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CHAPTER THREE: Proposal Development and Budgeting

      Types of Proposals


      A proposal is a written document outlining the anticipated obligations and responsibilities of the University to an outside agency. Once accepted by the sponsor and the University, the proposal defines the conduct of a sponsored activity.

      Most often a proposal involves a request for financial support to cover the cost of the project, the purchase of equipment or the payment for services rendered to the outside agency. There are, however, instances in which the University is committed to providing a service or product without money changing hands. The principal investigator/project director is still responsible for reporting these agreements to the Office of the EVPR including the completion of the appropriate transmittal form (e.g. a Proposal Clearance Form [PCF] or Multi-Institutional Research Application [MIRA].). For the definition of sponsored activities, Chapter 1, Section 1 or visit the Definition of Sponsored Activities website.

      3.1 Preliminary Proposals

      Preliminary proposals are abbreviated proposals used by an agency to prescreen applications. These proposals, usually 3-5 pages in length, highlight ideas rather than procedures and usually provide for projected composite budgets. The results of prescreening may be binding, where the agency will only review formal proposals that have been invited back; or advisory, where the agency may suggest revisions or discourage resubmission of a formal proposal but not reject it outright.

      A Letter of Intent is a specific type of preliminary proposal. These are frequently requested by agencies prior to submission of a formal proposal. The Letter of Intent allows the agency to get an idea of what is likely to be submitted and plan ahead to secure the resources needed to conduct the review process. This Letter of Intent is often requested, but is not required and usually will not generate any feedback from the agency. A copy of the Letter of Intent must be sent to the appropriate unit within the Office of the Executive Vice President for Research.[1] If the sponsor requires a detailed budget along with the Letter of Intent, the Office of Sponsored Programs Grants Administration (formerly Grants Management) or the Office of Industry Contracts must review and approve the budget prior to submission.

      While preliminary proposals are not formal commitments by the University and usually do not require the appropriate transmittal form (e.g. Proposal Clearance Form or MIRA) it is in the PI/PD’s best interest to have written documentation of any matching commitments or cost sharing appended to the submission. A copy of the preliminary proposal should be forwarded to the Office of Sponsored Programs Grants Administration or Office of Industry Contracts[2] at the time of submission. If an institutional signature is required for submission of the preliminary proposal, all documentation of cost sharing must be provided prior to signature.

      3.2 Formal Proposals for Financial Assistance

      Formal applications or proposals are documents that are submitted directly to an external sponsor that outline the components of an investigator-designed work plan. Proposals generally include a request for financial assistance to support the proposed work.

      The funding agency may provide financial assistance through several different mechanisms:

      · A Grant is an implied contract with the funding agency. A grant will allow a fair amount of creative or intellectual input in the design of a project, but will still require the PI/PD to adhere to a pre-approved budget and project outline.

      · A Cooperative Agreement is a funding mechanism that includes an active role for the funding agency.

      · A Contract is the most restrictive of the funding mechanisms that a PI/PD will encounter. In a contract, the PI/PD is undertaking a project for the agency under program parameters designed by the agency. A contract generally has negotiated terms in the award agreement that allow little flexibility on the part of the PI/PD. Industry contracts need to be reviewed and approved by the Office of Industry Contracts.

      · A Donation is a private foundation or corporation providing funds as a gift to the University. In such instances, the proposal must be processed through the Office of Development and Alumni Relations.

      If there is a question about whether the proposed funding is a gift or a grant, please review the guidelines under the Definition of Sponsored Activities and Guidelines for Designating Funding as a Gift or a Sponsored Program .

      Contracts and cooperative agreements are usually submitted in response to a specific work plan outlined by the agency. A grant application may be a solicited proposal responding to a stated request or program announcement from an agency, or an unsolicited proposal aimed at the general area of interest of the targeted agency. Regardless, the format of the proposal is likely to be dictated by guidelines of the agency and it is the responsibility of the PI/PD submitting the application to read these guidelines and design the program as required by the agency.

          All formal proposals require a PCF or MIRA. (The MIRA is used for all clinical trials, sponsored research which requires approval by the Biomedical IRB and any other project/study that uses the facilities of Jewish Hospital Healthcare Services (JHHS), Norton Healthcare (NHC), or University Hospital (ULH) sites or resources to conduct the research). The PCF/MIRA require endorsement by the appropriate Deans (or their designees), Chairs, and the Office of Sponsored Progrmas Grants Administraion or the Office of Industry Contracts dependent upon the sponsor. For information on Proposal Clearance Forms and MIRA forms please refer to Section 4.2 .

      3.3 Material Transfer Agreements

      A Material Transfer Agreement (MTA) is required when the University accepts a proprietary substance or product from an outside agency for use or testing. These agreements often require that a deliverable, such as a written report, be provided to the outside entity and limit what can be done with the proprietary substance or product. These substances are often unique and can include biological materials, chemical compounds, pharmaceutical preparations, other types of tangible research materials and even software. While there may be no financial commitment from either party, there are often issues of intellectual property, confidentiality, hazardous materials and protection of human subjects that must be addressed. The agreement must be in place and endorsed by both parties to protect the liability of both the investigators and the University. If the outside entity is a signatory of the Uniform Biological Materials Transfer Agreement (UBMTA) or can accept the terms of the UBMTA, this will speed the process. When submitting an MTA for processing, include the name, address, and contact information (e-mail address, phone number, fax number) of the appropriate person at the outside entity should any issues requiring negotiation be present in the agreement. Please refer to the Office of Technology Transfer for assistance with MTAs.

      Proposal Components

      3.4 Administrative Information

      Most proposal applications submitted for extramural funding will request certain administrative information about the University. Tables containing the most commonly requested information (general information, and fringe benefits) can be found on the Sponsored Programs Grants Administration web page.

      While most granting agencies will provide guidelines for proposal preparation, there are some commonalities that one should expect to see when preparing a proposal, especially when requesting public funds. It is good practice to utilize any sponsor-provided proposal outlines. Those reviewing submissions for the sponsor will be expecting this format and non-compliance could cause the proposal to be disqualified. For sponsors that do not require a set format, the following information lists the sections that make up a standard proposal.

      3.5 Transmittal Letter

      A transmittal or cover letter should act like a luggage tag for your grant application. Many times the letter will be seen only by the Program Officer who is routing the application to the reviewers so the information contained here should be brief and functional. The letter should stress the importance of this project without reiterating the project narrative. If the letter is effective, the reader will want to look further at your proposal as the project is made to appear unique, critical, necessary, and/or timely. If this is a resubmission of a previously declined project, note it here with a statement explaining why it is a stronger project in its current version.

      NIH policies on resubmissions for Request for Applications (RFA) have changed in 2003. See http://grants2.nih.gov/grants/guide/notice-files/
      NOT-OD-03-019.html

       

      The transmittal letter will allow the agency to categorize the proposal and to direct it to the proper sources for review and consideration. Since an administrator in the Office of Sponsored Programs Grants Administration (or Office of Industry Contracts if industry sponsored) often signs the letter, the letter should provide identification and contact information about the PI/PD. If there was pre-proposal contact with the program manager, note it in the letter along with details of revisions suggested by the program manager. If the proposal is intended to go to a specific review section, the transmittal letter should describe those details. If the proposal is not intended for review by a particular reviewer or review section, this should also be noted with a brief reason for the request for funds.

      3.6 Proposal Cover Page

      Most of the larger granting agencies will provide a form or a format to use as a cover page. If there is not a standard format required, the coversheet should contain at a minimum:

      · Proposal title

      · Sponsoring agency and/or Program receiving the grant proposal

      · PI/PD’s name and his/her contact information

      · Date submitted

      · Authorizing Official and a line for signature

      · Contact information for the Authorizing Official

      3.7 Abstract or Project Summary

      Most sponsors require a summary of approximately 250 to 500 words outlining the proposed scope of work and significance of the project. The abstract should be a good marketing piece for the application, summarizing what need the project meets, its objectives, why the researcher and institution are optimal, and why it is critical for the funding to be granted. This section should focus more on the objectives and anticipated outcomes of the project than the methodology. Each specific aim should be briefly addressed to demonstrate its value in the project. While this is usually the first section read, it should be the last section written in order to provide an accurate, thorough and complete overview.

      3.8 Project Description or Proposal Narrative

      The project description is the detailed narrative outlining the project rationale, the goals and objectives, the methodology, the work plan, and the evaluation criteria. This is likely to be divided into one or more of the sections outlined below.

      Introduction

        The introduction should effectively market a proposal. It should be written in a way that entices the reviewer to want to read the rest of the proposal. The introduction should be used to set up the argument for funding this project. It should describe the researcher(s), how this proposed program complements the sponsor’s strategy and resources, the accomplishments the PI/PD has in this area, and why he/she is best positioned to address the problem at hand.

        Demographic information about the University can be found in the Factbook published by the Office of Planning and Budget. Data about resources at the University that pertain to the specific program are generally helpful; however, much too often proposal writers are tempted to simply insert a piece of boilerplate text into the introduction. This does little to gain the interest of the reader and unless it directly pertains to the problem at hand, it takes up valuable space in the narrative.

          Example for a K-12 Education Program:
          Weak: The University of Louisville recently celebrated its 200th birthday. Located in Kentucky’s largest metropolitan area, the U of L was designated as the state’s urban university when it joined the system in 1970 after many years as a municipally supported institution.
          Better: The University of Louisville is a public institution located in Kentucky’s largest metropolitan area where more than 92,000 K-12 students are enrolled in the Jefferson County Public School System. The close partnership between these two entities provides an exceptional educational opportunity for the 2000 students currently enrolled in the U of L School of Education.


        Problem or Needs Statement

        While the introduction lends credibility to the PI/PD’s ability to address this issue, the needs statement focuses on the problem itself. The idea is to show that the researcher can bridge the gap from the current state to a more desirable outcome. The logical order of this section will move the reader from what the problem is and how it is currently being addressed to how the proposed solution is a better option.


          Example:
          1. X number of people died from {disease} according to 1998 statistics.
          2. Traditional treatments require hospitalization due to extreme side effects.
          3. Our new treatment program shows promising results with few side effects and no hospitalization, meaning a higher rate of compliance at a lower cost.

         

        This section should be well referenced and arguments should be based on documented facts, not opinions. Pilot studies supporting your hypothesis should be referred to, but explained in detail in the Methodology section. This needs assessment should set up the basis for the specific aims statement, therefore an effective transition into the next section is necessary.

        Specific Aims: Goals and Objectives

        The specific aims of a proposed project will describe the successes or outcomes that can be anticipated if the project is funded. The aims must grow out of the needs statement and relate to the method that will be employed to close the gap between the current and ideal state. Goals and objectives should be addressed in this section and an explanation of how the project will contribute to these goals and objectives should be provided.

        A goal is normally understood to be a more global target to which the proposed program will contribute, such as curing cancer or achieving world peace. An objective is a more intermediate accomplishment that will contribute to the overall goal. An objective can and should be accomplished during the tenure of a grant while it is unlikely that a goal will be. The objectives should be specific, well defined, measurable and timely. They must clearly explain how they contribute to the overall goals.

        Objectives can be either outcome-based or process-based, but care should be used when writing process-based objectives so process and methodology do not become confused.


        Example:
        Goal: To solve the problems of Public Housing.
        Outcome Objective: To create 30 new first time homeowners from public housing residents by the summer of 2004.
        Process Objective: To create a training program in home ownership for low income public housing residents.

         

      Methodology

        This section will describe how the objectives will be accomplished. It should include what will be done, what resources are necessary, the roles of each individual contributing to the project, and why certain approaches are taken to solving the problem at hand. This section should be structured to show the logical flow of the work, the sequence of activities, and the interrelationship of each of the particular tasks. Milestones and decision points that are planned to show the progress of the project should be included.

        A description of the decision to utilize one methodology over another is very effective, especially if using a unique approach. It is also useful to discuss the obstacles that may be encountered as the project proceeds and what alternatives might be necessary to ensure successful completion.

      Evaluation

        This section should set up the criteria by which the researcher and the funding agency will determine the success of the project. The evaluation should flow out of the criteria described in the objectives section with regard to time, cost, and other measurement indicators. It is sometimes useful to include funding requests for a third party to evaluate the work that will have been accomplished, especially if the outcomes are fairly subjective and hard to measure. If working with a large data set, a statistician should be included on the project team to provide analysis of the success of the project.

      Personnel

        The responsibilities of all personnel must be delineated clearly in the narrative. If students or postdoctoral fellows are included in the work plan, there must be a clear discussion of their involvement in the research, the training benefits to be derived, if any, and how they will be supervised.

      Biographical Sketches

        Biographical sketches should be provided for all key personnel and consultants whose role will contribute significantly to the project. Full curriculum vitae are seldom appropriate for this purpose. Sketches should highlight the contributor’s current title, educational background and relevant professional experience. The references should be limited to 10 entries, making sure to include the most recent work and any earlier work that is particularly relevant to the program at hand. A statement noting the total number of publications by the researcher can be included.


        Example:
        Dr. John Doe has published over 100 articles in the area of ___________ .
        Those most relevant to the current work include . . .


      Current and Pending Support

        Each of the key personnel will be required to list any active grants or proposals pending at other agencies. Any relative scientific or budgetary overlap between a funded project and the proposed effort must be explained.

         

        This section should also outline the percent of effort committed to each project along with a timeline for each project. Each investigator should be careful to manage his/her time so that he/she is not committing more than 100 percent effort to all job-related activities, including funded research. If the success of the submitted proposal means that the total percentage of effort becomes too high, a statement must be included to describe how the individual will reallocate time and effort to meet all of his/her commitments.


        Note: Research proposals to the Biological Sciences Directorate at the National Science Foundation will not be reviewed simultaneously with a proposal pending at any other federal agency. Junior faculty members applying for their first federal grant are exempt from this rule.

      Facilities and Equipment

        This section will be used to describe any specialized equipment, services or resources available to the PI/PD that are beneficial or necessary to the success of the proposed work. If the facility is not part of the University of Louisville property, a letter should be obtained from an administrative authority at that facility that clearly commits the facility to the project. Likewise if the equipment described is not under the direct control of the research team, a letter from the individual responsible for that equipment must be included outlining an agreement and terms for use of the equipment for this project.

        Proposal Appendices

        If the sponsor permits appendices, this section may include letters of commitment or partnership, relevant publications, or other materials that enhance the proposal. Tables, figures or graphs that are referenced in the narrative should be incorporated into the body of the narrative rather than appended to it. Appendices may not be used to circumvent the stated page limit for the body of the proposal.

        3.9 Proposal Budgeting

        The PI/PD should show all necessary costs and resources of the project in the budget, even those covered as cost sharing, so that there is an accurate accounting of the actual total cost of the project. When requesting funding for any line item in the project budget, it is imperative that the PI/PD show how the cost of that item is necessary to complete the proposed project. Each item in the budget should tie back to the project to substantiate the request for funding.

        Allowable Costs

        Any requests for support from a federal agency must be in compliance with requirements outlined by the Office of Management and Budget (OMB), Cost Principles for Educational Institutions Circular A-21. Any proposal requesting funding that is deemed unallowable by OMB Circular A-21 must defend this request as part of the budget as being absolutely essential to the successful conduct of the project and assure that these costs are provided for the sole benefit of this activity. Agency guidelines published for a specific program announcement or RFP may be more restrictive than the OMB guidelines and will take precedence over the guidelines. Costs reimbursed under the Facilities and Administrative costs (indirect costs) agreement will not normally be allowable as direct costs on a proposal budget to a federal agency.

        Example: Postage is not normally an allowable cost under A21. A project requires a 5-page survey to be mailed to a targeted audience of 1000 people; estimated cost to mail each survey is 50 cents. The PI/PD can request $0.50 x 1000 = $500 in postage specifically for the survey. Additional funding cannot be requested to cover routine office mailings.

        Requests for support from non-federal agencies must be consistent with the agency guidelines on allowable and reasonable costs, as well as any University policies that may apply to that circumstance.

        Units are responsible for any costs that have been determined unallowable by the funding agency.

        For more information on cost allowability, please refer to Chapter 6, Section 1 or OMB Circular A-21 Section J.

        Budget Categories

        This section will examine the various categories of funding which a proposal is likely to request and will provide details on the calculations and restrictions in each category.


        Note: The National Institutes of Health has streamlined the budget process for most grant applications requesting direct costs of $250,000 or less per year. Refer to the NIH website for Modular Grants. Although the NIH does not require detail, the Office of Sponsored Programs Grants Administration (OSPGA) will require enough detail to assure accuracy of the budget and unit commitments to appropriately budget by cost pool categories in the PeopleSoft Financial System.

      Salaries

        The Salary and Wage section of most grant applications will request a listing of the persons working on the project, their roles, the estimated time committed to the project (usually as a percent of full-time commitments) and the amount of salary to be charged to the project. Salary calculations should reflect the total percentage effort of each member of the project team, whether or not the money is being recovered from the funding agency, with the balance being shown as a University cost sharing. University voluntary cost sharing is discouraged.

        Factors that should be considered in salary and wage calculations include:

        · If the award is expected to be made in a budget year different from the application year, salary requests should be adjusted to show the anticipated increase in base salaries. Keep in mind the amount of time needed for proposal review;

        · Salary escalation factors for subsequent funding years should be calculated using a 3-4 percent escalation factor;

        · If a promotion is expected to occur during the project period, the anticipated salary adjustment should be reflected in the proposal budget and an explanation should be provided in the budget justification;

        · 10 percent effort is roughly equivalent to one half day per week;

        · Salaries for unfilled classified or Professional and Administrative (P&A) positions should be estimated at midpoint of the salary range for that pay grade;

        · In situations where time commitments on the grant are going to require a member of the research team to be released from other responsibilities, the immediate supervisor prior to submission of the proposal the Office of Sponsored Programs Grants Administration and/or chair must approve that change of assignment.

         

        Note: The investigator salary amount that is used for budgeting purposes in the proposal is the total university compensation. It includes: (1) the faculty base as defined in Redbook section 4.3.2 and (2) salary supplements, such as administrative supplements, University Scholar or Distinguished Scholar supplements, research incentive awards or other compensation arrangements that last for at least 6 months and can be reduced or eliminated as appropriate. X-pays for short term projects (less than six months) are not included in total university compensation.

        While the budget and administrative functions of the proposal must be kept separate, the roles of all institutions involved must be fully integrated in the research plan.

         

          Example A:
          A faculty member with a twelve-month appointment earns $65,000/year plus a salary supplement of $6,500 associated with being appointed a University Scholar. He/She anticipates spending 30% of his/her time on this project, which is scheduled to begin in the next fiscal year from now.
          1. Total University Compensation at the time of the award will be $71,500 + a 4 percent raise or $74,360 :
          $71,500 x 1.04 = $74,360
          2. Multiply the estimated Total University Compensation by the percentage effort:
          $74,360 x 0.30 = $22,308
          Example B:
          A faculty member on a B-10 appointment will be earning $45,000/year at the time of the award. He/She anticipates spending the entire summer plus 20 percent of his/her time during the academic year on this project.
          1. Summer salary can be calculated as ($45,000/9) x 3 = $15,000
          2. Academic year salary would still be ($45,000 x 0.2) = $9,000
          3. Salary request = $15,000 + $9,000 = $24,000

         

            Note: The National Science Foundation calculates summer salary based on 2/9 of the academic year base.

            Note: The National Institutes of Health has a salary cap of $179,900 indicating that the agency will not reimburse for the pro-rata portion of base salary above the cap. Remember this when applying the effort percentage to the base salary for inclusion in the grant budget.
            Example: Professor A earns $225,000 salary, including a Distinguished University Supplement, and the percent effort on the grant totals 25 percent. The grant budget amount should include 25 percent of $199,700 NOT $225,000. The $225,000 salary is still indicated in the budget as the total institutional salary.
            Professor B is earning $90,000 salary and the percent effort is 25 percent.. The grant budget amount should include 25 percent of $90,000.


        Student Salaries

        A salary is paid to students for work or service conducted for the University outside of any educational responsibilities. If Graduate Research Assistants are included on a grant and are receiving a salary, this salary is part of the wage and salary calculations. A stipend is compensation for training activities. Stipends are not included in the wage and salary calculations for research grants proposals.

        Minimum salary/stipend levels for graduate assistantships are established by the Graduate School Dean’s Office. Faculty adding graduate or undergraduate students to their research programs should contact the unit business manager or designee in their home department to determine the correct rate of pay.

        Fringe Benefits

        Fringe benefits are those items that an employee of the University receives over and above salary. This category includes costs such as the University’s contribution to Social Security, to retirement funds, to health insurance, long-term disability and life insurance and the Medicare tax. For the purpose of the proposal, fringe benefits may be calculated on a weighted average as a percentage of salary, based on the schedule below. The actual amounts of fringe benefits will be charged to the project and the actual rates may vary from the average rate, depending on a person’s salary and benefits package.

         Recommed Fringe Benefit Rates   

                                            

      Equipment

        Equipment, as defined in OMB Circular A-21, refers to any utilitarian item costing $5,000 or greater with a life expectancy of greater than one year. Costs necessary for delivery and installation should be included to reach the $5,000 threshold only if they are part of the terms and conditions of purchase. If an item fails to meet either of these standards, it should be listed under the budget category for “materials and supplies.”


            Note: Applications to agencies outside the federal government are likely to have lower thresholds for equipment classifications.

        The following are some other important items pertaining to equipment:

        · Software is only classified as equipment when it is operating software necessary for the performance of the equipment in question. Application software is never classified as equipment.

        · Equipment is never included in the Modified Total Direct Costs used as a basis for F&A calculation.

        Equipment requests should document the necessity of the equipment to the successful completion of the project. Where possible, manufacturer’s price quotes should be used to document the cost basis for the particular piece of equipment; however the PI/PD should be aware of the likelihood of a bidding requirement upon actual purchase of larger equipment items.

        Expendable Materials and Supplies

      Items included in this budget category generally refer to consumables and small equipment with a value of less than $5,000. Supplies should be categorized by type and estimated cost. In most circumstances, federal regulations prohibit the purchase of general office supplies in a grant or contract budget. In special circumstances where the cost can be justified as a real and reasonable cost of the project, these costs can be requested, but funding will be up to the judgment of the agency’s grants management staff. It is important to note that an agency’s approval of a particular item of cost does not establish the cost as an allowable cost to the sponsored project.

      Tuition

      Tuition is an allowable direct charge for students involved on sponsored projects. However, it is never included in the Modified Total Direct Costs used as a basis for F&A calculations.


      Consultants

        Consultant costs should be included for situations in which it is impossible or impractical to put an individual on as salaried. Usually consultants are personnel from outside the University whose expertise is needed on a project for a fixed period or for a specific activity. As a general rule, hiring a consultant entails a personal services contract. The department is expected to follow normal University policies and procedures for processing personal services contracts. University of Louisville personnel may serve as consultants on other faculty projects if they meet the following criteria:

        · The faculty member is not located in the same department as the PI/PD or any of the key personnel;

        · The activity the consultant is undertaking on the project is not part of the duties outlined in his/her specific work assignment. All the same University guidelines pertaining to faculty and staff consulting activities apply under these circumstances.

        Consultants should be identified by name. The budget justification should discuss his/her area of expertise and the necessity of including him/her on the project. The fee basis should be detailed and any reimbursable expenses including travel should be outlined separately.

            Note: The maximum daily fee allowable for consultants on a National Science Foundation proposal is $524/day as of January 1, 2004.

        See Chapter 7, Section 2 for additional discussion of consultant and subaward costs.

        Subawards

        If the proposed project involves work to be done at another institution or agency outside of the University of Louisville, it may be necessary to issue a subaward. In most circumstances, the funding agency will prefer that one institution take administrative oversight for the management of the project. In these circumstances, the award will be made to the lead institution and that institution will then create a subaward to transfer a portion of the funding and responsibilities to personnel at a second institution. Those individuals will have full control over their section of the work, but will report back through the primary institution that will have ultimate responsibility to the funding agency.


            Note: While the budget and administrative functions of the proposal must be kept separate, the roles of all institutions involved must be fully integrated in the research plan.

        The subawardee will need to provide the primary institution with a complete budget outlining its share of the project costs, including F&A. The total cost for that part of the project will then be added to the budget of the primary institution as a single line item under “subaward” or “subgrant.” The budget sheet and justification from the subawardee will be included as an appendix to the primary budget.

        If the University of Louisville is the primary institution, the University requires that the budget, along with a letter of confirmation, be signed by the authorized representative of the subawardee’s institution. The letter should indicate that the representative is satisfied with the scope of work, the commitments of the faculty and the estimated costs.

        Once the agency issues an award to the University the Office of Sponsored Programs Grants Administration (OSPGA) (or the Office of Industry Contracts for research involving human subjects) will create the terms of the subaward but only after working with the PI/PD to ensure that there have been no changes in the budget or the work plan as it was submitted.

        If faculty members from the University of Louisville are entering into a subawardee agreement with another university, a fully signed Proposal Clearance Form or MIRA form is required, indicating the primary institution as the sponsoring agency before agreeing to authorize the budget or letter of commitment. In addition, a fully signed copy of the complete proposal must be provided to OSPGA (or OIC as appropriate) before an award will be accepted.

      Travel

        Travel can be requested on proposal budgets to capture the cost of off-campus activities, to access holdings at a remote location, or to attend a scholarly meeting to present details of the funded work. Travel can also be requested to bring collaborators or consultants from outside the University of Louisville to this site for activities related to the proposed work plan. All travel is subject to University Travel Policies.

         

      Other Direct Costs

        There are other costs that may pertain to specialized projects that do not easily fall into one of the categories above. Examples of such costs include service charges for patient care, statistical evaluation, survey research, repair or maintenance of equipment, rental or adaptation of space, or publication costs. Any substantial costs that are included in the “Other” category should be discussed with the program manager prior to submitting the request. If the request involves renovation of existing space, endorsement by the proper University officials will be required prior to final sign-off.

        All of the costs discussed so far are considered Direct Costs, or costs that are directly associated with the project. All of these costs must be described in the budget justification and linked back to their role in the project narrative. Other allowable direct costs are described in OMB Circular A-21, Section J or in the application guidelines issued by the funding agency.

        Facilities and Administrative Costs (F&A)

        Facilities and Administrative costs are often referred to as indirect or overhead costs. They are called indirect because they can not be measured directly, such as salaries for example. They must be calculated indirectly, as an approved percentage of the MTDC. Nevertheless, F&A costs are real audited costs that the University incurs in carrying out sponsored research projects. Reimbursed F&A funds are received by the University and used for facilities and infrastructure needed to support research and creative activities.

Facilities & Administrative Cost (F&A) (a.k.a. Indirect Cost) Rates


        Calculating F&A–Modified Total Direct Costs

        The F&A schedule above represents a weighted average of costs based on an audit of expenditures related to scholarly enterprise at the University of Louisville. These averages are applied to a proposal budget based on a percentage of Modified Total Direct Costs (MTDC). MTDC are those direct costs that are accepted by the federal government for use as a base in the calculation of the appropriate F&A costs associated with a project, as exhibited in the table below. MTDC usually consists of salary and wages, fringe benefits, materials and supplies, travel, services and consultants. Direct costs that must be excluded from MTDC include equipment ($5,000 or greater), capital expenditures, charges for patient care, tuition remission, rental costs of off-site facilities, and scholarships and fellowships.

        When there is a subaward associated with a proposal, only the first $25,000 of that subaward is included in the MTDC base of the primary recipient. This is in addition to any F&A reimbursement request made by the subawardee.

        Only the Executive Vice President for Research has the authority to reduce or waive F&A costs on a grant or contract proposal. Waivers in circumstances where the agency guidelines allow full F&A cost recovery are rare. In circumstances where the agency has a written policy for a cap on indirect cost reimbursement, the University will honor that request to the extent possible. Please note: if a reduced indirect rate is allowed on non-federal sponsored projects, it will be applied to Total Direct Costs, not MTDC. Requests for a waiver must be submitted by the Dean of the College in writing to the EVPR though the Office of Sponsored Programs Grants Administration (OSPGA) or the Office of Industry Contracts (OIC). If a waiver is approved, OSPGA/OIC may request that additional costs normally recovered through F&A be shown as direct cost or as cost sharing on the proposal.

        Example: Computing the MTDC Base

                  Proposal to the US Dept of Education for an on-campus research project.



                  Salaries and Wages 150,000
                  Fringe Benefits 36,000
                  Equipment 250,000
                  Materials and Supplies 75,000
                  Travel 2,500
                  Consultant Services 50,000
                  Subcontract to JCPS 175,000



                  Total Direct Costs
                  738,500



                  * Exclusions to MTDC base

                  Equipment 250,000
                  Amount over $25,000 for subcontract 150,000



                  Total Exclusions 400,000



                  MTDC base (Total Direct - Exclusions) 338,500



                  48%  x  MTDC
                  162,480

                  (Current federally negotiated rate
                  x MTDC = sponsor requested F&A)



                  Total Cost of the Proposal
                  900,980

                 

                *  The figures provided represent the on-campus research rate at the time of publication and should be modified based upon any future negotiated rate agreements.

                 

                Off-Campus Rate

                The Off-Campus rate may be requested if the PI/PD certifies that more than 50% of the University’s work entailed in the project will be conducted at a site not owned by the University of Louisville or to which the University is not directly allocating facilities costs. In such circumstances, the off-campus rate will apply to the entire project.

                Industry-Sponsored Clinical Drug Study Rate

                For clinical trials in which the sponsor is a for-profit enterprise, the F&A rate will be 26% of the total direct costs of the project. No modifying exclusions are recognized. Additionally, some costs that would be covered under the federally negotiated F&A cost rate may not be covered under the lower industry rate and may need to be added as a direct cost.

                 

                Budget Justification

                The budget justification is a narrative section appended to the budget that describes the requested costs in detail and outlines the need for each item requested. This section should tie all of the items listed in the budget back to the work plan described in the narrative. The more closely a requested item can be linked to the success of the project, the less likely it is to be cut if the agency decides to negotiate an award.

                Cost Sharing and Matching Costs

                Often a government or not-for-profit funding agency will not bear the full cost of a proposed project. In such instances additional funding must be obtained from University funds or from a party external to the University.

                Cost sharing is also known as a matching or in-kind contribution. “In-kind” means obligation of costs already incurred by the University. For example, a faculty member’s salary will be paid regardless of whether or not this proposal is funded. However, if the proposal is funded, a certain portion of that salary will be dedicated to time and effort on the project and will comprise cost sharing if not directly paid by the project. In-kind cost sharing also includes non-cash contributions to sponsored projects including donations of equipment and supplies or effort contributed by individuals not paid by the institution.

                It is generally not appropriate to cost share when the industry is the sponsor (unless it is a case of governmental “flow through”). Department head, dean, and the Office of EVPR approval are required before cost sharing with research sponsored by industry.

                The following describes the different classifications of University labor-related cost sharing, developed in accordance with federal guidelines through the Federal Office of Management and Budget.

                1. Mandatory Committed Cost Sharing: The portion of project costs that the Institution must provide in support of the project. For example, the sponsoring agency may require the University to fund half the cost of an investigator’s salary in support of the project.

                2. Voluntary Committed Cost Sharing: The portion of project costs in excess of mandatory sponsor requirements offered by the investigator or institution in the project budget and accepted as part of the sponsor agreement. For example, the investigator proposes to fund 10% of total salary from the project and to commit 20% effort to the project. The 10% of total effort unfunded by the project represents voluntary committed cost sharing. Voluntary committed cost sharing should be kept to a minimum.

                3. Voluntary Uncommitted Cost Sharing: The portion of total project costs in excess of sponsor funding that is incurred by the institution but not required by the sponsor nor specifically committed in the proposal budget or budget justification. For example, if the award requires 10 percent effort and the investigator, in order to complete the research, decides that unanticipated additional effort is required at a level of 15 percent. The salary costs associated with the excess 5 percent effort represent voluntary uncommitted cost sharing.

                Cost sharing expenses must be allowable, allocable, reasonable and necessary as described in OMB Circular A-21. These expenditures must be treated consistently and must be verifiable through documentation.

                Cost sharing or matching costs can be obtained through grants or commitments from outside the University, such as those from industry partners. However, money originating from federal sources cannot be used to match other federal grants.

                Any cost sharing obligated in a funded grant proposal must be accounted for and identified by the Office of Sponsored Programs Grants Administration (or the Office of Industry Contracts) as an assessment of the cost of the project. In-kind salary and other matching commitments will be escrowed into a separate cost-sharing account, identified by a companion speedtype. This makes it possible for the University to identify the total project costs for final financial reporting, closeout and audit of the project records. Voluntary uncommitted cost sharing is not required to be charged to a separate companion speedtype.

                 

                GENERAL GUIDELINE FOR COST SHARING (MATCHING) REQUESTS
                FOR GRANTS, CONTRACTS and FELLOWSHIPS

                Requests for cost sharing on grants and contracts are frequent. These guidelines outline what cost sharing (matching) requests will be supported on a routine basis when grants and contracts include full facilities and administration overhead. Cost sharing requests that do not fit these guidelines will be negotiated on a case by case basis. When faculty seek prestigious grants and fellowships which provide limited extramural funds, the cost sharing principles for prestigious, but limited extramural awards described below apply. All requests should come from the appropriate unit dean one week ahead of the deadline for proposal submission.

                COST SHARING

                1. Non-Federal, Cost Share Required

                The VPR will make a contribution equivalent to an amount equal to 10% of the anticipated facilities and administrative overhead costs if the PI, department, and/or unit contribute an amount at least equal to 20% of the anticipated overhead recovery.

                2. Federal Grant Cost Share Required

                The EVPR will, subject to availability, automatically provide 50% of the necessary cost share, up to $50,000, if the proposal is consistent with specific Challenge for Excellence initiatives. Cost sharing for proposals in excess of $50,000 must be negotiated. Proposals that do not focus on specific Challenge initiatives must be negotiated on a case by case basis.

                Cost Sharing Principles and Guidelines for Prestigious, But Limited Extramural Awards

                A. Successful competition for extramural support of research, scholarship, creative activities and educational initiatives enhances U of L’s reputation and brings new resources to the institution. To these ends, faculty members in all fields are urged to find and take advantage of extramural funding opportunities. In keeping with the University's goal to increase federal funding, particular efforts should be made to encourage applications for and enable acceptance of federal commitments.

                B. It is the responsibility of the university to support, enable, and facilitate both application for and acceptance of external funding, including cost sharing where appropriate.

                C. No faculty member should experience a diminution of university salary in accepting a substantial and prestigious external grant.

                D. The department, the unit, and the office of the vice-president for research should work with grantees to cover both salary and non-salary costs when prestigious awards do not cover the real cost of the work and/or when cost sharing is required by the agency.

                Implementation:

                All applicants for grants, contracts, and fellowships must submit a proposal clearance form to their chair or other supervisor, their dean, and the Office of Research Administration. Some agencies, particularly those funding arts, humanities and social sciences such as NEH, Woodrow Wilson, Mellon, McKnight, and Rockefeller, may not provide sufficient funds for salary and expenses. During the clearance process, a plan to cover unrelated university responsibilities during the term(s) in which the extramural award is active will be designed. Cost sharing will be committed through consultation among the Office of the Executive Vice President for Research, the department chair and the dean. As a rule, awards exceeding $8,000 per semester or more may qualify for one or more of the following:

                • supplementation of direct salary support provided by the award, so that total salary for the academic term(s) in which the award is active is equal to the investigator’s regular university salary for that period*.
                • funding for real costs to support the project (travel, lodging, higher cost of living in a location away from Louisville, etc.)

                *In the case of qualifying summer grants of $4000 or more to faculty on 10-month contracts, or on +20% contracts for summer teaching, the plan should provide a supplement to the grant stipend up to a combined amount (grant plus supplement) equal to annualization of the investigator's salary. For those normally scheduled to teach in the summer, such annualization will be in lieu of the +20%, and the faculty member will be relieved from summer teaching. In the case of summer grants to faculty typically on +20% contracts for overload teaching during the regular term, the faculty member may choose to give up the +20% in favor of an annualization as above, or to continue with the +20% as planned, and accept the grant with no further salary assistance from the university.

                For more information and procedures concerning cost sharing at the University, please refer to Chapter 6, Section 8.

                 

                (07/18/2011)

                 


                [1] The documents would be submitted to the appropriate office based on the sponsor. LOIs submitted to governmental and non-profit sponsor go to OGM. LOIs submitted to industry (which includes SBIR and STTR proposals) go to OIC.

                [2] The documents would be submitted to the appropriate office based on the sponsor. Proposals submitted to governmental and non-profit sponsors go to OGM. Proposals submitted to industry (which includes SBIR and STTR proposals) go to OIC.

                 

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