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Develop the Budget

Think of your budget as the financial description of your project. Generally the funding agency will require a line item budget and a detailed budget narrative that describes the amounts and uses of each line in the budget. Always refer to the agency guidelines to determine allowable activities and costs.

Most federal agencies include online budget forms as a part of their application package. OSRP is available to assist in preparing the final budget and will also review the budget, together with the MSU Denver Grants and Accounting Office, prior to submission to ensure that it is aligned with funder and university guidelines. We also provide budget templates in Microsoft Excel that match the required fields in the online forms for a number of agencies. These templates are available in the Toolkit.

Direct Cost vs. Indirect Cost: Charges to a grant are categorized as either direct costs or indirect costs.

  • Direct costs are defined as the charges to a project or program that can be easily identified with the immediate operation of the grant (i.e. project personnel, supplies, equipment, travel, and consultants). Direct costs to a sponsored program are described in the RFP and the guidelines of the funding agency.
  • Indirect costs, also called Facilities and Administrative (F&A) costs or Indirect Cost Recovery (ICR), pay for charges that are not specifically attributed to an individual project. Indirect charges are defined as costs that are incurred for common or joint objectives. Indirect costs reimburse the college or university for services to the grant such as: accounting services; salaries not reimbursed by the project, such as clerical and administrative involvement; computer laboratory fees; the institution’s infrastructure; office supplies; postage; local telephone charges; photocopying; and facility maintenance. Any portion of the F&A not recovered from the funder would be considered a match by the university. Institutional policy requires full F&A be claimed except where a lesser amount is authorized.  An important point to consider is that F&A costs are not recovered from sponsoring agencies until the direct costs have been incurred. The F&A rate is recognized by funders and the university as the legal basis upon which the university can make claims for reimbursement for F&A.
  • The current F&A rate has been negotiated with the federal government through the Department of Health and Human Services at 32 percent for on-campus activities and 20 percent for off-campus activities. Refer to the negotiated Indirect Cost Rate Agreement document on file with OSRP for any clarification as to which rate would apply for your project.
  • Note that not all direct costs are subject to ICR, so indirect costs are calculated on Modified Total Direct Costs (MTDC). Examples of items excluded from ICR are participant costs (for example, some types of student support), equipment over $5000, and subcontracts amounts over $25,000. The budget templates in the Toolkit will automatically calculate MTDC and ICR costs for you.
  • More detailed information about MSU Denver F&A costs can be found here.

Creating the Budget

Typically, sponsored projects allow the grantee to request compensation for the following direct costs: personnel (salaries and wages); fringe benefits; equipment; materials and supplies; travel; consultants; and other. Read guidelines carefully to determine what restrictions, if any, are placed on the categories, or if some line items are not allowed. We provide several budget templates for investigators to prepare a project budget. They can be found in the Toolkit. 

Faculty Release Time/Summer Month Calculations

It is not unusual in a federal or state project to find that the proportion of faculty time supported by a sponsor is limited. In proposing a project with grant funds, the principal investigator must select a workable and fundable methodology, including the amount of time that is available to work on a project as a faculty member. Use the Person-Months Conversion Calculator and Chart to determine the numbers as requested by the agency. If the principal investigator is a faculty member, check with the respective Chair and Dean to ensure that the proposed workload is feasible.


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