Module 7 - Direct Costs | STELAR - STEM Learning and Research Center

Module 7 - Budget

Overview | Direct Costs | Proposal Steps | Resources

Direct Costs

Components of a Budget and Budget Justification

Components of a Budget and Budget Justification Per the PAPPG, “ the proposal may request funds under any of the categories listed so long as the item and amount are considered necessary, reasonable, allocable, and allowable under 2 CFR §200, Subpart E, NSF policy, and/or the program solicitation. ” In this section of the module, you will learn more about some of the key direct cost components of a proposal’s budget. It is important to note that there is not a correct/ideal 'balance' between funds allocated to each of the components - instead strong budgets have a clear rationale for each line item in the budget justification.

In the audio clip below, Dr. Robert Russell, NSF Program Officer, gives a brief overview of what can and cannot be included in your Budget.

It can be challenging at first to determine how to structure a budget. For example with Salaries and Wages (yours and your staff time), it is a good exercise to think through the proposed tasks your institution plans to undertake, and then assign specific people and time to those tasks in order to build that line item of your budget. It is also helpful to consult with someone in your institution with expertise in budgets who may be able to provide institution-specific tips on budget development.

Salaries and Wages

Once you have conceptualized your work, your team, and who your partners will be, you must think about how to staff your project internally in order to accomplish the project goals. Only your institution’s employees who will be staffing your proposed project should be included in this section. Your institution should provide you with the salaries and fringe benefit costs for the individuals who you will include, but you must determine how much time they can and will devote to your work in order to budget sufficiently for them. NSF does stipulate that no more than two months of salary can be allocated for senior personnel with academic positions unless justified (see Senior Personnel Salaries & Wages Policy). The budget justification should name all the personnel that will staff your project, their title or intended role on your project (e.g., PI, co-PI, Research Assistant, etc.), and should describe what tasks they will perform for the duration of the proposed work.

Travel

The work you are proposing may require domestic and/or international travel. Reasons for travel can range from having staff travel to research sites to conduct data collection, to attend a program’s annual PI meeting (as many NSF programs require), or to present on your proposed work at conferences as part of your dissemination plan (see Module 6: Dissemination). You may also budget for non-staff travel, for example, to bring your advisory board (should you choose to have one) to your institution or another location for a face-to-face meeting. So, when budgeting for travel it is important to consider all the possible needs for staff and non-staff travel and then consider the following for each trip:

how many travelers will there be
to what locations (if they can be determined ahead of time) and via which mode of transportation (air travel or ground transport)
if there will be lodging costs and if so for how many days
the per diem rates per day per traveler

When budgeting for travel it is common to use U.S. General Services Administration () per diem rates to estimate costs per trip, and each category of trip (PI meeting, conference, workshop, advisory board meeting, data collection, etc.) should be separated. The budget justification should describe the proposed travel and its intended outcome, and justify the necessity of the travel to accomplish the proposal’s objectives and/or to disseminate results from the proposed work. Be sure to review the section in the PAPPG on Allowable and Unallowable Costs as well.

Participant Support Costs

Participants in your projects may include students and teachers, among others. This section of the budget refers to direct costs for items such as stipends or subsistence allowances, travel allowances, and registration fees and other costs that are necessary for these individuals to participate in the proposed work and in order to accomplish the proposal’s objectives. The number of participants budgeted for must align with the scope of proposed work and the stipends and other funds budgeted for participants must adequately support, compensate and incentivize their participation. In the budget justification, participant support costs must be specified, itemized, and justified. Indirect costs (described in this module) are not allowed on participant support costs. Note: if a proposal is successful and an award is made, NSF requires that participant support costs be accounted for separately by your institution.

Direct Costs for Partners

Module 2 on Forming Partnerships described how to identify and develop partnerships that will help the proposal achieve its objectives. As part of the partnership development process, you will have determined what the partnering institution will contribute to the success of the project, what tasks they will be responsible for and how they will contribute to the overall execution of the work and dissemination of results (if applicable). Each sub-award to a partner from the overall award must be outlined in the proposal submission as well. You and your partner must negotiate and come to agreement on a budget amount to the partner that adequately enables the partner to perform their tasks.

As we learned in Module 2, rarely do partnerships operate simply out of shared ideals. Organizations require funding to pursue their missions and more often than not, money becomes the glue holding partnerships together. As a reminder when budgeting for your own work versus that of partners, determine your cut of the budget and understand clearly your own organizational bottom line. Ensure you have a handle on what percentage of your proposed project's budget your organization requires to successfully fulfill the responsibilities it has identified as its own. Develop a draft high-level budget for the activities you have identified as the ones you want primary responsibility for. This will provide initial parameters for your organization’s budget and help you determine broad parameters of budgets that could be available to partners. Minimally, the high-level budget should include estimates for staffing, overhead, travel, and any major events you intend to cover in your budget. Add an additional 10% - 20% to your own budget as wriggle room as you negotiate with potential partners. Although this budget may not be discussed with partners initially, it will provide you with a basic understanding of how much room there is in the proposed project for partner involvement. Once you have determined what your organization needs, you can begin discussions with partners with the knowledge of how much of the budget can be distributed among your project partners to cover remaining project activities and deliverables.

Each partnering institution must also provide you with a budget for each year of support requested as well as a budget justification that describes the intended use of every line item of their budget. This will be submitted as part of your overall proposal budget ‘package’. Often these negotiations take time and should begin early on in your proposal development process. Allow ample time to ensure that partners understand, i) the NSF budget requirements, ii) the format for budget and budget justification preparation and, iii) a deadline by when their materials are due to you. It is also possible for the partner to upload their budget and justification to NSF on their own, if they have the capacity to do so. In such a case, ensure your partner has a deadline by which to send their budget materials to you for your review and institutional approval, before they submit the materials via Research.gov.

Partners who will perform work on your project as consultants may be included in your own institutional budget as a direct cost and described in your budget justification. For more details on how to determine consultant status for an entity working with you on the proposed project, please refer to the PAPPG section on consultants.

Other Direct Costs & Indirect Costs

Your budget must identify and itemize other anticipated direct costs that are not covered under the sections above. These include i) materials and supplies, ii) publication costs, iii) computer services and iv) consultant services (see section above on Direct Costs for Partners). Examples of other direct costs include items such as space rental, payments to human subjects, printing and copying costs, service charges etc. For more details, refer to the PAPPG section on other direct costs. Be sure to also review the section on Allowable and Unallowable Costs as well.

Find out from your institution's financial arm if your institution has a federally negotiated indirect cost rate (NICRA), which must be used in computing indirect costs for a proposal. Indirect cost rates are often referred to as Facilities and Administrative Costs (F&A) at colleges and universities and sometimes referred to as General and Administrative (G&A) costs at other types of institutions. Per the PAPPG, except where specifically identified in an NSF program solicitation, the current, applicable NICRA of your institution must be used in computing indirect costs for your proposal. If your institution does not have a federally negotiated indirect cost rate, please review the PAPPG section on indirect costs.

All other direct and indirect costs must be itemized and described in your budget justification.