Budget Preparation

Download ORA Budget Template Download

The Office of Sponsored Programs (OSP) requires that a budget and justification be included in all proposal submissions. This document assists the sponsors in better understanding of the financial requirements of a sponsored project.

A consistent approach to all sponsored projects assures compliance on every level. When ECU is audited, the auditing agency seeks to insure that costs are allocable to the appropriate project, allowable, reasonable and treated consistently across all sponsored projects in accordance with federal regulation MB A-21. It is one of OSP’S main functions to review budgets with the A-21 cost principles in mind. OSP reviews budgeted line items in concert with a details budget justification.

The preparation of a realistic and appropriate budget for a proposal is important for many reasons. Project planning is demonstrated by a careful and reasoned budget plan.The budget indicates, in a very concrete manner, the funds required necessary to complete the proposed project. A well-constructed budget and justification demonstrates that the project director/principal investigator possesses the experience and skills to successfully execute and complete the project. The justification information protects the budget by demonstrating a thorough and thoughtful budget preparation. It builds credibility in the eyes of the reviewers/sponsor, thus increasing the likelihood of funding.

Budget preparation can be challenging and can consume significant time and energy. OSP has developed a budget template to simplify and standardize budget preparation for the Principal Investigator and departmental staff.

The purpose of this section of the Proposal Preparation Package is to provide ECU faculty and staff with information and examples that will aid them in the preparation of their proposal budgets. Please use the OSP Budget templates for preparing all budgets.
  • Direct Costs: Costs that can be directly attributable to a project, e.g., salaries, wages, supplies, travel, equipment, etc.
  • Facilities and Administrative (FA &A) Costs, or Indirect Costs: Generic costs that can not easily be attributable directly to a project, e.g., utilities, facility maintenance services, libraries or administrative services. Usually allocated to a project as a percentage of a 'base' calculated from the project budget. The base may be Salaries and Wages (S&NW) or Total Direct Costs (DC) or Modified Total Direct Costs (MD).Sometimes sponsors refer to FA &A costs as "overhead".

  • Cost Sharing: ECU contributions toward financing a project. Cost sharing should be avoided whenever possible. There are two types of cost sharing:
    • Cash Match - ECU provides actual Dollar for dollar Matching, of Sponsor funding.
    • In-Kind - Allocation of available ECU resources for use on the project, e.g., faculty time,use of supplies.

  • Salaries and Wages: Compensation paid directly to ECU faculty, staff, or students who will be working on a project. Non-ECU individuals working on the project may be compensated through subcontracts, professional services contracts or other mechanisms.

  • Fringe Benefits: (also called Benefits) Employer's share of Retirement, Social Security, Medicare, and Health Insurance. Each ECU employee working on the project needs to have the appropriate amounts added to the budget to cover these costs. Benefits, as well as salary, should be requested at all times. Benefits are built into the Budget Worksheet.

  • Supplies: Usually defined as consumable materials and small pieces of equipment, e.g., test tubes, hot plates, with a cost of less than $500 or a useful lifetime of less than one year.

  • Equipment: Capital equipment with a useful life greater than one year and a purchase cost exceeding $500 (state of NC definition.)

  • Subcontracts: Legally binding agreements usually used to facilitate the transfer of sponsor funds from a prime grantee or contractor to collaborators at other institutions. (See Subrecipient vs. Vendor Guidance)
  • Use models. The best models are budgets from similar successful proposals produced by a colleague. These models can provide the budget categories and estimates of some of the costs. Two sample budgets prepared by OSP appear at the end of this section.
  • Be comprehensive and realistic. Identify all possible cost items and estimate their costs over the life of the project. Use your own past experience and the experience of your colleagues. A list of possible budget items appears later in this section.

  • Get help. Faculty need not do everything themselves. Most academic units have designated unit staff liaisons--support staff who may be able to help prepare the budget by getting estimates of costs from vendors or other ECU offices and by preparing the actual budget document. OSP can help identify this person. Both Materials Management (purchasing) and Human Resources can also be contacted about the cost of certain items, such as major equipment or salary levels for new personnel.

  • Use an appropriate format. The format of the budget is very important. Most sponsors require an itemized budget and many sponsors prescribe a special budget form or format for proposals to their organization. These prescribed formats should always be used. When a format is not prescribed or more detail is required internally, OSP recommends the format that appears in the Optional Budget Work Sheet and the sample budgets appearing later in this section.

Three columns of figures: total cost of a budget item, the sponsor contribution, and the ECU contribution in covering the cost. This presentation clearly shows to the sponsor how ECU is contributing to the project, and also alerts chairs and deans to the specific commitments they will need to make.

Each ECU person (faculty, staff, or student) associated with the project is listed separately with his or her percent effort, salary requirement and benefits.

A budget for each individual budget year is developed (including inflationary increases), as well as a consolidated budget for the entire project period.

  • Get early Chair/Dean approval of any cost sharing required by the sponsor. If you require reassigned or release time from your academic responsibilities, or if your department or school must make any in kind or cash contribution to the project, be sure to discuss these requirements at an early stage with your dean or chair. An early commitment of support will facilitate make preparing the budget and getting final university approvals.

  • Include budgets from outside collaborators. If you are collaborating with individuals at other institutions (non-profit or profit making), include in the proposal itemized budgets for your collaborators' portion of the project and enter the total figure in your project budget under the item 'subcontracts'. You will also need along with collaborators' budget an official letter from the collaborators' institution supporting the project. Subcontracts will be written to transfer funds to the collaborators.
  • Avoid voluntary cost sharing of direct or indirect (FA&A) costs. Except where explicitly required by the sponsor, do not include cost sharing by the university. Voluntary cost sharing imposes monetary and administrative burdens on the university, and reduces our indirect cost rate. Whenever ECU accepts an externally funded project, it incurs expenses that cannot be easily apportioned to the project. ECU spends roughly an additional dollar for every five dollars of direct costs it accepts. It is the University's policy to recover these indirect costs whenever possible. Include indirect costs in your budget using the rates listed on the rate sheet. If there is a problem with this inclusion, please contact OSP. Where the sponsor has a general, written policy that requires cost sharing or disallows indirect costs, the university will usually agree to honor it.

  • Accounting / Maintenance
  • Advertising / Periodicals

  • Animals / Postage

  • Audio-Visual Instruction /Publications

  • Auditing / Recruitment

  • Binding / Registration. Fees

  • Books / Relocation

  • Computer Time / Rent

  • Consultants / Repairs

  • Dues / Salary/Wages

  • Equipment / Security

  • Fringe Benefits / Subcontracts

  • Indirect Costs / Supplies

  • Instruments / Telephone

  • Insurance / Travel

  • Legal Services / Tuition

1. Don’T construct a 'bare bones budget'. You will short change yourself. It will also diminish your credibility in the eyes of the prospective sponsor if you do not have a realistic budget.

2. Estimate your budget needs realistically but generously.

3. Request only budget items allowed by the sponsor. Asking for a disallowed item creates a poor impression of your application.

4. Write justifications for each personnel position and major piece of equipment requested. Write general justifications for all other items. Don't give the sponsor an opportunity to cut your budget due to a poor justification.

5. Request faculty salary in 25% increments for the academic year. 25% is the course equivalent in most units.

6. Where feasible, include support for Graduate Assistants, as aids for research training, etc. The university has very limited funds available for graduate assistantships.

7. General office supplies should not be included as they are covered by FA&A costs.

8. Salaries for faculty and staff in Year 1 of the budget should be based on the best estimate of what the salary will be at the time the grant begins. The first year salary may or may not be higher than it is during the current period. OSP recommends building in a 3-4% annual salary increase to account for increases in salaries and attendant fringe benefits. Budgets that do not include such increases will not be rejected. However, be advised that the grant will be charged for such increases by the ECU financial systems regardless of whether funds were budgeted.

9. Include hidden costs when purchasing equipment, e.g., shipping, renovations, setup, initial supplies, training of personnel to use equipment, manufacturer's technical support and maintenance.

10. Include something for your unit that can be justified. For example, equipment that can be used in courses or by other faculty, a unit administrative fee or part of a secretary (non-federal applications only).

11. If your project requires alterations or renovations of university buildings, request funds for facilities renovations in your proposal. (Note: Some sponsors do not permit renovations so check the sponsor's guidelines.)

12. When requesting salaries for new personnel to be hired, request a salary in the middle of the range allowed by the NC state personnel regulation. This will allow you to hire a more qualified person.

13. If you need to use 'creative accounting' in your budget construction, contact OSP well before the submission date of the proposal. Your chair and dean might approve the budget, but approvals at the University level may take time.

National Institutes of Health (NIH) proposal budgets have a couple unique elements – the use of modules and the exemption of Consortium F&A from calculations of maximum permitted Direct Costs. The OSP Budget Template has features intended to assist in accurately creating budgets containing these elements.

On NIH modular budgets, Direct Cost Minus Consortium F&A should be in even
multiples of $25,000. If the NIH Modular Budget setting is activated on the
START tab, the template will depict Direct Cost Minus Consortium F&A in a
separate line and display an error – “Not Modular” – the total on this line is
not a multiple of $25,000. Consortium F&A is tracked on the SUBCONTRACTS

On non-modular NIH budgets, also called Full Detail Budgets, the template will
display the Direct Cost Minus Consortium F&A line but will not monitor the
line for compliance with modular totals. Users can use this line to determine
if their budget is within the maximum direct cost cap appropriate to the
proposal type. This setting is also found on the START tab.

NIH Modular Budget Image