Presentation on theme: "Guidelines for Preparing an NIH Budget"— Presentation transcript:
1 Guidelines for Preparing an NIH Budget Lindy-Ann Wright, M.AFinancial Manager, MU-JHUJohns Hopkins UniversityNov. 3, 2010
2 Disclaimer !The following are general guidelines for most NIH proposals.Some NIH programs and funding opportunity announcements may have different requirements and conditions that supersede the information presented here.Be sure to check that you are following the correct procedures for the competition to which you are applying.Different non-NIH sponsors may likely have specific templates and guidelines different to those presented.Preparation of the budget is, for many researchers, the most difficult task involved in proposal development.
3 Carefully read the Request for Application (RFA) or Program Announcement (PA) for important budget limits and guidelines.The SF 424 and PHS 398 grant application kit gives you guidelines on° Budget for initial budget period° Budget for entire proposed period° Budget Justification
4 BUDGET TIPS !Complete the budget section after you have written your research plan and have a good idea of costs.Request only enough money to do the work.Significant over or underestimating suggests that you may not understand the scope of the proposed work.Which will be a disadvantage to your application
5 Which Budget Format Should I Use? NIH competing applications generally use two types of budget formats,Modular Budget orDetailed Budget format.
6 Budget FormatA Modular Budget is used for applications requesting a maximum of $250,000 per year in Total Direct Costs. Budgets are simplified, and do not require submission of detailed budget information to NIH.A Detailed Budget format is required for all applications requesting more than $250,000 per project year
7 Detailed Budgets Over $500K • Applications for more than $500,000 Direct Costs per project year must obtain prior approval from the NIH supporting institute or center. • NIH recommends the approval process is initiated by calling or ing one of the program officers at least six weeks prior to the submission deadline.(not including indirect or F&A costs on any subawards or subcontracts) for Direct Cost
8 Budget for Foreign Applications Foreign applicants must provide,Detailed Budget Forms with the proposaleven if $250,000 or less is requestedModular Budgets are not accepted from foreignapplicantsReceiving detailed budget forms from f.applicants allows NIH staff to assist the applicant with applicable regulatory and policy requirements for grant funding expenditures
9 Can requests for funding be made in foreign currency? All requests for funds, including the budget contained in the application, must be stated in U.S. Dollars ($).Once an award is made, NIH will not compensate foreign grantees for currency exchange fluctuations through the issuance of supplemental awards.Any fluctuations will need to be supported from your direct cost funds
10 DETAILED BUDGET FORMS, PHS 398 For applications submitted manually, use the NIH PHS 398 Budget PagesDownload the most current PHS 398 forms and instructions from the NIH website:If you have downloaded these pages in a previous submission, please do not assume that you have the most current version
13 EXPENSE CATEGORIES, PHS 398 • Personnel •Consultants • Equipment • Travel • Supplies •Patient Care Costs •Alteration and Renovations • Other Expenses • Consortium/Subcontract (Direct Costs)• Total Direct Costs Initial & Proposed Budget Periods • Consortium /Subcontract Facilities & Administrative Costs •Total Costs •Budget JustificationWe will look at the details of some of the more common categories
14 DETAILED BUDGET FORMS, SF 424 Proposals submitted electronically must use the SF 424 (Research and Related) Budget PagesForms can be located at the NIH siteDetermine where electronic forms can be taken
19 EXPENSE CATEGORIES, SF 424 Total Direct Costs Indirects ( F &A) Total CostsFeeBudget Justification(pdf versions only)Senior / Key PersonnelOther PersonnelEquipmentTravelParticipant /Trainee Support CostsOther Direct CostsAll files uploaded on the SF 424 format must be in the pdf format
20 Personnel – Salaries & Wages • Personnel effort on NIH proposals must be reported in person months• For frequently asked questions/ answers on person months visit the NIH website:Lets look at some of the more familiar budget categories
21 What is the definition of person months? “Person months” is the metric for expressing the effort (amount of time) for PI(s) and other personnel devote to a specific project.The effort is based on the type of appointment of the individual with the organization:Calendar year (CY) 12 monthsAcademic year (AY) and/orSummer term (SM) 3 monthsSome institutions may define the AY appointment differently.If you look on the budget pages, SF or 398 you can observe the abbreviations for budgeting the effortAcademic year may be 9 or 10 months. However I believe you may be familiar with the calendar year appointments
22 How do I calculate person months? Multiply the % of effort associated with the project by the number of months of the appointment.For example:25% of a 9 month academic year appointment = (AY) person months(9 x .25= 2.25)10% of a 12 month calendar appointment = (CY) person months(12 x .10 = 1.2)35% of a 3 month summer term appointment equals 1.05 (SM) person months(3 x .35= 1.05)Calculation of person months is straightforward
23 How do I calculate person months? Salary Requested is then: Number of paid "Person Months" by 1/12 of the Institutional Base Salary - which is $36,000 for this example: 1.2 (CY) x $36,000 (1/12) = $3,600 $3,600 is included in the Salary Requested column of the budget form
24 Key PersonnelThe PI and other individuals who contribute to the scientific development or execution of a project in a substantive, measurable way, whether or not they receive salaries or compensation under the grant. Typically these individuals have doctoral or other professional degrees.Consultants also may be considered key personnel if they meet this definition.Who are key/Senior Personnel
25 Key PersonnelKey Personnel listed under the Personnel category of the budget form can only be your institution’s employees.DO NOT list non-institution collaborators in this budget categoryNon –institution collaborators are either Consultants or are funded under Sub-recipient Agreements, also known as Subcontracts.They have separate budget categories and forms
26 Personnel• Calculate the salary of the Principal Investigator (PI) and other Key Personnel taking into account the NIH salary cap.• Salary is capped annually at the level set for a federal employee in the Executive Level I salary range• Effective January 1, 2010, this cap is $199,700 /yrVerify that NIH allows for less than 100% effort for PIGet salary cap website
27 Other Personnel All other non- Key Personnel Example: Research TechniciansHealth VisitorsNursesGraduates StudentsUndergraduate Students
28 BUDGET TIP - salariesFor multi-year projects, the budget should take into consideration any possible salary increases.NIH allows for cost of living increases to 3% annually
29 Fringe BenefitsFringe Benefits costs are the expense to an institution to provide medical, dental, tuition reimbursement and other staff benefitsNIH follows your institution’s policy with regard to fringe benefits, and does not have a pre-set limit for these costs
30 Fringe BenefitsThe rate your institution uses to calculate Fringe Benefits costmay change annuallyIt is important to get the best estimated rate from theResearch or Finance Department for the proposed start dateof your projectApply the projected rate (s) to Salaries Requested on thebudget to calculate Fringe Benefit costs
31 Calculating Fringe Benefits To calculate the fringe benefits costs multiply the Salary Requested (SR) by the fringe rate$20,500 (SR) x 35% fringe rate = $7,175Add fringe benefit cost to (SR) for the Total Salary (TS) column of the budget page$20,500 (SR) + $7,175 (fringe) = $27, 675 (TS)
32 CONSULTANTSConsultant services, when required to carry out the proposed work, are allowable on NIH budgets.Consultants are not subject to the salary cap restriction, but consultant costs must be reasonable and allowable by NIH standardsIdentify in the budget the proposed consultant by name, type of service, indicate the number of days of work, pay rateNormally, consultants are paid a consulting fee plus travel expenses.
33 BUDGET TIP - Consultants If your institution allows employees to be consultants on the proposal list the expenses under Personnel, including fringe benefits costs. An employee with the role of consultant cannot be listed in the consultant category of the budget
34 EquipmentAs defined by NIH, "equipment" means "an item of property that has an acquisition cost of $5,000 or more , and an expected useful service life of more than 1 year.Equipment to be purchased should be itemized on the budget pageExamples are, vehicles, lab machinerySome instituitions have different cost value for equipment
35 EquipmentCapital items costing less than $5,000 should be budgeted under Material and SuppliesThis category includes items such as televisions, dvd players, computers and other small electronics costing less than $5,000.
36 BUDGET TIP -EquipmentAvoid requesting expensive equipment unless you absolutely need it, and justify it wellDon't request funds for equipment already listed in the resources section, unless you can provide an adequate explanationReviewers look for any "discrepancies" and will delete funds for equipment that should be available to you.
37 SUPPLIESNormally, a research project will consume supplies such as laboratory items, teaching aids, computer software, and other research supplies.Itemize by category all expenses over $1,000 on the budget page.
38 TRAVELTravel is expected for attending pertinent meetings in your field, to meet with collaborators, and to present data.Local travel is expected to collect data; transport and follow up of participants ; other project related transportation.
39 TRAVELIf travel is anticipated, the detailed budget for the trip(s) should be provided in the budget page and justified.For foreign travel, Principal Investigators should review their federal awards for requirements related to theFly America ActFly America Act, federal regulation that requires the use of U.S. carriers for travel that will be reimbursed from federal grants and contracts.This act requires that american carriers or associated airlines should be used, whenever possible for travel when using federal funds
40 TRAVELTravel expenses can be requested for lodging, meals, ground transport and incidentals.Maximum Foreign Per Diem Rates are available at,Costs for trips must include a detailed justificationCharges for staying with friends or relatives are not reimbursable expenses!
41 Alterations and Renovations Major Alterations &Renovations (>$500,000).Unallowable under foreign grants and domestic grants with foreign components.Minor Alterations & Renovations (<$500,000).Generally allowable on grants made to foreign organizations or to the foreign component of a domestic grant, unless prohibited by program regulations.Minor A&R Costs may be included and justified in any detailed budget of a competing application.
42 OTHER EXPENSES Long distance telephone calls Contracted Services AnimalsAnimal Care ExpensesLab Costs and FeesTuition Remission for Graduate StudentsParticipants StipendEquipment MaintenanceLong distance telephone callsPostagePublicationsCopyingReference BooksMiscellaneous Expenses
43 Consortium /Subcontract A sub-recipient relationship is appropriate when the Principal Investigator contemplates a funded collaboration with a colleague at another institution.The collaborating institution should provide a statement of work, detailed budget and budget justification, signed by the collaborator's Authorized Institutional Representative
44 SUBCONTRACT ON THE BUDGET All subcontracts must include a separatePHS 398 or SF 424 (R&R) budget pagesInclude the Direct and F&A subcontract costs into the prime/main budget categoryNote where to include this
45 BASE COST / Modified Total Direct Cost Base cost is what the Facilities and Administrative rate is applied to for calculating the F&A costs on the budget.Most NIH institutions allow for specific direct costs categories to be excluded to be excluded from the Base CostFor Foreign Applicants only equipment is excluded from the Base CostCan foreign applicants exclude anything other than equipment?
46 Calculating Base Cost A budget has the following expenses: Total Direct Costs = $350,000Equipment Costs = $32,000 (exempt)Base Cost = $350,000 - $32,000 = $318,000The F&A Rate is applied only to $318,000
47 Facilities and Administrative (F&A) Facilities and Administrative (F&A)costs, are costs which are necessary to support research and other sponsored projects, but which cannot be readily assigned to individual projects. F&A costs must be included in proposal budget unless the sponsor has a written policy on F&A rates for the competing grant.
48 F&A Rate for International Applicants NIH provides limited F&A costs to foreign institutions and international organizations to support the costs of compliance with NIH requirementsF&A rate is maximum 8 % of Total Direct Costs less Equipment CostsForeign or International applicants do not need to negotiate an F&A rate to receive the 8% from NIHThis includes expenses for IRB, audits, HS Research
49 Calculating F&A Costs(1) Sum all direct costs = Total Direct Costs (TDC)TDC = salaries + benefits + supplies + equipment etc(2) Calculate the allowable Base Costs:For foreign applications:TDC – Equipment costs = Base Cost
50 Calculating F&A Costs(3) Multiply the correct F&A rate against the Base Cost tocalculate the F&A costs for the projectBase Cost x F&A rate (8%) = F&A Cost(4) Add TDC to F&A Cost to calculate the Total Project Costs.TDC + F&A Costs = Total Project Costs (TC)
51 Budget JustificationFollow your budget forms with a detailed budget justification.Explain in detail the projected expenses in personnel and each budget category.Edit thoroughly to ensure the figures on the budget forms match those on the justification pages.
52 Common Mistakes in Budgeting a Grant Un-anticipated salary increases for PersonnelUnder-estimated need for Research SuppliesExclusion of costs for expensive necessary equipmentUn-anticipated cost of living annual increases in expenses over the life of the project.
53 Solutions to Common Mistakes Fortunately, the NIH by expanded authority, allows for the re-budgeting of 25% of any budget year Total Costs without having to contact them.
54 References Foreign Grants Information Foreign Grants – BudgetsFly America ActForeign Grants – NIH Policy StatementOffice of Management and Budget, A -21 Circular