Developing a Successful Budget

Developing an accurate budget can take time, particularly if the project includes personnel from multiple areas at Duke, collaborators at other institutions, external consultants at other organizations, or involves technology development or international activities. 

Investigators should work closely with their grants administrator or financial practice manager as early as possible when developing the budget and budget justification. Contact myRESEARCHnavigators@duke.edu if you are unsure who to contact or do not have these departmental resources available to you. 

Common Errors in Budgeting

Developing the budget can be an involved process - particularly if the project includes complexities. 

Common complexities include:  

  • personnel from other departments   

  • external consultants 

  • technology development  

  • international activities 

  • sub-awards or agreements with collaborators at other institutions or organizations 

 

Most sponsors provide guidelines and/or specific forms for budget preparation.  Duke also provides guidance and resources to help investigators ensure that all project costs are 1) budgeted accurately based on the needs of the project and 2) used in accordance with the approved budget. 

The best advice to avoid common errors in budgeting is: 

  1. Start early and seek guidance.  Work with you grants administrator, research development professional, foundation relations representative, or myRESEARCHnavigators early in the process to understand the costs needed for the proposed activities. Begin developing the budget as early as possible. 

  1. Ensure Costs are Budgeted Compliantly.  Costs may vary widely based on the type of project, sponsor, and resources required to conduct the work. Carefully and accurately assess all financial needs of the project and be able to justify the necessity of the costs. The following general principles described in the Uniform Guidance apply generally to costs budgeted in Duke sponsored activities: 

  • Allowable – a cost is allowable if it 1) is necessary and reasonable for the performance of the project, 2) is verifiable with sufficient detail and supporting documentation, 3) conforms to any limitations by the sponsor 

  • Allocable – a cost is allocable if it 1) is necessary to carry out the activities of the project and 2) is assignable to the project (at least in part) with a high degree of accuracy 

  • Reasonable – a cost is reasonable if it 1) does not exceed what is generally recognized as ordinary and necessary for the proper and efficient performance of the project and 2) does not exceed in its nature an amount that which would be incurred by a prudent person in like circumstances 

  • Consistently-treated – for federally funded budgets, a cost may not be assigned as a direct cost if any other cost for the same purpose in like circumstances has been allocated as an indirect cost 

  1. Be a good steward of Duke’s grant funding.  When accepting funds from external sponsors, Duke agrees to follow rules and regulations and to comply with sponsor terms and conditions. 

  • As a non-profit institution, it is not within Duke’s mission to seek profit from its research activities; therefore, it is important that the budget represent true costs necessary to conduct the work. 

  • All project costs should be included in the budget and be expended within the project period of the award.  To ensure proper accounting of project costs, verify all project expenses are allocated during the project period and to the appropriate funding source.  You can access financial reports for your funded projects by visiting myRESEARCHhome and navigating to the myReports widget.  Here you will find various reports ranging from summary financial data to fund balances to expense projections and more. The information in these reports will reflect planned expenses or changes that have not been entered in Duke’s financial systems, so make sure you are working closely with your grant administrator for the most accurate financial information. 

For foundation budgets, please be in touch with the appropriate Foundation Relations office:

What is F&A and why is it in my budget?

Short Answer: F&A (also referred to as "indirect costs" or “overhead”) are the real costs associated with the facilities and administration necessary to support research but are not readily assignable to a particular project. 

The Details: When Duke conducts externally-sponsored research, the sponsor funds Duke for the expense of the research itself (direct costs) and for the expense of the facilities and administrative (F&A) services required to conduct the research.  F&A costs cover the portion of infrastructure and operational costs related to research. 

Examples include: 

  • Maintenance of facilities specifically-designed for cutting-edge research 

  • Utilities, telecommunications, hazardous waste disposal 

  • Infrastructure necessary to comply with various federal, state, and local rules and regulations 

All applications for sponsored research, education, and outreach (public service) projects will generally have associated F&A costs. These F&A charges are real expenses incurred in the conduct of sponsored activities and must be recovered from the sponsor using Duke’s current, standard F&A rate in all applications. If the sponsor limits the F&A that may be recovered, it is important that you work with your grant administrator early in the process to secure institutional approval to accept a capped rate.  

See Duke’s policy on Facilities and Administrative Costs on Sponsored Projects 

What is cost sharing and why can’t I cost share voluntarily?

Short answer: Cost-sharing is that portion of a project's costs, direct or F&A, not borne by the sponsor. When the sponsor requires cost sharing, these costs may be contributed by the University or by third parties. It is University policy to cost-share only when it is demonstrably in its best interest to do so - cost-sharing only when required by the sponsor and only to the extent necessary to meet the sponsor’s specific requirements.  Because of this policy, the University will not generally commit resources to a project unless required to do so by the sponsor. 

The Details:  Cost-sharing can take a variety of forms: e.g., reduced F&A cost recovery rates, commitments of faculty effort not direct charged in the budget, the use of University funds for additional project support, or contributions from third parties.  

Note: Cost sharing is not the same as an unallowable expense.  An unallowable expense is one for which the sponsor will not reimburse the institution, either because: 

  • the amount the sponsor will reimburse is limited (for example, salary over the DHHS cap) or 

  • there is a policy or regulation that prohibits the expense to be direct charged to the project. 

 

When considering cost sharing on a proposal, the following criteria should be kept in mind: 

  • For federally-funded activities, voluntary cost sharing is not expected and cannot be used as a factor during merit review – unless cost sharing is specified in the notice of funding opportunity. 

  • Any decision to cost share should reflect the University’s overall priorities within the functions of research and education. 

  • Requests for cost-sharing must be made and the commitments must be documented at the time of proposal submission. 

  • If cost sharing is mandatory, only expenses that are otherwise allowable as a direct charge can be considered cost sharing.  In other words, if the sponsor does not allow tuition to be direct charged, tuition costs can not be included to meet the sponsor’s cost sharing requirement. 

Be aware that sponsors consider any examples of quantifiable commitments of support described anywhere in the application to be proposed cost sharing that (if awarded) must be tracked and reported – including the budget/budget justifications, proposal narrative/research strategy/specific aims, and/or letters of support.   

Cost sharing of all kinds requires prior approval.  Cost sharing requires the prior approval of the Duke organizational unit (or third party) providing the cost share before the submission of the proposal – as well as authorization from the appropriate management center (ORA for Schools of Medicine and Nursing / ORS for Provost Area Schools) to be included in the proposal.  Secure approval for cost sharing well in advance of the sponsor due date to avoid delays and misunderstandings about cost sharing requirements and limitations by working with your grant administrator to make the request to the appropriate management center. 

A detailed discussion of cost-sharing policies and procedures may be found in Duke’s Policy (GAP 200.140) Cost Sharing on Sponsored Projects and in the Uniform Guidance § 200.306 Cost sharing or matching

What financial resources may I include in my institutional Letter of Support?

Short answer: Letters of support should not include quantifiable financial commitments unless required by the sponsor and/or approved by the institution well in advance of the sponsor’s due date. Letters of support should 1) specify what the collaborator providing the letter will contribute to the research, 2) convey enthusiasm for the proposed work, and 3) lend credibility to your proposal.   

The Details: A letter of support is a valuable part of your grant proposal because it provides an opportunity for you to document the commitment and support of the institution, your collaborators, the availability of specialized facilities and specific resources and more.  If quantifiable financial commitments are made in the letters of support (or elsewhere in the application), these commitments are considered voluntary cost sharing and must be documented, met, tracked through University systems and reported to the sponsor.  Therefore, it is important that you remove any reference to voluntary committed cost sharing anywhere in the proposal unless approved by the institution in advance. 

Additional guidance on financial commitments within letters of support 

Quantifiable, voluntary committed cost sharing is not allowed.  Your letters of support may not describe any quantifiable effort or resources described in support of the sponsored project beyond what is included as a direct cost in the sponsor budget unless cost sharing is required by the sponsored.   

Unless required by the sponsor, avoid anything in your LOS that resembles cost sharing. It is tempting to think that your proposal will be more competitive if you volunteer a significant institutional financial commitment.  In fact, sometimes it is hard to tell if cost sharing is required or not by the sponsor because of “gray area” descriptions in the solicitation – for example: 

  • Cost share not required but “highly encouraged” 

  • Cost share included in merit review criteria 

  • Merit review (or summary statement) comments reflect low score for institutional commitment 

In these cases, Duke University does not consider the cost sharing to be mandatory, though each case will be evaluated separately to determine if an exception can be made. 

 

Terms to avoid 

The following are “red flag” terms that suggest cost sharing.  Avoid using these terms unless cost sharing is required by the sponsor: 

  • Cost sharing 

  • Sharing 

  • Matching 

  • In-kind 

  • Donate 

  • Commit % or $ 

  • Allocate % or $ 

  • Exclusive use 

  • Volunteer 

  • Support at no cost 

  • Contribute 

  • Example rates or per item charges (for example $100/hr or $45 per review) 

 

How to describe financial resources in letters of support 

When cost share IS required by the sponsor (mandatory) 

When cost share IS NOT required by the sponsor (voluntary) 

Duke University is highly supportive of this project and agrees to cover the costs of the salary/effort of the PI for the duration of the project 

Duke University demonstrates support of this project though the availability of expert advice and consultation of the PI, as needed 

The PI requests 40% salary for this project, and will devote an additional 10% effort that the University will support 

The PI requests 10% salary support for this project (direct charged in the budget) and will provide additional support to the project, as needed  

The department will purchase [equipment] (cost $XX,XXX) for use in support of the PI’s work on this project 

The PI has access to [space], [resources], [equipment] that is beneficial to this research 

The PI will provide intellectual direction to the project and co-author publications.  Her salary (5% effort) will be supported by the University 

No salary support is being requested for the PI, however she will provide oversight and intellectual direction for the project and be directly and significantly involved throughout the project