The development of a budget and budget justification are among the most important components of a grant proposal. Before preparing a budget, it is recommended that PIs review the AU internal budget template to get an idea of the budget categories. The AU budget template must be completed and routed with all proposals.
Below is a list of budget categories that are included in the AU budget template. Please note that not all categories need to be used.
Personnel can include full-time or part-time faculty or staff, student wages, overtime wages, and faculty summer salary. Generally, the salary amount that is charged to the grant is determined by the amount of effort that is required of the employee. To calculate this number, multiply the percentage of effort by the employee salary. (example: 15% effort x $100,000 salary = $15,000).
Faculty Summer Salary
Faculty on academic-year appointments may receive summer salary on external grants. Faculty members may earn additional summer salary at the same base salary up to the monthly full-time rate of 1/9, not to exceed three ninths. Faculty may not receive additional compensation in the form of summer ninths for work performed during the academic year.
Based upon the University's average five (5)-course load for tenured and tenure track faculty a course release can be calculated in two ways. The first is done by allocating 30% of effort during a semester to a sponsored project. The second is done by allocating 15% of effort for the entire academic year to a sponsored project. If more than one course release is requested in a year, the allocations will change. These are guidelines, however, and the final decision regarding course releases are made by the respective dean, based on the teaching unit's needs.
Fringe benefits are a pooled cost of employment at American University. The current rate is 27.08% for full-time employees and 8% for part–time employees. These rates may be found within our current DHHS Negotiated Indirect Cost Rate Agreement (NICRA), located HERE.
Travel costs should be separated-out by domestic, international, and non employee travel on the budget template. Make sure to include all travel costs such as airfare, hotel, cab fees, and meals. GSA domestic and U.S. Department of State foreign per diem rates should be consulted and used as a reference for hotel and meals/incidentals. However, please check the potential sponsor/grant travel policies to ensure budgeted expenses are allowable. For example, alcoholic drinks and entertainment are unallowable on federal grants. The AU Travel Policy should also be reviewed.
American University's preferred travel agency is World Travel, Inc. They can assist you with your travel needs.
Consultants can be an individual or company retained to provide professional advice or services on a project for a fee. They are hired to provide essential services unavailable from existing project personnel.
Characteristics of consultants:
- Provides the goods or services within normal business operations
- Provides similar goods or services to many different purchasers
- Operates in a competitive environment
- Are subject to open-bid requirements or requires sole source documentation
- Provides goods or services that are ancillary to the operation of the research project; and
- Are generally not subject to monitoring or reporting requirements of the prime award
- A company or an individual who is clearly a bona fide consultant (expert advisor) who pursues this line of business for him/herself
- Are paid for their time at a daily or hourly fixed rate
- A consultant is considered a "work for hire" thus all intellectual property and copyrightable information is generally assigned to the prime/grantee recipient (i.e. American University)
There is a line item for consultants in the budget template under "Professional Costs".
Rate of Pay
To determine the reasonable cost of an external consultant, the principal investigator/project director may wish to consult: (1) the range of fees of the other qualified individuals considered in the selection process; (2) the cost of consultants on other projects; and (3) University compensation levels for similar individuals. Some federal agencies limit the maximum rate per day for consultants. The University honors any limit imposed by Federal agencies on consultant rate of pay. OSP can provide guidance on determining limits set by the sponsor.
Consulting By University Employees
Faculty or staff members who serve as consultants on the sponsored projects of other faculty members receive no compensation above full-time base salary. When consultation is across teaching unit lines and the faculty or staff consultant performs the work in addition to the regular work load, compensation above base salary must be specifically provided for in the agreement with the sponsor. Individual arrangements must be approved in writing by the teaching unit head, the college dean, the Dean of Academic Affairs (for faculty), or the Director of Human Resources (for staff), and the sponsor.
Since federal regulations governing supplementary compensation are very restrictive, the principal investigator should consult the assigned OSP staff member before entering into any commitments on inter-unit consulting.
A faculty member with a full-time appointment as a principal investigator/project director cannot function as an inter-unit consultant.
A Subcontractor is a legal entity to which a subaward is made and is accountable to the recipient for the use of the funds provided. The AU Subrecipient Monitoring policy is located HERE.
Characteristics of a Subcontractor:
- Synonymous with subawardee, subgrantee, etc.
- Subcontractor's goods or services are specifically tailored in response to the project, not provided commercially
- Subcontractor's program/project director is generally a collaborator; may even be designated as a Co-Investigator in the proposal
- Subcontractor is part of the development and execution of the work performed by prime/grantee
- Makes programmatic decisions
- Has performance measured against the goals/objectives of the project
There is a line item for subcontractors in the budget template under "Professional Costs". The following forms need to be include with the proposal if hiring a subcontractor:
Subrecipient Commitment Form
Subrecipient Monitoring Pre-Qualifying Questionnaire
Equipment can consist of classroom and lab equipment, computer equipment and software, office furniture and equipment, capital equipment leases, government computer equipment and lab equipment.
The University is required by federal regulation (2CFR 200) to ensure that equipment acquired with federal funds is properly accounted for and used for its intended purpose. The University policy is to capitalize all equipment, either moveable or fixed, with a unit acquisition cost of $5,000 or greater and a useful life of two years or more.
Participant support is used to reimburse program participants for subsistence allowances, travel allowances, and registration fees associated with attendance at a workshop conference, seminar, symposium or other short-term training or information-sharing activity.
Who can be participants?
Participants are individuals funded by a sponsored award to receive a service or training opportunity from a workshop, conference, seminar, symposium or other short-term instructional or information sharing activity.
Who can't be participants?
- Neither research subject(s) receiving incentive payments nor project staff member(s) and/or students receiving compensation directly or indirectly from the grant are considered participants.
- University employees cannot be participants.
- Participants may not work or provide services for the project or program other than for their own benefit.
- A participant is not involved in providing any deliverable to the University or a third party.
What you MUST do and CANNOT do with Participant Support:
- Must be justified in the approved proposal budget and include the number of participants to be supported
- Cannot be re-budgeted without sponsor approval
- Cannot be provided for anyone receiving compensation (directly or indirectly) from the Federal Government
- Must be excluded from the Direct Costs based used to allocate indirect costs
Other costs can consist of supplies, space rental, food service expense, research reference materials, video equipment/supplies, laboratory supplies, postage & shipping, printing & duplicating, and telecommunications.
Indirect costs are real AU costs - not taxes or profit - associated with the institutional administration of grants. Indirect costs include space, utilities, sponsored project and departmental administration, and library costs. The general policy at American University is that we will use the written sponsor indirect cost rate. Under our current NICRA, the current rates are 43% for on campus projects and 19% for off campus projects. The base for calculation is Modified Total Direct Costs (MTDC). Some federal programs will stipulate other F&A rates and AU budgets will use those rates in those circumstances. COGR (Council on Governmental Relations) is starting to call F&A "Research Operating Costs" to better reflect the real actual costs of research.
What is considered off-campus?
Off-Campus is defined as research that is conducted in space not owned, rented, or leased by AU and not otherwise paid for by the University from University funds. For space used for off‐campus research, an external source (typically, a research sponsor) provides funding, either paying directly for space or by providing space for research at no charge to the University. Accordingly, the Facilities portion of the on‐campus F&A (otherwise known as overhead) rate does not apply to the rental or lease costs of such space. The classification of on- or off-campus is made solely for the purpose of applying the correct overhead rate. Grants and contracts will not be subject to more than one overhead cost rate. If more than 50% of a project is performed off-campus, the off-campus rate will apply to the entire project. Justification for use of other than the on-campus rate should be included in the proposal's budget explanation.
Requests for reductions or waivers of indirect costs in proposals should be directed to Ashley J. Alexander, OSP Director, per the F&A policy located HERE.
What is Modified Total Direct Cost?
There are certain budget items that are excluded from the indirect cost rate; thus, the total direct cost amount is "modified" to reflect these exclusions.
What is excluded?
- Equipment (Individual items of equipment in excess of $5,000)
- Capital Expenditures
- Rental Costs of off-campus facilities
- Tuition Remission
- Scholarship and Fellowship Stipends
- Participant Support Costs
- The portion of each subaward in excess of $25,000
Near the end of AU budget template, there is an adjustment section where these expenses are placed. The spreadsheet will exclude these items from the indirect cost line.