The proposal budget must be as accurate as possible. When proposing a budget for a sponsored project, the PI assures Stanford and the sponsor that project finances are represented as accurately as possible. It ensures the sponsor pays its fair share of the project costs. It is the first opportunity you have to control costs.

Specific requirements must be adhered to at the proposal stage, as well as when funds are expended: cost principles as defined by federal regulations, consistency requirements as imposed by the (CAS) Board, must be adhered to at the proposal stage, as well as when funds are expended. Estimating methods must be consistent with Stanford accounting practices and must allow expenditures to be accumulated and reported to at least the same level of detail as the estimate.

Each proposal must contain a budget for each year of support requested (unless a program announcement stipulates otherwise.) The amounts requested for each budget line item should be documented and justified in the budget justification. When proposing administrative salaries that are integral to a project, a justification is required.

Although you can’t foresee how the project will unfold and exactly what the costs will be, you must develop a budget that is as realistic as possible. A budget that fails to request an adequate amount of funds is just as problematic to a proposal as one that requests an unrealistically large amount of funds. The objective is to create an accurate and detailed budget based on the proposal objectives. Always follow Stanford policy and the sponsor's proposal instructions.

The proposal budget ensures the sponsor pays its fair share of the project costs. It is the first opportunity you have to control costs. It becomes a management tool once the project is awarded. It  prevents problems such as: shifting costs to a non-benefiting sponsored project (unallowable), cost transfers, cost overruns, and late or overspending to “burn” the balance.

Read the proposal application instructions carefully. Look for items that will require a special approval early in proposal development.  Some approvals can be processed while the rest of the proposal is being developed. Special approvals include: indirect cost waivers, PI waivers, emeritus faculty participation, other departments participation, possible conflict of interest, renovation/construction, subawards, human subjects, lab animals, biohazards or other safety issues.

1. Who is the sponsor?

2. What is the period of performance?

3. Who will be involved in the project?

4. Will there be new hires or additional students?

5. Will there be domestic or foreign travel?  If yes, then where and for how long?

6. What type of technical supplies are required?

7. Is a subaward required?

8. Does the sponsor require cost sharing?

9. Is specialized equipment required?

10. Is administrative staff integral? (for federal projects only)

School administration teams can assist with budget questions and with preparation of the budget. Local administration teams by school:

• School of Medicine:  Research Management Group
• School of Engineering: Engineering Research Administration
• School of Humanities and Sciences: Dean's Office
• Graduate School of Education: Dean's Office
• School of Earth Science: Department Manager
• Independent Labs, Institutes  and Centers : Center Directors and/or DoR
• Graduate School of Business:  Anita deGero
• Law School:  Joel Greene
• Libraries:  Mimi Calter

Zero Based

Gather data to estimate costs. Use current data from: People Soft, Vendor Quotes, and Travel Quotes. Break the work down to small increments so you can project costs. Apply judgment based on the facts and circumstances of this project and the PI’s portfolio. Discuss your estimates with the PI and make changes.

Historical

Assess actual costs and spending patterns from a similar project. Was that project:  within budget, on time, were performance specifications met?  Was the project free from disallowed cost at closeout? Review burn rates for non-salary expenses. Use your assessments to estimate costs for the new project.

The Uniform Guidance is effective for federally sponsored agreements and new funding increments incorporating the Uniform Guidance awarded on or after December 26, 2014. Proposals submitted for federally sponsored projects expected to be awarded on or after December 26, 2014 will reflect the following change in Cost Sharing.

The Uniform Guidance and states:

• Under Federal research proposals, voluntary committed cost sharing is not expected.
• It cannot be used as a factor during the merit review of applications or proposals, but may be considered if it is both in accordance with Federal awarding agency regulations and specified in a notice of funding opportunity.

In addition, the National Science Foundation will not accept proposals with voluntary committed cost sharing unless it is specified in the notice of funding opportunity.

Cost sharing is defined as the portion of total costs of a sponsored project paid for by Stanford, rather than the sponsor.

Mandatory cost sharing is required by the sponsor as a condition of obtaining an award. The cost-sharing commitment must be included in the proposal to be considered by the sponsor.

Voluntary cost sharing is not required by the sponsor as a condition of obtaining an award. It must be included in the proposal, but the sponsor does not require cost sharing as a condition of the award.

Committed cost sharing is when an award is received in which there was either a mandatory or voluntary cost sharing commitment by Stanford in the proposal. The cost sharing activity becomes a binding commitment which the University must provide as part of the performance of the sponsored agreement. This commitment must be tracked in the accounting system as cost sharing.

Voluntary uncommitted cost sharing is faculty-donated effort or other direct costs above that agreed to as part of the award. Since it was not proposed and constitutes “additional” time or materials it is not considered a binding agreement and is not accounted for as cost sharing.

Matching refers to the sponsor requirement that the University match grant funds in some proportion with funds from another party, either from the University or more typically another sponsor (with both sponsors’ approval). Matching requirements may be in the form of actual cash expenditure of funds or may be an “in-kind” match, which is the value of non-cash contributions to the project. An in-kind or matching contribution made by a party other than Stanford requires documentation from the third party supporting the use of the funds as in-kind/matching and may require a certification of fair market value.

Allowable Cost Sharing Expenditures

When submitting a proposal that requires cost sharing, make sure to follow the sponsor's instructions and Stanford policy. You can propose cost sharing only for those expenses that would qualify as allowable project costs.

Examples of Allowable Cost Sharing

• Salary and Staff Benefits (School of Medicine prohibits faculty cost sharing)
• Tuition (the Stanford's contribution only)
• Equipment when the  award is contingent upon such cost-sharing
• Travel
• Material and supplies
• Other project expenses
• F&A costs

F&A costs are real costs of conducting instruction, research and other sponsored activities. These F&A costs do not disappear simply because a sponsor refuses to pay for them; the University must fund any F&A costs that have not been reimbursed. When direct costs are cost shared, the F&A costs associated with the direct costs are automatically cost shared. PIs may take advantage of the automatic cost sharing of these costs, and include them on the proposal budget. PIs may also include any waived F&A costs as University cost sharing in proposals.

Unallowable Cost Sharing Expenditures

The following expenses cannot be offered as cost-sharing commitments in sponsored project proposals.

• Unallowable costs as defined in A-21, section J or the Uniform Guidance
•  Costs designated as unallowable for a particular sponsored project
• Salary dollars above a regulatory cap, e.g., NIH salary dollars
• Effort above 90% (95% for Research Faculty) for those faculty with an appointment of less than 12 months
• Stanford facilities such as laboratory space. PIs should take care in preparing proposals for sponsored agreements not to commit use of facilities as cost sharing, but rather to characterize the facilities as available for the performance of the sponsored agreement at no direct cost to the project.
• Stanford utilities depreciation on government-funded equipment F&A costs in excess of the 26% administrative cap, except for DOD contract.
• Equipment unless it is a requirement of obtaining the award
• PI Salary ( School of Medicine only)

Cost sharing may not be proposed where the sponsor has explicitly prohibited it (e.g., National Science Foundation).

Sources of Funds for Cost Sharing Commitments

It is the PI's responsibility to identify and provide resources for cost sharing of direct costs (including equipment).

The PI may not utilize funds from another federal award as the source of cost sharing, except as authorized by statute. The PI may utilize funds from non-federal awards as the source of cost sharing only when specifically allowed by both parties. Funds for cost-shared expenditures are typically identified from among gift, endowment income, operating budget (except in the School of Medicine), or other department designated funds.

At the time of proposal submission, the Office of Sponsored Research (OSR) or the Research Management Group (RMG) is notified of the cost-sharing commitment through the Proposal. When OSR/RMG receives the award from the sponsor, the notice of award will indicate if the project involves cost sharing. In addition, the existence of cost sharing is noted in SeRA and Oracle.

Salaries make up the largest category of direct project costs so when preparing a budget, start by making a list all Stanford project personnel who will be required to support the proposed statement of work.  If a person needs to be hired once the award is funded, simply estimate their salary and percentage of effort and list them as To Be Determined (TBD)

Project Personnel Included

Project personnel includes only Stanford personnel: the principal investigator, co-PIs, co- investigators, Academic Staff Researchers (ASR), technical support staff, graduate students, research assistants, and administrative support staff (working directly on a major project). It includes Stanford personnel acting as collaborators.

Project Personnel Excluded

Stanford Hospital and VA employees are not budgeted in the Personnel budget category. Stanford Hospital employees are budgeted in “Patient Care.” Check with your Research Process Manager (RPM) in the School of Medicine or OSR for advice regarding VA employees.

Other non-Stanford personnel may be proposed as consultants or as the personnel in a subaward.

Salary Information

Include in the budget:

1. The persons role on the project (not job title) and the person's name 

Example: Rafael Nadal, Lead Protein Synthesizer  not Rafael Nadal, Professional Tennis Player

2. The Percentage of Effort or Person Months Devoted to the Project

This includes all responsibilities (including teaching and research) together and may not exceed 100% FTE. The portion of salary charged to the project is based on the percentage of FTE committed to the project. Remember that any percentage of effort committed in a proposal and subsequently devoted, must be accounted for later as project expenditure (either a direct project charge or cost sharing).

Nominal contributions of effort “as needed” may be included and NOT quantified. In this case, where no % FTE is specified, no cost sharing is committed. A “part-time” commitment, on the other hand, implies a specified % FTE, and that amount should be quantified. If awarded, “part-time” effort must be either directly charged or cost shared.

For help converting percent effort to person months click here.  

3.  The Appointment Type (academic, summer or calendar) 

Nine Month Appointment and Summer Effort A faculty member on a nine-month appointment can only be paid from sponsored projects up to 90% during any of the summer months. Salary charged to sponsored projects during the summer months must be consistent with effort expended during the same period.

Limits on Salary Amounts

NSF

NSF limits salary compensation for senior project personnel to no more than two months of their regular salary in any one year from all NSF-funded grants. This effort must be documented in accordance with the applicable cost principles.

If anticipated, any compensation for such personnel in excess of two months must be disclosed in the proposal budget, justified in the budget justification, and must be specifically approved by NSF in the award.

NIH Salary Cap  (DHHS Salary Cap)

NIH will not pay requested salary above the annual salary cap. If salary is requested above the salary cap, NIH will reduce that line item to the salary cap, resulting in a reduced total award amount.  When preparing a detailed budget, you must base your request on actual institutional base salaries (not the cap) so that NIH staff has the most current information in hand at the time of award and can apply the appropriate salary cap at that time.

The DHHS salary cap limits the amount which can be charged to a DHHS project (or related cost sharing account) by limiting the maximum annual salary rate for a 100%, 12-month FTE. The rate is set annually and applies to all awards made that year.

DHHS establishes the funding limitation for salaries at the time that a competitive award is made. However, if subsequent (non-competing) funding is awarded during a year with a higher salary cap, NIH will allow existing funds to be re-budgeted to that level. Typically, no new funds will be awarded for this purpose. 

• DHHS salary cap may change annually. 
• DHHS funds salary up to the level of the cap in effect on the award date. 
• Use a special expenditure type to capture difference between actual pay & what can be charged to a DHHS award

Other sponsors also may have salary caps, such as Juvenile Diabetes Association. Read  the program announcement carefully to determine if your sponsor has a salary cap.

Proposal Preparation Costs

Proposal preparation costs (typically comprised of salary for the PI and/or others) may not be charged to sponsored projects unless the proposal is being prepared for submission to a current sponsor for a non-competing extension or continuation of its currently awarded project. In those circumstances, it is appropriate to charge those proposal preparation costs directly to current projects. Costs for development of proposals for submission to other sponsors, or for work that does not relate to ongoing projects, is not allocable to current projects and may not be charged to those projects.

While administrative expenses are normally charged through the indirect cost rate, federal regulations describe when administrative and clerical salaries can be charged directly to federally-sponsored projects.

You can propose administrative and clerical salaries to a federally sponsored projects  if ALL of the following conditions are met:

1. Administrative or clerical services are integral to a project or activity

• The requirement that the cost is “integral” means the services are essential, vital, or fundamental to the project or activity

2. Individuals involved can be specifically identified with the project or activity

3. Such costs are explicitly included in the budget or have the prior written approval of the federal awarding agency

4. A budget justification must be included in the proposal

5. The cost are not also recovered as F&A costs

Non-federally Sponsored Projects: Direct charging of administrative or clerical salaries to a non-federally sponsored project is appropriate if the services benefit the sponsored project.  Some non-federal sponsors may have specific requirements for direct charging of administrative costs.  Such requirements need to be addressed in proposals.

The Tuition Grant Program (TGP) fringe rate is assessed on regular benefits-eligible salaries charged to all non-government funded PTAs including sponsored projects, operating budgets, and auxiliary PTAs.

Regular benefits-eligible salaries charged to government-funded PTAs, academic service centers and sponsored project cost sharing PTAs are exempt from the TGP charge.

The TGP charge is subject to facilities and administrative costs (F&A) and infrastructure charges. The TGP fringe benefit rates can be found on the Rates page of this site. The TGP charge appears in expenditure type 51770 Fringe Benefits TGP.

If you have any questions or need more information about the application of the TGP Fringe Benefit Rate, please contact Andrew Harker, Provost Office, at extension 5-0666 or Jesse Charlton, Research Administration Policy and Compliance, at extension 3-9102.

View the TGP Rate

Capital Equipment

Unless otherwise specified by the sponsor terms and conditions, assets are defined as capital equipment by Stanford when the following three criteria are met.

1. Cost is $5,000 or greater
2. Useful life of more than one year, and
3. Individual, stand-alone, moveable, tangible item

Sponsor Terms and Conditions

Always read your award terms and conditions as sponsors may define equipment differently. Verify equipment ownership as well.  Review the terms and conditions for required prior approvals and check for other management obligations. It is critical to use the correct Expenditure Types for purchases.  Refer to the Frequently Used Expenditure Types Chart.

Check the terms and conditions of your particular award for information related to the acquisition, ownership and disposition of property.  Some awards do not allow the purchase of particular types of equipment, while other awards are made specifically for that purpose.  Some require pre-approvals before equipment may be purchased.

Document allocability, i.e., the way in which the equipment benefits the project, is critical, particularly if the equipment is acquired LATE in the project period.  Similar to the rules for the direct charging of administrative expenses, there is a parallel requirement for a good budget justification whenever you plan to charge “general purpose” equipment to a project.  The federal bias is that such equipment is an indirect cost.  If you need to purchase such equipment specifically for a project, the budget justification should be detailed in its linkage of the expense to the technical work of the project.  There are no indirect cost waivers on non-capital equipment costing less than $5,000.

Sponsor owned property may have a definition that is different for “equipment” acquisition and reporting thresholds from Stanford’s, so you must review the award terms & conditions for exceptions.  Remember, transactions for equipment purchased for the government are not taxable.

Include in the budget: type of equipment, manufacturer’s name or identifying mark, quantity, estimated cost, and basis for the estimate, vendor quote, and sales tax.

Budget sales tax and freight if applicable. Expenses included in the price of the equipment are listed below.  Although some expenses must be excluded from the purchase price they can and should be proposed if applicable.   These types of costs should be included in the "other" expense category.

General Purpose Equipment

General purpose (non-scientific) equipment budgeted in a proposal will require an especially careful budget justification. Budget for a specific item “or equivalent.”  This will give you the flexibility to substitute something equivalent later for the same amount of money. Be aware of fabrications.   These are unique, specialized equipment that are not commercially available.  They are considered material until complete and will have a useful life of more than 1 year after completion and an aggregate cost of $5,000 or more. If you have a fabrication, see the Property Management Manual below in Related Items.

A similar type of justification is needed if you are proposing to purchase general purpose equipment. Office equipment is normally considered an indirect cost. Avoid a CAS violation by always charging these items consistently.

Summarize travel costs in the budget. Separate foreign and domestic travel.

​In the Budget Justification

Document how the travel benefits the sponsored project. It is important to note that federal sponsors require air travel on U.S.-owned air carriers. Include the following.

• Describe and list each trip separately
• Distinguish between foreign and domestic travel
• Person traveling, purpose, and duration of trip
• Transportation costs to and from destination
• Per diem costs or actual projection for room and board
• Ground transportation costs
• Other expenses as determined by the statement of work
•  Federal sponsors require air travel on US owned air carriers  

Review burn rates for other similar projects. Each scope of work requires different other expenses such as: tents, sleeping bags and groceries for those studying in remote areas, fish tanks for those studying fish. Get vendor quotes.

Remember: sales tax, shipping costs, maintenance, publications, animals including care and handling.

Tuition allowance for graduate student Research Assistants (RAs) must be charged to the project where the graduate students' effort is charged. Each school has their own tuition rate.

• Non-School of Medicine: Charge 60% of full tuition allowance directly to the project; the balance is the University’s contribution.  This is not cost sharing.
• School of Medicine: Charge 81% of full tuition directly to the project

Tuition Allowance (TAL), is the tuition component of an assistantship compensation package. The cost of TAL is shared between Stanford general funds and school, department, and/or sponsored project funds providing the assistantship. TAL is paid for a full quarter. We cannot bill the government for expenses if the corresponding service has not been provided. In other words, we cannot be reimbursed for tuition by a government sponsor until the end of the term but tuition allowance is provided to the student at the beginning of the term.

Stanford's policy is to apply the University's full negotiated Facilities & Administrative costs to all externally-sponsored projects.

In certain circumstances, the Vice Provost and Dean of Research may approve full or partial waivers of the F&A costs normally incurred by sponsored projects. However, such waivers will not be considered for projects where the sponsor is:

1.      A for-profit organization, whether US or international, or

2.     An office or agency of a foreign government, including organizations funded by that government.

F&A waivers or reductions are not granted to remedy incorrect classifications of costs. PIs may request supplemental funding from sponsors, but such requests are rarely granted.

Pre-Approved F&A Waiver Exceptions

Some programs or sponsors are pre-approved by Stanford for a waiver of a portion or all of our normal F&A cost recovery. In most cases, these programs or sponsors require such a waiver as a condition of the award.  View the Pre-approved F&A Waiver List here.

Publicly Available Policy on Overhead Expenses

Stanford recognizes that many non-profit foundations have their own policies regarding the use of their funds for overhead expenses. In the case where the foundation has an official written and publicly disclosed policy published on line that is applied on a consistent basis, or where a public solicitation for proposals defines a limit on indirect cost recovery as a condition of the program, Stanford will normally accept those requirements. The foundation's publicly available public policy statement or program solicitation should be submitted to the Office of Sponsored Research or the Research Management Group as an attachment to the Proposal Development & Routing Form (PDRF) as part of the completed proposal package.

No Publicly Available Policy on Overhead Expenses

Case-by-Case Exceptions

The Dean of Research will consider other requests for indirect cost waivers only in very limited circumstances.

Note: This approval authority is delegated to the Dean of the School of Medicine for projects to be administered within the School of Medicine. All requests must go to the Director of the Research Management Group.

Special requests are initiated by the PI and must be approved by the PI's department chair and school dean's office before being sent for approval to the Dean of Research. The decision whether to grant or deny an exception request is at the sole discretion of the Dean of Research, or of the Medical School Dean for projects in that school. In determining the institutional costs and benefits of such requests, the Dean of Research may take any or all of the following into consideration.

• The equity of granting the waiver when the projects of other faculty carry full overhead
• The total cost to Stanford
• The likelihood that an award would be seriously jeopardized without a waiver, and the potential effect of the loss on the faculty member's overall research program
• The benefit of the waiver to new or junior faculty members or in support of research efforts in new directions which otherwise might not be sufficiently developed to attract typical peer-reviewed awards
• The effect of a waiver to increase direct costs available for student support

Outside of the School of Medicine, requests for indirect cost waivers are submitted using a Request for IDC Waiver form.

See the Research Policy Handbook Policy 15.2 Facilities and Administrative (Indirect Cost) Waivers for detailed information.