Guidelines for Grant and Contract Management

307. Proposal Budgets

Proposals (applications) normally include a detailed breakdown of the financial support being requested from a sponsor. A proposal budget is a best estimate of the costs requested to complete a project. Budgets should be prepared with as much detail as possible.

Projects costs are usually broken down into direct and indirect cost categories. Direct costs are those that can be directly attributable to a specific project. Indirect costs are those costs incurred by an institution for facilities and administration of sponsored projects. Both are real costs that must be included in a budget. Current University guidelines on indirect cost appear in Guidelines 303 and 304.

Tables A - C of this guideline explain various items included in proposal budgets.

  • Table A defines costs that are normally categorized as direct costs in proposal budgets.
  • Table B outlines different categories of indirect cost.
  • Table C explains cost sharing and matching funds, which some agencies require in order to secure an award (see Guideline 217, “Matching or Cost-Sharing Commitments on Externally-funded Proposals”). Guideline 307A, "Budget Formats," contains budget templates for your convenience.

– October 2003

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307.2 Budget Table A

Table A: Direct Costs Included in Proposal Budgets

Item 1: Salaries or Wages
The amount of salary to be paid individuals employed on the project. This includes salaries for faculty, technical staff, other professional staff, clerical staff, research assistants, etc.

Item 2: Fringe Benefits
A percentage of salary for each employee, used to cover health insurance, social security, disability insurance, workman's compensation etc. The University has three different benefit rates. See Guideline 305 for the most current rates.

Item 3: Consultant Costs
Fees for professional services. Consulting services are normally provided by an individual who is considered an expert in the field. Identification of the consultant by name, specialty, and daily rate is required in the budget. Some federal agencies cap the daily rate a consultant may be paid. Consult specific agency guidelines for such caps. (See Guideline 403 and Independent Contractors for more information).

Item 4: Other Services
Generally an expert in an area other than the subject area of the research project itself; treated as a vendor. (See Independent Contractors for more information).

Item 5: Equipment
The University defines equipment as nonexpendable property costing over $5000 (as of 7/1/98) with a life expectancy of over one year. The State of Illinois and some non-federal agencies have different guidelines. Consult specific agency guidelines. Each purchase over $5,000 must be identified and included in the budget justification. Each piece of equipment that is constructed or fabricated must be separately identified. For more detail, see the Increase in Equipment Capitalization Threshold memo.

Item 6: Supplies
Expendable properties under $5000 and/or a life expectancy of less than one year. Supplies should be broken down by specific categories of cost, such as laboratory supplies, office supplies, etc.

Item 7: Travel
Travel is classified as domestic or foreign. Domestic travel includes trips within the U.S., its possessions and territories, and Canada. Travel costs include transportation costs (airfare, train fare, car rental), food and lodging, and miscellaneous items while away from home. Justifications and identification of the travelers are required for each trip. See University Financial Policy No. 1202 (Travel).

Item 8: Computer Costs
Computer costs are normally associated with the time and use charges of campus computing or established divisional facilities, not for personal computers or networks.

Item 9: Publication Costs
Page charges and other fees for publications in professional journals.

Item 10: Subawards
A subaward must be included in the proposal when a portion of the project is to be done at another institution. The total costs for a subaward (subrecipient direct costs and F&A [indirect] costs) are considered direct charges on the University of Chicago's project. The subrecipient must provide a complete budget along with a work scope. The cover page including the sign off of the Principal Investigator/Project Director and the authorized institutional official at the subrecipient organization is also needed, as well as a copy of the subrecipient’s F&A agreement. See Guidelines for Grant & Contract Management 404.

Item 11: Animal Costs
Animal care and use charges at the University of Chicago are made up of three separate components. These costs are all requested as Other Direct Costs. See Animal Resources Center for Rates & Fees.

Item 12: Other and misc. expenses
All identifiable expenses must be itemized in the budget. Other costs could include items such as animal care (described above in more detail), telecommunications, tuition for graduate research assistants, duplicating expenses, postage, leases/rentals, radiation protection services, maintenance contracts, etc. For Federal projects, special attention should be paid to the inclusion and justification of those "other direct costs" which may be considered as indirect costs. See Guidelines 307 B.

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307.3 Budget Table B

Table B: Indirect Cost (Facilities and Administrative Costs) Categories

Modified Total Direct Costs (MTDC)
Federal overhead costs are referred to as Facilities and Administrative Costs (F&A Costs). The University negotiates F&A rates with the federal government (Department of Health and Human Services, DHHS) periodically. All rates are calculated against Modified Total Direct Costs (MTDC). The MTDC base includes salaries and wages, fringe benefits, materials, supplies, services, travel, animal costs (purchases, perdiems, and lab work), and the first $25,000 of each subgrant or subcontract. Different rates are used for different types of projects. See Guideline 304 of this manual for the current and appropriate indirect cost rates for a particular proposal.

Specifically excluded from the MTDC F&A base are:

  • equipment purchases, capital expenditures
  • fabricated and constructed equipment
  • charges from an approved campus computing facility
  • patient care costs (hospital patients onlyboth in-patient and out-patient costs)
  • tuition and fees for University of Chicago students
  • animal care and use expenses
  • rental costs of off-site facilities
  • scholarships and fellowships
  • Physical Sciences Division Central Shop charges

The first $25,000 of each subcontract is subject to indirect costs. Any amount above $25,000 is exempt. See definition of subaward in Table A of this Guideline (307A).

Total Direct Costs
Indirect cost charges are applied to all items when using this base. There are no exclusions. The total direct cost base is used for grants and contracts from non-federal funding organizations. There are different rates for different non-federal agencies. See Guideline 303 in this manual for the most current and appropriate indirect cost rates.

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307.4 Budget Table C

Table C: Cost Sharing (Matching)

Cost sharing (matching) are those costs or funds that the awarding agency requires the University to pay or contribute as a condition of the award. All cost sharing (matching) contributions must meet all of the following criteria:

  1. Are verifiable from University records.
  2. Are necessary and reasonable for proper and efficient accomplishment of the award's activities.
  3. Are provided for in the approved budget when required by the awarding agency.

In addition to the criteria listed above, cost sharing or matching contributions for Federal awards must also meet the following criteria:

  1. Are not included as contributions for any other Federal sponsored award.
  2. Are allowable under the OMB Circular A-21 cost principles.
  3. Are allowable under OMB Circular A-110.

Federal awarding agency approval is required, and a nonfederal awarding agency's approval may be required, to count unrecovered indirect costs as part of cost sharing or matching.

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