Presentation on theme: "Building & Reviewing Grant Budgets Advanced Skills for Developing and Reviewing Grant Budgets Office of Grants Management: Douglas Godesky, Sr. Grants."— Presentation transcript:
Building & Reviewing Grant Budgets Advanced Skills for Developing and Reviewing Grant Budgets Office of Grants Management: Douglas Godesky, Sr. Grants Officer Douglas Lees, Grants Mgmt Specialist
Corporation Grantee Financial Accountability Seminar July 2007 Understand how budgets fit in the big picture Standardize expectations on what is a compliant budget Share budget formulation tips and strategies Answer your most pressing questions TIP: Everything discussed is Unless Otherwise Stated! Typically each grant program has its own rules, guidance and specifications --- Know your programs rules and how they differ! Goals
How Budgets Fit Into the Big Picture
Corporation Grantee Financial Accountability Seminar July 2007 When does a budget have an impact in the grant lifecycle? The Grant Life Cycle Pre-Award Post-Award Continuation Application or Re-compete Application Project Definition Funding Analysis Application Formulation Peer & Staff Reviews Validating Award Performance Subgrant Design Closeout & Audit
Corporation Grantee Financial Accountability Seminar July 2007 Ensures the Details are Covered Follow Rules Budgets have impact … … at every stage of the grant lifecycle The Grant Life Cycle Pre-AwardPost-Award Continuation Application or Re-compete Application Project Definition Funding Analysis Application Formulation Peer & Staff Reviews Validating Award Performance Subgrant Design Closeout & Audit Keep Partners Compliant Guide Staff Plan What is Necessar y for Success Establish Realistic Scope Reflects on Performance Define Approved and Allowable Compete For Funds
Corporation Grantee Financial Accountability Seminar July 2007 Budget Design Has Impact at Every Stage of the Grant Lifecycle To plan what is necessary for success To establish realistic scope To ensure youve covered the details To keep your partners compliant To compete for funds To reflect on how youve complied with rules To guide your staff as they execute To define whats expected and approved To reflect upon your performance Tip: Involve budget staff in project planning from the beginning and thereafter
Corporation Grantee Financial Accountability Seminar July 2007 Good budget planning makes things happening the way they are supposed to happen… Negotiation APPLICANTCORPORATION Award Application Continuation Applications Closeout Reports Continuation Awards Clarification Questions How much do we need?
What are some of the impacts of a poorly planned budget? FLIP CHART LIST Delayed award… Post-award amendments … …
Corporation Grantee Financial Accountability Seminar July 2007 Poor budget planning leads to challenges … Negotiation APPLICANTCORPORATION Award with Special Conditions Application Follow-up Negotiation Additional Questions Resolve Special Conditions Amended Grant Revise Budget – Unexpected Costs Amended Grant Revise Budget – 10% Rule Amended Grant Special Approvals Unallowable Costs Return Application Request Grant Extension Amended Grant Monitoring Indicators Closeout Audit Difficulty Matching Expenses With Budget How much can we get?
As an applicant/grantee, what is on your mind when you are faced with submitting a grant budget? How much can I ask for? … How much information do they need?... … How much can I ask for? … How much information do they need?... … FLIP CHART LIST
What are some typical budget development problems you have run into? Unclear directions/instructions… Limited space for answers… … Unclear directions/instructions… Limited space for answers… … FLIP CHART LIST
What is on the mind of the federal employee who will review your budget?
Corporation Grantee Financial Accountability Seminar July 2007 Corporation employees are examining …. Panel Review Viable Applications Staff Review CEO Approved Negotiations Grant Awards Negotiation Letter via eGrants BUDGET LINE ITEM concerns, Costs at-risk of being unallowable Unusual Cost Items Lack of source calculations Indirect cost rate concerns Compliance with budget instructions Compliance with budget worksheets … resolve, Only allowable costs remain Unusual costs explained Budget worksheet completed Year over year increases okay Cost ceilings met Supporting calculations for all costs Indirect cost rate obtained/valid Budget modified in eGrants FINANCIAL concerns, Costs not aligned with other grants Match sources at-risk of unallowable Matching performance/projected … resolve, Cost alignment Qs answered Match confirmed as allowable Match at minimum or higher ADMINISTRATIVE concerns, Audit findings Monitoring performance & concerns New grantee no federal/CNCS experience … develop, Special conditions Award Phase
Corporation Grantee Financial Accountability Seminar July 2007 Summary: How Budgets Fit into the Big Picture Budgets impact every stage of the grant lifecycle Budgets can not be an afterthought Budget formulation is a known challenge to applicants Knowing how to form a quality budget is a critical skill Budget review is a major federal staff responsibility That is why we care so much… Individual professional judgment plays a major role…
What is a compliant budget?
Corporation Grantee Financial Accountability Seminar July 2007 Compliant budgets meet three (3) requirements… All required project costs are included All necessary cost calculations are presented All appropriate cost justifications are offered Deciding what is necessary and appropriate is based on the individual professional judgment Program and Grants Officers certify your budget as compliant; they must have the information they need to reach their professional comfort level
Corporation Grantee Financial Accountability Seminar July 2007 Compliant Budgets include all project costs needed to fully conduct a program Federal share + Non-federal share Resources needed, not just minimum levels Logically related costs – if Im paying for this, I should be paying for that Administratively required costs Required by the program; e.g., Liability insurance, allocated share of audit fees. Programmatically required costs within cost limits Program activity costs that are expected to be performed; e.g., volunteer transportation, member or volunteer support costs Limits are met; e.g., administrative cost caps, year-to-year cost growth, sources of funds, etc. Presenting all non-federal (matching) costs is a change from expectations and advice given in the past
Corporation Grantee Financial Accountability Seminar July 2007 Compliant budgets include calculations where possible… To explain how you reached a number in your budget To explain what would otherwise not be obvious To define your choice when costs can be estimated in different ways To reflect your budget strategy
Corporation Grantee Financial Accountability Seminar July 2007 Compliant budgets do not need calculations when… Units of measure are obvious / self-explanatory A cost is only reasonably estimated one way Application instructions direct that calculations are not necessary The amount is below a threshold that your grants officer considers minor enough not to be calculated
When to include supporting budget calculations A budget request for a 12-month funding period for a locally operated program with an indirect cost rate agreement, reads as follows. How would you respond to each line item? Accept as-is, or Require Calculation? If accept as-is, why no calculation? Supplies $1,200 Staff Travel $12,000 Notebook Computer $3,000 Computer System $25,000 Annual Rent $6,000 Printing Project Brochure $4,000 Internet Access $295 IDEA Conference $1,400 Accountant Services $1,000 Utilities (Based on Prior Year Costs) $14,000 Annual Cell Phone Service Contracts for Staff $5,000 Staff Training 4 professionals $4,000 Food $1,200 Construction Supplies $5,000/mo. X 6 mo. X 3 Sites = $90,000 Federally Approved Indirect Cost Rate Agreement $20,000
Corporation Grantee Financial Accountability Seminar July 2007 Compliant budgets include line item cost justifications… To explain unusual costs To explain unexpected costs To explain high dollar costs To explain typically unallowable costs
Corporation Grantee Financial Accountability Seminar July 2007 Compliant budgets do not need cost justifications when… The cost is one that is widely and commonly incurred by most business efforts The cost has been incurred in prior years under the same grant and the justification is already well established in the grant record Application instructions direct that cost justifications are not necessary for particular items Application instructions direct the applicant to include the particular cost item
When to include line item justifications A budget request for a 12-month funding period for a locally operated program with an indirect cost rate agreement, reads as follows. How would you respond to each line item? Accept or require more justification? If accept as- is, why no justification? Supplies $1,200 Staff Travel $12,000 Notebook Computer $3,000 Computer System $25,000 Annual Rent $6,000 Printing Project Brochure $4,000 Internet Access $295 IDEA Conference $1,400 Accountant Services $1,000 Utilities (Based on Prior Year Costs) $14,000 Annual Cell Phone Service Contracts for Staff $5,000 Staff Training 4 professionals $4,000 Food $1,200 Construction Supplies $5,000/mo. X 6 mo. X 3 Sites = $90,000 Federally Approved Indirect Cost Rate Agreement $20,000
Corporation Grantee Financial Accountability Seminar July 2007 Small Amount RequestedLarge Amount Requested Unique / New Costs Common / Prior Costs High Need for Explanation and Justification Low Need for Calculation Cost identification (label) only needed Reference to prior year costs or total only needed High Need for Explanation & Justification High Need for Detailed Calculation High Need for Explanation Need for Basic Calculation
Exercise Recognizing Compliant Budgets Left Side of RoomRight Side of RoomExamine Budgets A, B, C & DE, F, G & H
eGrants is your best guide to establishing a compliant budget on the first try eGrants budgets are custom to match the application instructions and program you are applying to.
Corporation Grantee Financial Accountability Seminar July 2007 eGrants budget categories are customized… Custom Budget Categories
Corporation Grantee Financial Accountability Seminar July 2007 eGrants flags incorrect entries with Warnings and Error messages…. Budget Rules: Warning and Error Messages are established by each Corporation program, specific to their grant applications for that program. Warning Messages: You can proceed with the information in place but you are warned that it may not be compliant with the application guidance. Error Messages: You can not proceed with the information, the system will prevent you from moving to the next step until the information is edited. Need for Help When Using eGrants: Be sure to distinguish between needs: Technical Help Needs: eGrants Help Desk Application Help Needs: Your assigned Program Officer Obtain a help desk ticket number if the problem is not immediately resolved Your Program Officer can escalate a technical problem if you have not received a timely solution
Corporation Grantee Financial Accountability Seminar July 2007 Budget Tip: Providing calculations and/or justification/explanation is the fastest path to results If you provide the information up front, Corporation Staff will not need to ask for clarification. You likely have the information in your budget backup – why not just share it? Time saved. Your program design and accounting system should be anticipating and recording all costs regardless of your decisions on the grant budget
What are you attesting to when you submit a budget?
Corporation Grantee Financial Accountability Seminar July 2007 Accountability for …all data … is true and correct …
Corporation Grantee Financial Accountability Seminar July 2007 Budget Tip: Administrative Costs If you use a flat administrative cost rate plus include typical indirect costs as direct, you must include an explanation for the every line item with an apparent duplication of costs CNCS Fixed Percentage Option (NCSA Only), for accounting for administrative (indirect) costs, (when statute allows) provides a flat administrative amount. There is no written description of the pool of costs that are assumed covered when you use the CNCS fixed percentage Administrative costs option. Fixed Percentage Administrative costs are assumed to cover typical administrative indirect overhead costs: space, furnishings, general supplies, utilities, back office administration, accounting, auditing, and similar. Capped administrative costs are designed to limit indirect cost reimbursement. When choosing between Fixed Percentage Option and use of Federally Approved Indirect Cost Rate Agreement, do the math!
Corporation Grantee Financial Accountability Seminar July 2007 Budget Tip: It is possible to get a provisional indirect cost rate from CNCS if you are pursuing a negotiated indirect cost rate A provisional rate will be valid until a final rate agreement is reached/established.
Corporation Grantee Financial Accountability Seminar July 2007 Budget Tip: Providing details on fringe benefit rates 1.When the benefit rate is > 30% of salaries, professional judgment is typically to expect a breakdown by element. 2.When different rates apply to different employees.
Corporation Grantee Financial Accountability Seminar July 2007 Budget Tip: Rounding Round and split federal and non-federal shares in a similar manner, rounding to an appropriate level Round cost estimates when possible Leads to smoother budget review, execution and closeout Supplies Example: Actual Annual Cost: $4555 in prior year, or about $379.58 / month Budget Request: Supply Cost Narrative: Average monthly cost for general office supplies based on prior year spending patterns Calculation Narrative: $400/month*12 = $4800
Corporation Grantee Financial Accountability Seminar July 2007 Budget Tip: Rent / Space Simplified Method: The organization uses all space in a similar manner; All space/rent is accounted for as indirect; Direct Allocation Method: Indirect rate represents space/rent costs that support general & administrative activity Direct costs represent space/rent associated with direct activities accordingly by benefit to the project (a) Use the same method for federal as well as non-federal money (b) Clearly inform the Corporation of the method you are using
Corporation Grantee Financial Accountability Seminar July 2007 Budget Tip: Grant Writing Expenses If you use indirect / administrative reimbursement to pay for grant writing, you will not have funds to pay for the indirect costs that the fee/rate was intended to fund, and those costs can not be shifted to other federal funding sources Grant Writing = Fundraising Fundraising, not allowable (in most cases) It is not appropriate to account for the cost of grant writing and development as a direct cost since the costs are typically incurred before the grant was awarded, or if for a future grant, they are not allocable to the current grant
Corporation Grantee Financial Accountability Seminar July 2007 Budget Tip: Eyebrow raising requests (or omissions) Some budget line items will always be examined in detail; provide justification in advance for: Food Local program gear Public Service Announcements (PSA) Advertising Ceremonies Not having a cost in your budget also can bring a focus to your project: If something is not in the budget, auditors have tended to question the cost Lack of personnel costs in federal or non-federal share with no explanation
Corporation Grantee Financial Accountability Seminar July 2007 Budget Tip (Commissions): Your records on the number of years a sub-grantee has been receiving funding are considered correct You will encounter discrepancies between eGrants versus your records If you encounter such a discrepancy, take these steps: Pass the information to your Program Officer with cc to the Grants Officer; include details to support the correction Presumption is that you have the correct information Calculate matching budgets using your records The Corporation has a protocol for the Program Officer to follow to verify the correction The Commission will be notified by the Program Officer of the outcome, usually confirmation/agreement
Corporation Grantee Financial Accountability Seminar July 2007 Budget Design Strategy: Including projected costs in every object class minimizes potential for required post-award federal approvals Budget Object Classes: Personnel, Fringe, Travel, Supplies, Equipment, Contracts/Subgrants, Other, Indirect (Administrative). Prior Federal Approval Required: To cumulatively move >10% of total budget between object classes, or to expend funds in an object class that was not funded. Strategy: By including all project costs in your budget you … …minimize the potential of having unapproved budget object classes; and, …raise the dollar threshold that defines the 10% limit. Rules on prior approvals apply to non-federal share of the budget as well as the federal share
Budget Design Strategy (Typically for Commissions): When sub-granting, balance well established programs with new programs to ensure that match is met at the prime grant level Prime grantee compliance with match: Measured by combining match provided by all subgrantee (cumulative performance); underperforming sub-grantees can be carried by over performing sub-grantees
Corporation Grantee Financial Accountability Seminar July 2007 Budget Design Strategy Use a Budget Checklist No unexplained amounts Staff time does not exceed 100% if handling multiple projects Staff time accurately reflects what the project will consume Aligns tells the same story as the proposal narrative Includes only costs to be incurred during grant period Includes all items contributed by other sources Follows all known application instructions Adds up per cost line item and overall Costs for every phase of the program are included
Corporation Grantee Financial Accountability Seminar July 2007 Budget Design Strategy: Consider all possible exceptions to the routine Are the salaries in the proposal accounting for cost of living increases? If new staff persons are being hired, is the necessary additional space and equipment being considered? If equipment is needed, is it necessary to purchase or is leasing the more appropriate approach? If additional space is rented, are the increased costs of insurance, utilities, maintenance and other impacts accounted for?
Corporation Grantee Financial Accountability Seminar July 2007 Logical Conclusions & Other Advice 1. Time invested in developing a compliant, and complete budget facilitates effective and hassle-free grant administration at prime and sub-grant levels 2. Budgets can be designed to minimize the need for changes and the likelihood that later federal reviews/approvals will be needed 3. A properly approved budget is: A financial blueprint to help an organization meet its goals and objectives Aligned with the program description and all budget discussion therein A tool to help ensure an organization is meeting matching requirements 4. Programs should: Periodically review budget to actual expenses Assure budget changes are properly approved Review movements between line items and verify if they are within provision guidelines
Questions Electronic copies of this material can be found at The Resource Center http://nationalserviceresources.org/ Search for Financial Accountability Seminar
Corporation Grantee Financial Accountability Seminar July 2007 !! PARTICIPANT NOTICES !! CERTIFICATES FOR TRAINING: All participants who attend and complete three or more sessions of the Financial Accountability Seminars can pick up a certificate of participation Sunday afternoon, Monday or Tuesday morning. CFO – OIG – OGM SUNDAY CLOSING PLENARY: Please attend the Plenary Session [Sunday 3:15 –Salon G] with Jerry Bridges, Carol Bates and Peg Rosenberry to hear about OIG audit plans, address issues that arose during the day and learn about upcoming changes in grants policy. RESOURCE TABLE: Please take advantage of this opportunity to meet with and discuss your questions and concerns with our experts who include presenters and a special guest from the Division of Payment Management at HHS.