Sponsored Programs & Research Compliance

Develop a Budget Justification

Develop a Budget Justification

A budget justification is a narrative explanation of each of the components of a budget, thus “justifying” the cost in terms of proposed work. The justification should focus on how each line item in the budget is required to achieve the aims of the project and how the estimated costs in the budget were calculated.

For newcomers to the process, consult with experienced faculty or staff within your department or contact the SPARC pre-award specialist assigned by department.

Budget justification “templates” should be seen as examples only, as sponsors have different requirements (modular v non-modular, categorical differences, etc.). Look to your direct sponsor for an example rather than a one-size-fits-all template.

Below are some helpful tips:

  • Organize the budget justification listing items in the same order and format as the sponsor’s budget categories.
  • Only include budgeted items. Some sponsors like NSF will disqualify a proposal if contributed items are listed. Do not list cost-shared items unless cost-sharing is mandated by the sponsor.
  • Monetary amounts should be included only in the “other personnel” section for hourly salaries and “travel” section if a trip breakdown is requested. Otherwise, leave out proposed amounts entirely.
  • Explain why items are essential in relation to the aims, methodology, and goals of the project.
  • With multi-year projects, include the time commitment per year of the personnel and detail any yearly changes, if any, for each category.

The funding agency guidelines may stipulate different categories or criteria allowable in a budget, so the following should be seen as a general template. Below are the main categories of most budgets and justifications, with an explanation of that category followed by a sample entry.

Sections of the Budget Justification

Senior Personnel

This category is inclusive of anyone listed as PI, Co-PI or project director, investigator, or co-investigator (co-I). List the personnel name, title, amount of time (calendar, academic, or summer month effort) to be spent on the project, and what s/he will accomplish. Note: Committing effort to a project without requesting salary for that corresponding effort to the project budget is considered cost sharing. UNCW typically allows for only the minimum amount of cost sharing necessary to meet sponsors’ requirements (mandatory cost share) and discourages voluntary committed cost sharing. All cost sharing requires departmental approval. 

Example:

Janice Smith, Ph.D., Principal Investigator (2 academic months; 1 summer month in Y1-3). Dr. Smith is a professor of chemistry at UNCW. Dr. Smith will be responsible for the overall coordination and supervision of all aspects of the study. This includes hiring, training, supervising staff/students; recruiting study participants; scheduling and staff assignments; and data management. In addition, she will conduct the orientation sessions and be responsible for reporting study findings.

Other Personnel

Common personnel types budgeted include graduate student research assistants (GRAs), postdoctoral associates (post-docs), undergraduate research assistants (RAs), and research technicians (technicians). If the person to serve in the proposed role is known, list their name, title, amount of time to be spent on the project (in calendar months), rate of pay, and what s/he will accomplish.

Include a cost-of-living adjustment (“COLA”) in the amount of 3% (excluding initial grant year) for faculty and staff salaries & fringe. Verify any sponsor-driven limitations on COLAs.

  • Students
    • Students are usually classified as “other personnel.”
    • Graduate Students
      • Assistantships
      • Hourly
        • Graduate students can be paid hourly if an assistantship is not sought. Please see our website for average/typical hourly rates and stipend amounts used in sponsored program budgets.
      • Undergraduate Students (Hourly)
        • Undergraduate students are always hourly positions. Please see our website for average/typical hourly rates and stipend amounts used in sponsored program budgets.

Other Significant Contributors

Other significant contributors (“OSCs”) are those that commit to contribute to the scientific development or execution of the project but are not committing any specified measurable effort – no person months – to the project itself. If no salary is being requested, do not quantify the amount of time and effort being spent, as this constitutes an effort commitment and, thus, would be considered cost sharing.

Consultants

Consultants are those that will be hired to assist in a targeted area of the project. They do not have say-so or guidance over the project (the way an investigator or principal investigator would). Provide the consultants name, if known, institution/company/etc. and an explanation of the area of expertise the consultant will provide to the project. If a fee is to be paid to the consultant, explain how the fee was determined (i.e., $X/day* # days). Ensure your budgeted amount does not exceed sponsor guidance. Rates can be calculated on an hourly, flat fee, or task basis. Obtain a letter from each consultant indicating their willingness to act in such capacity.

Subrecipient/Vendor/Contractor

Subrecipient: an entity that has agreed to work in collaboration with a UNCW PI to perform a substantive portion of the programmatic effort on an award.

  • A subaward or subcontract (sometimes referred to as a consortium agreement) is required when a third party (the subrecipient) will be responsible for execution of a portion of the project work. When the UNCW budget includes funding for subrecipient(s), the UNCW budget justification should state the name(s) of the subrecipient organization(s) and include a brief justification for subcontracting to each entity by explaining the project goals involved in their work. The specific items in the subrecipient budget(s) should not be explained in your budget justification. The budget and budget justification from each subrecipient should be included in the proposal, separately from UNCW’s budget and justification.

Vendor/Contractor: an individual, business, or other entity which supplies products or services to the University.

Fringe Benefits

Fringe benefits can change yearly and should be confirmed before submitting your budget.

Fringe benefit rates are calculated on actual costs for employees per institutional policy, as approved by the Department of Health and Human Services in the F&A Cost Rate Agreement, dated 8/29/2018, and they are based on a percentage of institutional base salary including: FICA, retirement, disability insurance, workers compensation and unemployment insurance. Health insurance is based on a flat monthly amount set by the state legislature each year.

Benefit rates for students and temporary staff are based on: social security, workers’ compensation, and unemployment. The rate is always 8.65% during both the academic and summer months for students.

Equipment

Equipment is defined as “a single item that has a useful life of at least one year or more and with a unit cost of at least $5,000.” However, if an item consists of parts that are only functional once assembled, it is considered one item. Be sure to specify the type of equipment and, if known, the model and vendor name. Explain how the equipment will be used in the project and its necessity within the project. If possible, provide a vendor quote. If not possible, indicate how the amount budgeted was determined (i.e., website price list, purchase contract, etc.). Equipment is excluded from F&A cost basis for modified total direct costs (“MTDC”).

If equipment is shared with other projects, budget an amount that corresponds to expected project use and verify the rationale. Split funding of equipment generally should only occur with larger equipment purchases.

Example:

Funds are requested to purchase a Biolog ($1,750). These are physiological data recorders with multiple channels that will be used to record heart rates. These data recorders are needed because there are several periods when assessment points overlap and dedicated equipment for each type of visit will ease scheduling demands.

Travel

When possible, list “who, what, where, when, and why.” Organize the travel costs separately for domestic v. international travel. Explain how the costs were determined and/or estimated (i.e., $X rountrip airfare + $Y lodging for # of nights + $Z per diem for # of days).

Airfare must be coach class and, if paid for by federal grant monies, booked on a US carrier whenever possible. Please pay particular attention to the Fly America Act (49 U.S.C. 40118).

Best practice is to include a travel table to ensure clarity.

OSMB updated their per diem meal rates, effective July 1, 2021. In accordance with OSMB guidance, UNCW is using the US General Services Administration (GSA) lodging per diem of $96. Lodging more than this rate will continue to route to the travelers’ supervisor and budget authority for approval. OSMB meal per diem rates are as follows:

OSBS Meal Per Diem 07.01.2021
In-State Out-of-State
Breakfast (per diem) $9.00 $9.00
Lunch (per diem) $11.80 $11.80
Dinner (per diem) $20.50 $23.30
Total Meal Per Diem $41.30 $44.10

 

GSA Lodging Per Diem 10.01.2020
In-State Out-of-State
Lodging (actual, up to*) $96.00 $96.00
Total Subsistence $137.30 $140.10
Dinner (per diem) $20.50 $23.30
*Unless exceed amount approved with justification

Per the NC Office of State Budget and Management (OSMB) for travel beginning January 1, 2021, personal mileage will be reimbursed as follows:

If a state employee chooses to use a personal vehicle, actual mileage is reimbursable. Mileage is measured from the duty station or point of departure—whichever is closer to the destination—to the destination (and return). In accordance with the agency’s policies, a state employee shall be reimbursed at a rate that does not exceed the business standard mileage rate set by the Internal Revenue Service (56 cents per mile) when using their personal vehicle for state business.

Please continue to visit the Department of State website for the most current foreign travel per diem rates. For more information, visit the UNCW “Travel and Direct Pay” page.

Example:

Domestic Travel - $3,550 is requested for Dr. PI and Dr. Co-PI to attend the annual conference in Washington, DC in Y2. This estimate is based on the following costs, which include standard per diem rates used by UNCW.

Domestic Travel

Annual Conference, Washington, DC

May 1 – May 5, 2021

Airfare

$600

Meals & Incidentals

$1,750

Lodging

$600

Taxis to/from airport

$100

Subtotal Costs

$3,550

Number of Person Trips

1

Number of Travelers

1

Total Costs

$3,550

Participant Support Costs

Uniform guidance defines participant support costs (“PSCs”) as direct costs for items such as stipends or substance allowances, travel allowances and registration fees paid to or on behalf of participants or trainees in connection with conferences or training projects. PSCs are exempt from F&A on federally sponsored projects. For non-federal awards, sponsor-specific and/or award-specific guidelines should be reviewed to determine if F&A is allowable.

A participant is defined as “the recipient, not the provider, of a service or training associated with a workshop, conference, seminar, symposium or other short-term instructional or information-sharing activity. Participants may include students, scholars, and scientists from other institutions, individuals from the private sector, teachers and state or local government personnel." Employees of UNCW are not eligible to receive participant support.

Other Direct Costs

Other direct costs can be charged to a grant if they are specifically and readily identified with that particular project and comply with the funding agency’s program guidelines. Essential project costs that will be used for research and solely for the project may be budgeted with proper justification. Always explain why purchases are essential to the project’s aims and dedicated only to the research on that specific project and explain how the costs are determined. Different grant mechanisms and sponsors allow or disallow various other direct costs, typical allowable other direct costs include the following:

  • Materials and supplies: consumable items such as lab animals, lab supplies, clinical supplies, glassware, chemicals, reagents, etc., used while conducting the scope of work for a project. An estimated supply budget of ~$12-15,000/yr may be reasonable. Animal intensive studies and studies involving human subjects tend to be more costly. Categories that include costs of less than $1,000 typically do not have to be itemized.
  • Publication costs: costs associated with helping you disseminate your research findings from the proposed research. If you are submitting a new application, you may want to delay publication costs until later budget periods to allow for the collection of data to share.
  • Animal purchase and care costs
  • Equipment maintenance expenses
  • Fees-for-service expenses
  • Tuition & fees: On federal grants, tuition may only be included for graduate students and the amount of tuition included needs to be proportionate to the amount of effort the student has on the grant. This means that the effort for an hourly position or assistantship is proportionate to the amount of tuition sought to include for the graduate student. Tuition for undergraduate students is provided in the form of student aid.
    • Example: Sarah Smith is working 5 hours per week for 36 weeks (full academic year). Because full-time during the academic year is 20 hours/wk, this student is committing 25% effort, so only 25% of tuition amount may be included.
  • Memberships & subscriptions

Costs that are normally considered facility & administrative (indirect) costs include: ordinary office supplies, personal computers, books and subscriptions, memberships, postage and FedEx, printing and photocopying, etc. However, if any of these costs are essential to the project’s research, are allocable and will be used solely for the project, then they may be budgeted when listed in the budget with proper justification.

Indirect Costs

Budget justifications should include a statement about the F&A cost rate (also referred to as indirect costs or overhead) that has been applied to the budget. For proposals to federal agencies, state that the F&A costs included in the budget are based on UNCW’s federally negotiated rate agreement and provide the effective date of the agreement, which is August 29, 2018.

For corporate or non-profit organizations, it’s likely the sponsor will specify the allowable indirect cost rate. If a sponsor limits indirect costs, no F&A waiver is necessary. But the limitation must be publicly available and published on their website or guiding documentation.

If a PI wishes to have an F&A rate that differs from the applicable rate a formal F&A waiver must be completed and approved. Do initiate this waiver, please reach out to your assigned pre-award specialist.