (EGMS) when doing their budgets. This ensures that they get the correct rates. Information on how to do this can be found at the EGMS website.

General Principles of Budgeting at the University of Minnesota

Facilities and Administration Rates (F&A)
Sometimes referred to as Indirect Cost Rate (IDC)

U of MN Policy Library
Charging of Direct and Facilities and Administrative (Indirect) Costs

Graduate Assistant/Professional Student Salary Rates FY 2008-2009

Graduate and Professional Student Fringe Table FY 2008-2009

2008-2009 Fringe Benefits by Component

FY 2009 Fringe Benefit Matrix

U of MN Travel Services
Contains rates and policy information.