The Budget

Fig. 7.1
Steps for submitting the NIH budget

7.3 Complying with Federal Cost Principles

For a grant to be accepted by the NIH, not only should it be scientifically sound but should also comply with the governing cost principles. These cost principles are set forth in the NIH Grants Policy of allowable and unallowable costs [10]. For the NIH to approve your budget, the proposed costs charged to awards must be allowable, allocable, reasonable, necessary, and consistently applied regardless of the source of funds. There is a high likelihood of a proposal being rejected if these cost principles are not met [4].

7.3.1 The FOA (Funding Opportunity Announcement)

The FOA in addition to all the other information details the monetary limits on the types of expenses, like overall funding limits, construction allowed, and caps on travel expenses [4]. Before embarking on any project, carefully read the funding opportunity announcement for budget criteria and formulate your budget accordingly.

Do not under- or overestimate your budget, as it can adversely influence the chances of your proposal being accepted by suggesting to the reviewers that you do not understand the scope of the work involved. Reviewers keep in mind “the reasonable amount doctrine” to figure out whether the funds requested are justified by your aims and objectives.

7.4 Cost Sharing

Cost sharing implies charging a part of the cost of a sponsored project to a source other than the primary sponsor. In a university setup, this cost sharing contribution could be the cost and time of faculty members that commit to the project without charging the sponsor.

Sometimes a project requires cost sharing, as in large equipments awards. This is referred to as “required cost sharing.” When cost sharing is desirable but not required, it is referred to as “voluntary cost sharing.” This should be minimized whenever possible from your budget request. This cost sharing arrangement between your organization and the NIH does not normally impact the evaluation of your proposal [4].

7.4.1 Allowable Facilities and Administrative Costs (F&A Costs or Indirect Costs) and the Allowable Direct Costs

Direct Costs: These are costs that can be directly attributed to your project with ease and accuracy.

F&A Costs or Indirect Costs: These are costs associated with providing and maintaining the infrastructure that supports the research enterprise (buildings, maintenance, libraries, restrooms etc.); these cannot be easily identified with a specific program [4].

“Facilities” is defined as depreciation and use allowances, interest on debt associated with certain buildings, equipment and capital improvements, and operation and maintenance expenses [14]. “Administration” is defined as general administration and expenses, departmental and college administration, sponsored project administration, and all other expenditures not listed less than one of the subcategories of facilities [14].

F&A costs are determined in conjunction with auditors from the US Department of Health and Human Services for each institution. For profit organization, the F&A costs are negotiated by the Division of Cost Allocation (DCA), Division of Financial Advisory Services (DFAS) in the Office of Acquisition Management and Policy, and the NIH [4]. F&A costs are calculated by applying your organization’s negotiated F&A rate to your direct cost base. In general for most institutions, the negotiated F&A rate will use a modified total direct cost (MTDC) base, which excludes items such as equipment, student tuition, research patient care costs, rent, and sub-recipient charges (after the first $25,000) [4].

It is also worth knowing that direct cost requests equal to or greater than $500,000 require prior approval from the NIH Institute/Center before application submission. For many SBIR/STTR(Small Business Innovation research/Small Business Technology Transfer) grantees, 40 % of modified total direct costs is a common F&A rate, although rates at organizations may vary.

7.4.2 Formats for NIH Budget Submission

The strategy for success is to propose simpler projects with lesser budgetary demands, as reviewers will scrutinize larger funding requests. Budget requests to the NIH can be submitted under two categories:


Modular budget



Detailed budget


For a new PI, a modular budget is preferable unless it cannot be avoided, as when the project requires >$250,000/year or you are based outside the United States of America. This becomes more evident on reviewing the FY 2010 data for competing R01 applications. The average application received roughly $290,000 in direct costs (not including the institution’s overhead). About 76 % of new investigators used a modular budget. Applications requesting $250,000 or less in direct costs used a modular budget, and for non-new investigators, 66 % went the modular route [5].

7.5 Modular Budget

A modular budget format can be submitted if the direct cost is less than 250,000 dollars/year excluding consortium/subcontract overhead; the grant is R01, R03, R15, and R34; and the investigator’s organization is US based.

The funds are requested in lump sums of $25,000. The numbers of modules requested are calculated by subtracting the overhead from the total direct cost and then rounding it to the nearest $25,000. Modular budgets do not automatically adjust for inflation for future years, so you have to plan the entire budget at the outset. Request the same number of modules annually, except for special needs such as equipment.

Even though not required when using a modular budget, it is worth creating a detailed budget for your own institution’s use, including salaries, equipment, and supplies for funds requested. Even though these detailed expenses do not need to be submitted to the NIH, they are useful when calculating your overhead and for audits.

7.6 Detailed Budget

This budget format is used when the investigator’s direct cost minus overhead is greater than 250, 000 dollars/year, the grant is not an R01, R03, R15, R21, or R34 grant. It is also used when the investigator’s organization is not US based.

As the name implies, in this format, the investigators need to give detailed budgetary descriptions in the following areas: (1) research and support personnel involved; (2) equipment, travel, and training cost; (3) other direct costs; and (4) consortiums/subawards.

7.6.1 Research and Support Personnel

All research personnel from the investigator’s organization involved in the project should be mentioned in the budget with their base salary and effort, irrespective of whether they are requesting salary support or not.

The funds requested for research and support personnel are requested in person months. Conversion of percentage of effort to person months is straightforward. This is done by multiplying the percentage of the personnel effort by the number of months of appointment.

For example, 10 % of a 10-month appointment = 1.0 person month (10 × .10 = 1.0). Other issues to be addressed under this section are salary caps, fringe benefits, and senior/key personnel, which involves postdoctoral associates, graduate students, and other personnel.

Salary Cap: The NIH uses a salary cap to compensate the research and support personnel for your proposal. Requesting a salary above the salary cap will be counterproductive, as it results in a reduced total award amount. If in ensuing years the NIH increases the salary cap, the investigators can rebudget so that the personnel get paid as per the new cap [4].

The senior/key personnel who are devoting significant effort to the project should be mentioned. “Other significant contributors” who put meager effort should not be included. Examples of such common significant contributors include (1) CEOs of institutions providing overall leadership, but no direct scientific research contribution, and (2) mentors for K awardees, who provide advice and guidance to the candidate but do not directly work on the project. Consultants or associates who are not employed by the investigators’ organization should not be appended as senior key personnel, but rather should be included in the section of the budget for consultants or in the category of the consortium/subaward budget page for collaborators.

Postdoctoral associates and graduate students should be entered as per the percentage of effort put in the budget justification section. When justifying people having the same job description such as “lab assistants and technicians,” indicate the number of personnel involved with their role description, add their people months together, and add their requested salaries together. The salaries of secretaries and clerical staff are generally treated as overhead costs; if included as separate costs, their involvement should be directly and significantly related to the project [4].

7.6.2 Equipment, Travel, and Trainee Costs

Equipment is defined by the NIH as an item of property that has an acquisition cost of $5,000 or more (unless the organization has established lower levels), an expected service life of more than 1 year, be stand alone and function independently [4]. Sometimes replacement parts and fabricated equipment can be treated as exceptions to this standard definition. Generally, equipment is excluded from the facilities and administrative cost, so if you have something with a short service life (<1 year), even if it costs more than $5,000, you are better off appending it under the “supplies” category.

Routine equipment such as computers that will be used on other projects or for personal use should not be listed as a direct cost but should come out of the F&A costs, unless these items will be used solely for the actual conduct of the planned project.

Even when the application does not demand it, a price quote for new equipment, including price quotes in the budget proposal, can greatly help in the evaluation of the equipment cost to support the project.

Any time you request equipment that is costly, it is a wise strategy to first see if such equipment can be shared at your facility as this way you can cut down costs and have a better chance of success with the reviewers. In the event that the piece of equipment is vital and not available, then you will have to fully justify its need and also attest that it will be exclusively used for your project [5].

Your research project will require you or members of your team to travel. This has to be fully described in the budget request explaining the number of people traveling, dates, duration of your stay etc. It is again necessary that the travel has to be proximately related to the proposed research project. In the event that your institution lacks a specific policy for travel, then the US federal government policy in this matter can be adopted.

7.6.3 Budgeting for Other Direct Costs

These are (1) materials and supplies, (2) animal costs, (3) publication costs, (4) consultant services, (5) computer services, (6) alterations and renovations (A&R), (7) research patient care costs, (8) tuition, and (9) others. Materials and Supplies

These include items that are expended or consumed in the conduct of the project, such as lab glassware, vials, chemicals, and reagents. Specify the amount for each item needed. However, categories that cost less than $1,000 do not have to be itemized. Animal Costs

If your study involves live animals, then this can be included under “materials and supplies”; however, it is very convenient to include more specific details about how you calculated your estimate for animal costs. Include the number of animals you plan to use, the purchase price for the animals (if you need to purchase any), and your animal facility’s per diem care rate, if available. Details become exceedingly helpful if your animal care costs are extraordinarily large or small. For example, if you plan to follow your animals for an abnormally long time period and do not include per diem rates, the reviewers may think you have budgeted too much for animal costs and may recommend a budget cut [4]. Publication Costs

The goal of research is to disseminate knowledge to bring about changes for the better. A research finding cannot have an impact unless it is published and reviewed. This could be a costly process, and thus, publication costs are important to be included in your proposal. In case of a new application, you can also delay publication costs until the later budget periods, once you have actually obtained data to share [4]. Consultant Services

Depending upon your project, you might require consultant support. For the NIH, consultants differ from consortiums in that they may provide advice, but should not be making decisions for the direction of the research [4]. They generally charge a fixed rate that includes both their direct and F&A costs; as a result, you do not need to report separate direct and F&A costs for consultants. However, you have to submit their travel cost estimates. Additionally, consultants are not subject to the salary cap restriction; however, any consultant fee should meet your institution’s definition of “reasonableness” [4, 5].

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Sep 26, 2017 | Posted by in GENERAL & FAMILY MEDICINE | Comments Off on The Budget

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