Budget Justifications

A budget justification is a narrative explanation of each of the components of the budget, which "justifies" the cost in terms of the proposed work. The explanations should focus on how each budget item is required to acheive the aims of the project and how the estimated costs in the budget were calculated. When a detailed budget is submitted, all items in the budget should be justified.

NIH Modular Budgets should include justifications that comply with NIH instructions.

Subrecipient budgets should have their own budget justification narrative, separate from the UM budget justification.

Guidance on justifying typical budget categories:

These categories are listed in the order of the budget categories in the SF424 (R&R) application form (used for NIH and other grants)

Personnel

Provide information for all roles on the project, regardless of whether or not the individual's salary will be funded by this award. Note: Committing effort to a project without also charging the salary for that effort to the project budget is considered cost sharing. At UM, this type of cost sharing is not normally approved unless Sponsor guidelines require it.

In the budget justification, include the following for each role:

  • Name of the individual, or TBA (to-be-appointed) for roles not yet filled
  • Role title on this project (e. g. Principal Investigator, Co-investigator, Lab Technician, etc.). In most cases, the individual’s personnel title (e.g. Professor) is not appropriate. The role title should reflect what the individual is doing in terms of the work of the project. (e.g. Core B Director, Study Coordinator)
  • Amount of effort being devoted to this project (express effort in number of calendar months for Federal proposals and in percent of effort for most other proposals). When an individual’s effort varies by budget period, list the different amounts of effort and when they apply (e.g. 3 calendar months in budget periods 1-3 during the data collection phase and 1.2 calendar months in budget period 4).
  • A brief (one or two sentence) description of the role responsibilities in relation to the specific aims of the project.

Note: Role descriptions for subrecipients should not be included in UM's budget justification. Instead, these belong in a separate budget justification for the subrecipient’s budget.

Other significant contributors, as defined by the National Institutes of Health (NIH) are individuals who have committed to contribute to the scientific development or execution of the project, but are not committing any specified measurable effort (i.e., person months) to the project. They will not be paid and should not be included in the budget justification.

Administrative and clerical salaries, in particular, must be well justified if you are including them in the budget as direct costs. Federal regularions (OMB Circular A-21) state that administrative salaries will normally be treated as F&A costs. Direct charging of these costs is usually not allowed, but may be allowable when a substantial amount of administrative work is required to meet the aims of a major project. The federal regulations define "major project" as a project that requires an extensive amount of administrative or clerical support, which is significantly greater than the routine level of such services provided by academic departments. Read more and see examples.

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Consultants

Provide the consultant's name, institution, and an explanation of the area of expertise the consultant will provide to the project. If a consulting fee is to be paid, explain how it was calculated (for example, $X/day x # of days). The rate may be calculated on an hourly or daily basis, or may be based on completion of a task or milestone. Obtain a letter from each consultant indicating his/her willingness to act as a consultant to the project.

Consultants, by definition, are not performing part of the project work -- they are providing expert advice to the investigators as the investigators do the work. In contrast, collaborating investigators, who will be involved in the execution of the project work, are not consultants and should be included in the personnel (for UM employees) or as subrecipients (if from outside UM). Faculty from other University System of Maryland institutions cannot be paid as consultants on UM sponsored projects. Compensation for work by UM faculty or faculty from other USM institutions must be paid as salary.

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Equipment

Only items of equipment that meet the criteria of “capital equipment” should be budgeted in this category. At UM, capital equipment is defined as durable goods with a purchase price of at least $5,000 per item and a useful life of at least one year. (A different cost-threshold should only be used if the sponsor guidelines specifically define another amount.)

Specify the type of equipment, and if known, the model and vendor name. Explain how this equipment will be used in the project and why it is necessary to purchase equipment dedicated to this project rather than use shared resources. If possible, provide a vendor quote. If a quote is not available, indicate how the amount budgeted was determined (e.g., website price list, prices from University purchasing contracts, etc.).

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Travel

Explain the purpose of the travel in terms of the project goals. Specify the number of trips and destinations anticipiated and the number of individuals traveling. Explain how the costs were estimated. (For example, $X roundtrip airfare + $Y lodging for # of nights, + $Z per diem for # of days.) Travel costs are limited in the University policies on travel reimbursement even if the sponsor's travel guidelines are more liberal.

UM per diem and mileage reimbursement rates

Foreign travel estimates should be based on use of U.S. flag carrier/Open Skies airfares. The NIH defines foreign travel as any travel outside of Canada and the U.S. and its territories and possessions, or, for an organization located outside Canada and the U.S. and its territories and possessions, foreign travel means travel outside that country. The NSF includes Canada as a foreign country. Review sponsor instructions!

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Supplies

All non-permanent, disposable supplies such as chemicals, drugs, assays, lab glassware, syringes, lab notebooks, computer supplies and software fall into this category. Small equipment purchases costing less than $5,000 per item should also be included in the supplies category. Provide a list of the types of supplies needed on the project and explain how the costs were estimated.

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Patient Care Costs

The patient case costs budget category is to be used only for the cost of routine and ancillary medical services for patients enrolled in a clinical study that are performed in a hospital or clinical facility on either an inpatient or outpatient basis. Itemize the estimated costs including the number of patients and costs per test or treatment.

List the names of the hospitals or clinics involved. Indicate whether these hospitals or clinics have a currently effective DHHS-negotiated patient care rate agreement and, if not, what basis will be used for calculating charges.

Patient care costs do not include cost of tests performed in research labs or commercial labs, patient travel, lodging and subsistence or volunteer reimbursements or payments. Funding for these costs may be requested under the "Other Costs" category. Consulting physician fees may be included under the "Consultants" budget category.

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Subrecipient (Consortium) Costs

A subaward or subcontract (sometimes called 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 UM budget includes funding for subrecipient(s), the UM 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 here. The budget and justification from each subrecipient should be included in the proposal, separately from UM's budget and justification.

NIH Modular Budget guidelines require an abbreviated budget justification of the Consortium (subrecipient) costs: Provide an estimate of total costs (direct plus facilities and administrative) for each year, rounded to the nearest $1,000. When more than one consortium is involved, provide this estimate for each. List the individuals/organizations with whom consortium or contractual arrangements have been made, along with all personnel, including percent of effort (in person months) and roles on the project. Do not provide individual salary information. Indicate whether the collaborating institution is foreign or domestic. Provide an estimate of total costs (direct plus facilities and administrative) for each year, rounded to the nearest $1,000. When more than one consortium is involved, provide this estimate for each. List the individuals/organizations with whom consortium or contractual arrangements have been made, along with all personnel, including percent of effort (in person months) and roles on the project. Do not provide individual salary information. Indicate whether the collaborating institution is foreign or domestic.

Note:  It is sometimes confusing to determine whether a third party should be classified as a subrecipient vs a consultant or a subrecipient vs a vendor. Clink on these links for more information concerning the distinctions between these classifications.

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Other Costs

This category is for all other project costs not captured in prior categories, and typically includes such items as:

  • animal purchase and care costs
  • publication costs
  • equipment maintenance expenses
  • fees-for-service, such as commercial lab tests
  • communication and printing costs
  • project-owned vehicle expenses
  • costs of conducting a seminar series or symposium, such as facility use fees
  • fees for use of UM Core Facilities
  • tuition
  • rent for use of off-campus space

Itemize the expenses, explain why they are needed to conduct the project, and explain how the costs were calculated.

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Facilities and Administrative Costs

The budget justification may 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 UM's negotiated F&A cost rate agreement, and provide the effective date of the agreement.
  • For proposals to corporate sponsors, the rate for commercially-sponsored research is applied.
  • If the sponsor is a non-profit organization it is likely that the sponsor will specify the indirect cost rate that is allowed. In those cases, no justification of the rate is needed.

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Matching Funds and Cost Sharing

Some grant programs require institutions to support part of the costs of performing the project. The terms used for this institutional support are "matching funds" (cash contributions) or "cost sharing" (cash or in-kind contributions.

If the sponsor requires matching or cost sharing by the institution, explain in the budget justification what is being provided and its value. For example:

  • The University will contribute 10% effort by Dr. Jane Smith as in-kind cost-sharing for this project, which represents $27,980 in salary, fringe benefits and unrecovered F&A costs.
  • The University of Maryland will provide $50,000 matching funds for the purchase of the XYZ equipment.
  • The Department of AAA will provide 500 brochures concerning the health risks of smoking for the symposium, at no cost to the XYZ Foundation.

Cost sharing should not be promised routinely. It should only be offered when a sponsor requires it. Most sponsors state that unsolicited (voluntary) cost sharing does not enhance the competitiveness of an application. UM policy requires approval for all cost sharing. Voluntary cost sharing is typically not approved. Read about UM's policies and procedures on cost sharing.

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