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Estimate Direct Costs
How much will your research cost? While you are considering your hypothesis, it’s a good idea to develop your research budget by listing and categorizing all of the expenses associated with performing the research rounded to whole dollars. These costs may include: salary, materials and supplies, equipment, statistical help, travel, publication costs, consultants, etc. These are your direct costs, or the cost of doing research.
Know Your Budgetary Limits!
Know your limits! Carefully read the Funding Opportunity Announcement (FOA) for budget criteria. Look for any specific limits or restrictions on the types of expenses (e.g., no construction), spending caps on certain expenses (e.g., travel limited to $10,000) and overall funding limits (e.g., total costs cannot exceed $300,000 per year).
Use the “Goldilocks Approach” to Identify Necessary and Reasonable Costs
Be sure to identify all the costs that are necessary and reasonable to complete the work described in your proposal. So what is reasonable?
We recommend using a “Goldilocks approach.” The best strategy is to make sure your budget is “just right.” Don’t ask for too much, but definitely don’t ask for too little. Review the budget limitations of the FOA and prepare a budget that requests the most reasonable amount of money to do the work, not more and not less.
Reviewers look for reasonable costs and will evaluate whether your request is justified by your aims and methods. Specifically, they will judge whether the figures are in sync with the proposed research tasks. Significant over- or under-estimating suggests you may not understand the scope of the work.
Add in Indirect Costs
Once you have identified all of the direct costs of research, you will add in indirect costs (facilities and administrative “F&A” costs or “overhead”). Indirect costs are incurred by a grantee for common or joint objectives and cannot be identified specifically with a particular project or program. These costs are requested in addition to the direct costs of your project.
Last, But Not Least – Add in “Fringe Benefits”
Is there anything else? Yes. The fringe benefits are the costs that are allowable as part of overall compensation to employees in proportion to the amount of time or effort employees devote to the research, provided such costs are incurred under formally established and consistently applied policies of the organization. The fringe benefit is only applied to salary on the budget and the indirect rate is applied on top of the total amount requested.
Confused? Don’t worry, the NIH budget pages lead you through the process, and most privately funded grants are far less complex; they do not allow indirect costs at all, or strictly limit it to around 10 percent. Ascension Seton Indirect and Fringe rates are listed in Institutional Information for Proposals.