Develop and Submit a Proposal

The most significant direct costs for any sponsored project are typically salaries and fringe benefits, but direct costs may also include travel, printing, materials and supplies, subcontracting agreements, etc.  If your budget charges the sponsor for expenses that would normally be considered indirect costs (e.g., equipment, facilities, administrative support, etc.), these items require a budget justification.

Additional guidance on allowable direct costs and unallowable costs

F&A costs are also known as indirect costs or overhead. F&A rates reimburse the university for the indirect costs associated with a research project. It excludes equipment, capital expenditures, charges for tuition remission, rental costs, scholarships, and fellowships as well as the portion of each subgrant and subcontract in excess of $25,000.

View current rates

If a sponsored project has expenditures that are unallowable on a sponsored account (e.g. overspent budget or budget category, expensed items that are not allowable by the sponsor, or expenses that are inappropriate to the project), it is the Principal Investigator’s/department’s fiduciary responsibility to move those expenditures off the sponsored project promptly.

Unallowable Administrative, Operational, and Research Related Costs

• Office supplies, pens, paper, basic software, etc.

• Local telephone and fax; telephone line and equipment charges, cell phones

• Postage, express mail (Freight to ship component parts necessary for the research is allowable)

• Hazardous waste disposal

• Proposal preparation costs

• Costs of reprints of articles on the research funded by the grant are allowable; other printing costs may or may not be allowable depending on the circumstances

• The costs of  memberships in business, technical, and professional organizations are generally not allowable.

• Books and periodicals (these are typically considered indirect costs supported by the institutions library)

The following items are typical components of a budget.

Salaries and Wages

• To calculate total salaries and wages, list the amount of time that will be spent by any individual serving in any paid capacity on the project.
• Departmental administrative and clerical staff salaries are considered Facilities and Administrative costs (indirect costs) and are not typically charged to sponsored projects. If the sponsored agreement has specific requirements that mandate the use of administrative and clerical staff, or if the project requires significantly more administrative effort or expense, this need must be documented in accordance with the OMB Uniform Requirements and specifically identified in the sponsored agreement. These atypical administrative costs must be described in the budget justification.
• When individuals are identified by name, their actual salaries should be used in the budget estimate.
• No employee may be scheduled for activities in excess of 100% of effort in any given month; this includes research, teaching, and service.
• A principal investigator must devote a level of effort as required by a sponsor over the term of the award. After the award is granted and accepted, the PI and key personnel are committed to provide that proposed level of effort over the budget period unless the sponsor permits otherwise. 
• Sponsored activities may not result in any employees receiving compensation at a rate in excess of their authorized salary or academic rate. For multiyear projects, the budget should take into consideration any possible salary increases.

Fringe Benefits

• The fringe benefit rate covers expenses associated with salaries, such as insurance, retirement benefits, etc. These are a direct cost to a sponsored project, are clearly related to the salaries and wages to be paid, and are shown as a separate entry in the budget.
• Full fringe benefit rates are applied to direct salary and wages of full-time employees and to part-time employees who work at least 50% time.
• Partial fringe benefits are applied to direct salary and wages of part-time employees who work less than 50% time at the Institute. These employees do not participate in the retirement, group health, and other insurance plans.
• Enrolled students may be employed on sponsored projects, and they are not subject to fringe benefit rate charges.
• AU's current fringe benefit rate is 34%.

Equipment

• Capital equipment is defined as all property of a capital nature, complete in itself (stands alone), which does not lose its identity, has an anticipated service life greater than 2 years, and has a unit cost of $5,000 or more. The budget should specify the name and manufacturer of the equipment whenever possible. Sponsors may want to see the manufacturer's specifications and price list, particularly if the equipment is very expensive. No F&A costs are applied to this budget category.

Materials and Supplies

• Materials and supplies are defined as (1) consumable supplies, regardless of cost, or (2) equipment with a unit value of under $5,000 or a useful life of less than 2 years.
• Costs for photocopying, publication costs, page charges, reference books and materials, equipment/computer maintenance, service center rates, and contracted services are also categorized as materials and supplies.
• General office supplies, such as staples and pens, may not be allowable on federal grants unless they are related to specific project activities rather than general departmental activities. Budgets that include such items must include a budget justification unique to the project for such materials. A general descriptions of the type of supplies included and a best estimate of their cost can support this budget category.

Travel

• For each trip, the budget must outline who will be traveling as well as the proposed destination, purpose, and duration of the trip. An estimated breakdown of expenses for each person traveling should include transportation costs (e.g., roundtrip coach air fare), per diem or living expenses, and any other related expenses such as ground transportation or conference registration fees.

Subawards

• A subaward, also called a subcontract, subgrant, or subagreement, is a formal, written agreement between AU and another party to perform a portion of the sponsored project. Subrecipients, including subcontractors and consultants, must be identified in your proposed budget to ensure that costs are calculated correctly, and so that appropriate documentation can be included in the proposal. F&A costs apply to only the first $25,000 of each subcontract.
• The proposed subcontractor must prepare a statement of work and detailed budget signed by an authorized representative of the contractor. Sponsor approval is required prior to entering into a subcontract. If it is a vendor relationship, no sponsor approval is required unless specified in the award terms and conditions.

Consultants

• Individuals currently employed by AU should be listed under Salaries and Wages and not included under Consultants. A consultant is an individual or a firm offering professional or specialized services for a fixed rate or fee. AU only controls the direction of the consultant's work with respect to work objectives and desired results and not the methodology for achieving the results. If you plan to use a consultant, include the following information in your budget and budget justification: consultant name and title, daily fee, number of days engaged, and any other expenses (e.g., travel).

Rebudgeting

• There is considerable variation in sponsor policies relative to budget revisions. Award terms and/or sponsor agency guidelines must be consulted when revisions are contemplated. To the extent possible, budget revisions should reflect all necessary reallocations of resources that are foreseen through the end of the budget period. If prior sponsor approval is required for a budget revision, a request is made to the program officer as designated in the award — either via an online system, email, or a letter — sufficiently detailing the revision and justification. Once approved by the sponsor, your contracts officer will make the revision.