Sponsor Guidelines Should Always be Consulted for Specific Directives on Budget Preparation.  The Following Represents General Guidance.

The budget is the financial plan for the project or program. It includes both the sponsor and non-sponsor share of the total project cost. Proposed project costs are comprised of allowable direct costs, facilities and administrative (F&A) costs, and cost sharing. Allowable costs are those that are reasonable and allocable to the sponsored project and allowable under University and sponsor policy.

The budget should be subdivided into periods of twelve month duration (unless partial year funding is anticipated). If cost sharing is included, each budget period should include columns for both Sponsor and University costs.

A budget narrative (Narrative) should be prepared to explain how the budgeted costs relate to the project. The Narrative should provide sufficient detail to allow the sponsor to determine whether the proposed costs are reasonable and appropriate. Key elements to include in the Narrative are:

  • A detailed justification of the expense or service
  • How the expense relates to and benefits the project
  • The anticipated cost
  • The time period in which it will be utilized
  • Other information that will aid the sponsor in evaluating the proposed item

Direct Costs

A direct cost is any expense that can be identified specifically with a particular project or activity and be directly assigned to an activity with relative ease and a high degree of accuracy.

Facilities and Administrative (F&A) Costs

Sometimes referred to as indirect cost (IDC) and overhead, F&A costs are actual costs not always readily associated with a specific project such as building space, heating, lighting, administrative, etc.  F&A is calculated as a percentage of the Modified Total Direct Cost (MTDC) or Total Direct Cost (TDC).

  • If the a federally negotiated indirect cost (full) rate is employed, use the MTDC
  • If a non-federally negotiated indirect cost (less than full) rate is employed, use the TDC

Total direct cost includes all direct costs (personnel, fringe, tuition, equipment, supplies, travel, other, etc.) charged to a sponsored program.

Modified total direct cost consists of salaries and wages, fringe benefits, materials and supplies, services, travel, and up to the first $25,000 of the each subcontract (regardless of the period covered by the subcontract). Formally, the MTDC is the total direct cost less:

  1. Individual subcontract funds over the first $25,000
  2. Equipment (At UIC, an acquisition cost of $5000 or more, including components for fabrication of equipment which cost $5000 or more)
  3. Arrangements under which federal financing is in the form of loans, scholarships, fellowships, traineeships or other fixed amounts based on such items as education allowances or published tuition rates and fees of an institution.
  4. Patient Care Charges
  5. Tuition Remission included as a direct cost
  6. Rental Costs
  7. Capital Expenditures

Using a Less Than Full Rate

Some sponsors will only reimburse an F&A rate (a.k.a  administrative, overhead or indirect costs) that is lower than the federally negotiated rate. In this scenario that rate is applied to the Total Direct Cost. This means that no exclusions will be taken before applying the F&A. Under these circumstances both a waiver of indirect costs and published sponsor guidelines are required to accompany the PAF.

From time to time a sponsor limits both the indirect cost rate and which direct costs may be assessed that rate.  Under these rare circumstances, the full limitation must be expressed in the waiver and supported by documentation.  The budget template allows for a customizable MTDC in these situations.

Always review the programs guidelines as many sponsors indicate what costs, including F&A, are and are not allowable. When applying less that the full F&A rate, a copy of the sponsor's guidelines must be included with the proposal when submitted to ORS.