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Budget

"To have enough is good luck, to have more than enough is harmful."—Chuang-Tse
(Quote from the Stanford University Sponsored Research Manual)

Introduction

The purpose of this section is to introduce cost categories in the proposed budget, discuss the need for budget justification, and introduce a number of Dartmouth College and DHMC policies and procedures affecting sponsored research budgets. The Principal Investigator is encouraged to provide a draft of the budget to Office of Sponsored Projects for review as soon as possible in the proposal preparation process.

The proposal budget should delineate the entire cost of the project, lists the amount being requested from the sponsor, and identify project costs that will be met by other sources. The proposal's budget must accurately reflect necessary project costs that are allowable and reasonable. These costs must also be supported by budget documentation. Elements of most budgets include direct costs, indirect costs, cost sharing, and a budget justification. The budget should clearly state to the sponsor how much the entire project will cost and what the specific cost categories are.

If the project is well thought out, the budget will reflect the methodology described within the proposal narrative. Most reviewers will be able to determine if sufficient funds are being requested to successfully complete the project, and that those costs are reasonable given the scope of work.

Accuracy and detail are essential in this section. Again, researchers are encouraged to follow a sponsor's guidelines exactly. Be sure to show all costs related to the project. Keep in mind that sponsors will support costs that are reasonable and justified in a budget description.

Direct Costs

Costs directly linked with carrying out the work of the project. Direct costs include the following:

Salaries and Wages

The time and effort of all Dartmouth and DHMC personnel should be included in the budget. Proposed salaries must be in accordance with College approved salary scales and position grades. For information and advice on salaries ranges and position grade levels contact Office of Human Resources. In developing a multi-year project budget, remember to factor in salary increases. Note: allow for flexibility in hiring by requesting sufficient salary funding to attract the best qualified or most experienced applicant.

Fringe Benefits

Fringe benefits include such items as health insurance, retirement benefits, and federal withholdings. Rates are contingent on the type of appointment each staff holds, i.e., API, APII, faculty, etc. The rate must be charged to the grant in relationship to the salaries and percentage of effort charged to the grant. For mult-year projects, the fringe benefits can be increased by up to1% per project year. Obtain current fringe benefit rates from the Office of Sponsored Projects homepage.

Consultants

Consultants provide technical expertise for a limited duration necessary for the conduct of the sponsored project. A consultant is not considered an employee of the College or DHMC.

Equipment

Equipment critical to carrying out the project should be listed with a catalogue price or accurate estimate of the cost of each item listed (capital equipment is defined as items costing more than $2,500)

Materials and Supplies

Expendable equipment (up to $2,500) and supplies should be listed in this section. Each item or group of items should be listed and carefully justified in terms of need.

Travel

Domestic and foreign travel costs include meals, lodging, airfare, and ground transportation. The type and extent of domestic travel and its relationship to the project should be specified. Travel allowances for air travel normally cover round trip cost of coach accommodations. Separate projected transportation costs from food and lodging costs. [NOTE: It is often advisable to build staff interview costs into the total cost of project travel

Other Direct Costs

May include services such as those activities performed to support the project effort. Examples may include project specific postage, installation of equipment, maintenance on equipment, delivery costs, human subject fees, and project specific telephone service. Some services list exclusively as part of the project may also be considered subcontract expenses.

Subcontracts

Subcontracts and subgrants are agreements by which some scientific or programmatic aspects of a grant or contract made originally to the Trustees of Dartmouth College are contracted out to another organization.A subcontract is appropriate when a portion of the research or grant activity will be performed at another institution or commercial vendor. The primary proposal to be submitted to a sponsor must include the subcontractor's statement of work and proposed budget. A Letter of Intent from the proposed contracting organizations should be included with the primary proposal information. Dartmouth College will charged overhead on the first $25,000 of a subcontract . Contact the Purchasing Office for guidance in obtaining outside bids, and contract negotiation with outside vendors.

Indirect Costs

Indirect costs are costs that are not readily identifiable with individual projects. They allow an institution to recover some of the costs associated with supporting the research project. In developing the indirect cost rate such expenses as utilities and library use are factored into the indirect cost rate. These costs must be included in all budgets as a percent of total direct costs, excluding services and subcontract costs.

Indirect costs are computed into the final cost of the project using a rate that has been established between Dartmouth College and the Federal Government. Indirect cost rates are fixed for a negotiated period of time and are consistent for all grant or contract applications unless the sponsor prohibits indirect costs or designates another rate. There are times when the OSP may negotiate a different indirect cost rate that is lower than Dartmouth College's negotiated rate. Exceptions must be requested in writing and sent to the appropriate Dean for your area.

The Off-Campus indirect cost rate is to be charged only on those project conducted at sites outside of Hanover and areas immediately surrounding Hanover. The VA in White River Junction has a special research rate of 30%; rent should be included as a direct cost item at $36 per square hed.

In all other projects not conducted in Dartmouth owned buildings, rent should NOT be included as a direct cost item if the On-Campus rate is used. Rent is automatically included in the On-Campus indirect costs and will be paid out of the indirect costs recovered.

Indirect Costs cannot be charged on equipment, alterations and renovations, patient care costs, rental and maintenance of off-site facilities, tuition remission, scholarships and fellowships, and subcontract amounts over $25,000.

Cost Sharing and Matching Funds

Some sponsors require that the College contribute a certain portion of funding to the overall cost of a project or the purchase of a piece of equipment. This contribution may come from in-kind (non-cash) or cash contributions and must be approved by the appropriate Dartmouth College official. For this reason, be sure to obtain written authorization for cost sharing before writing or submitting a proposal requiring this kind of commitment by the College.

Definitions

Cost sharing is that portion of the total costs - direct and indirect - of a sponsored project or program that meets the following criteria:

  1. It is not provided by the sponsor, i.e., Dartmouth College has agreed to fund it; and
  2. It is included in the itemized costs of the project or program's budget that has been approved by the sponsor.

Cost sharing as defined above may be included in either of the following categories:

Mandatory Cost Sharing: Cost contribution required of the grantee by the sponsor as a condition of the award, such as the matching requirements of challenge grants.

Voluntary Cost Sharing: Cost contribution voluntarily offered by the Principal Investigator and accepted by the sponsor in the program budget.

Federal Regulations Regarding Cost Share Dollars

In order to be acceptable for cost sharing, costs must:

Per OMB Circular A-21
  • Be allocable, i.e., necessary and reasonable for proper and efficient accomplishment of project or program objectives;
  • Be allowable under the applicable cost principles; and
Per OMB Circular A-110
  • Be verifiable from the grantee's records;
  • Not be included as contributions for any other federally-assisted project or program;
  • Not be paid by the Federal Government under another award, except where authorized by Federal statute to be used for cost sharing or matching;
  • Be provided for in the approved budget when required by the Federal awarding agency;
  • Not be unrecovered indirect costs without prior approval of the Federal awarding agency; and
  • Conform to all other applicable provisions of Circular A-110.
Required Approvals for Cost Sharing

When cost sharing appears on a proposal budget, the source, type and amount of funds should be identified by and authorized by the signature of the appropriate dean. If the proposal budget contains required matching funds, the Development Office should also review it to ascertain who is responsible for raising the funds externally.

Recording of Cost Share Transactions

The Office of Sponsored Projects records the direct portion of a cost share transaction (1) initially by charging (under the appropriate subcode) a sponsored account specifically created to capture the cost share related to a given sponsored project or program and (2) subsequently by transferring the charge from the sponsored account to the Principal Investigator's departmental account through the use of certain subcodes (1990 for transactions related to salary and fringe, and 5910 for transactions related to non-salary dollars).

The indirect portion of a cost share transaction is recorded (1) initially by charging the sponsored account under subcode 7810 and crediting the appropriate revenue or pool account under subcode 7910 and (2) subsequently by reversing this entry , i.e., crediting the sponsored account under subcode 7900 and debiting the revenue or pool account under subcode 7900.

Significant (i.e., greater than five percent) variations from the proposal budget in the effort which a Principal Investigator expends on a particular sponsored project or program during the course of the project or program are recorded and certified by the Principal Investigator in Section 7 of the Payroll Authorization form. These variations represent additional salary-related cost share above and beyond that included in the proposal budget.

Budget Justification

The budget justification is the researcher's opportunity to describe in some detail any budget expenses that needs further clarification or explanation.

Last Updated: 1/3/11