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Preparing a Proposal Budget

Inflation Factors Category Suggested Inflation * Faculty/Staff Salaries 5%/project year Fringe Benefits 5%/project year Grad Asst. Salaries 5%/project year Graduate Tuition 6.5%/project year

Jump to... Link to Budget Training Proposal Review Salaries and Wages Guidance on Labor-Hour Contract NIH Modular Grant Instructions NIH Salary Cap Fringe Benefits Graduate Tuition Capital Equipment (>$5,000) Fabricated Equipment (total cost >$5,000) Travel Conferences and Workshops Materials and Supplies Publication Costs Consultant Services Computer Services Subagreements Other Direct Costs Facilities and Administrative Costs Sponsor-Capped Indirects (F&A) F&A Costs Rate Agreement Cost Sharing

* or as approved by sponsor. Above rates are suggested. 4 - 8% is a reasonable range of potential inflationary rate factors.

Estimated Fringe Benefits

Category	Calculation Guidance
Faculty/Staff	25.0% - [detailed rate components]
Post Doctoral Associates	15.0% - [detailed rate components]
Grad Asst. (FICA/OASI exempt - most likely)	14.0% recommended (includes health insurance and Workers Comp) - [detailed rate components].
Grad Asst. (FICA/OASI non-exempt - most conservative)	19.0% (includes health insurance and OASI/FICA/Workers Comp) [detailed rate components].
Resident, Full-Time Graduate Tuition (budget as other direct costs)	Click Here for Rates (Tuition is required when budgeting for an assistantship and should be excluded from MTDC when using the NCSU Federally negotiated indirect cost rate agreement. To view the institution's rule regarding tuition paid for assistantships, click [HERE]. Fees, are required of the student and can be budgeted, although optional, in requests for external funding. Fees should also be deducted from MTDC when using the NCSU Federally negotiated indirect cost rate agreement. Both tuition and, when desired, fees should be budgeted in the other direct cost category)
Non-Resident, Full-Time Graduate Tuition (budget as other direct costs)	Click Here for Rates (Tuition is required when budgeting for an assistantship and should be excluded from MTDC when using the NCSU Federally negotiated indirect cost rate agreement. To view the institution's rule regarding tuition paid for assistantships, click [HERE]. Fees, are required of the student and can be budgeted, although optional, in requests for external funding. Fees should also be deducted from MTDC when using the NCSU Federally negotiated indirect cost rate agreement. Both tuition and, when desired, fees should be budgeted in the other direct cost category)
Student / Timecard FICA/OASI non-exempt (most likely during non-academic periods)	8.45% recommended {generally reserved for non-assistantship students/employees who have not exempted themselves from FICA/OASI}
Student / Timecard FICA/OASI exempt (most likely during academic period)	0.8% {generally reserved for students on assistantship or students not working more than 20 hours per week total and who are full-time enrolled in classes}

Cost Sharing/Matching

Cost share only when specifically required by the sponsor. Typical cost share items are: PI Salary and fringe benefits and the related facilities and administrative cost. These costs are easily identifiable and documented. Cost sharing in excess of the amount required should be questioned and minimized at the departmental/college level. For more detailed information about cost sharing click [HERE].

Facility and Administrative Costs (aka. indirect costs, overhead)

Post 07/01/07 Start Date
Location	Research	Instruction	Public Service
on-campus rate	48.5%	47.0%	35.0%
off-campus rate	27.3%	26.0%	20.0%

Above Rates are Applied to the MTDC Base

Note: If you propose other than a new or renewal, such as a continuation or supplement where the original award began before July 1, 2007, you must use the former rates. This is because OMB Circular A-21, section G.7 advises that rates should be fixed for the life of an agreement. An agreement life includes all actions that do not require a new agreement.

Pre 07/01/07 Start Date
Location	Research	Instruction	Public Service
on-campus rate	46.0%	47.0%	26.0%
off-campus rate	27.3%	26.0%	20.0%

Above Rates are Applied to the MTDC Base

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1. PROPOSAL REVIEW

A. General

You should obtain administrative review from your college/unit research administrator or contact SPARCS for assistance.

B. Deadlines

Please see that your budget/proposal are reviewed by your cognizant Research Administrator 5 - 7 business days before the proposal must be sent. This will assure adequate time to make any corrections before the proposal is submitted.

2. SALARIES AND WAGES

A. Faculty and Staff (including Technical Staff and Post Doctoral Candidates)

Use current salary figures with an appropriate inflation factor as of July 1 of each year thereafter. If an NCSU faculty member will only be consulting on a project, it will still be calculated as a percentage of the appointment. No extra compensation may be paid from a sponsored project unless it is specifically approved by NCSU administration, identified as such and requested from and approved by the sponsor in the proposal.

Faculty, post doctoral candidates and other EPA employee salaries should be pro-rated for the actual effort anticipated on the project using current salary rates for existing employees or anticipated salary rate for new hires. Check with departmental or college administration in determining appropriate anticipated salary rates for new faculty, post doctoral candidates and other EPA employees.

Staff salaries should be pro-rated for the actual effort anticipated on the project using current salary rates for existing employees or highest salary range or band for anticipated new hires. For current staff salary ranges and bands check the HR website by clicking [HERE].

For NIH proposals only, beware that there are certain salary caps that apply as illustrated on the NIH Salary Caps website found by clicking [HERE].

B. Wages/Temporary Employees

Use hourly wage rates as appropriate for the type of work performed within the guidelines issued by Human Resource Services. In particular, find the appropriate SPA range or band from the HR website by clicking [HERE]. For hourly wage employees, it is suggested, but not required that you use 5% per year inflation factor.

C. Salary to Hourly Rate Conversion

To convert 9 month salaried employees to an hourly rate divide the 9 month salary by 1,560 hours. To convert 12 month salaried employees to an hourly rate divide the 12 month salary by 2,080 hours (173.3 hours per month for 12 months = 2,080; The average month has 4.33 weeks). If asked to provide a "loaded" rate remember to load the hourly rate calculated using the aforementioned convention with appropriate fringe AND appropriate F&A rate.

3. FRINGE BENEFITS

• Faculty and Staff = 25.0%. [detailed rate components]
  
  
• Postdoctoral Associate = 15.0%. [detailed rate components]
  
  
• Graduate Assistantships:

  --OASI/FICA Tax Exempt = 14.0% (most likely)
  --OASI/FICA Tax Non-Exempt = 19.0% (most conservative)
  --[detailed rate components]

• Graduate Assistantship Tuition and Graduate Student Support Plan supplement should be budgeted under Other Direct Costs. click here
  
  
• Student Timecard:

  --OASI/FICA Tax Exempt = 0.8% {generally reserved for students on assistantship or students not working more than 20 hours per week total and who are full-time enrolled in classes}
  --OASI/FICA Tax Non-Exempt = 8.45% {generally reserved for non-assistantship students/employees who have not exempted themselves from FICA/OASI}

4. EQUIPMENT

Only items costing $5,000 or more each should be listed here, cost estimates should include shipping; identify each piece of equipment with a corresponding cost. Provide generalized specifications and justify in relationship to the statement of work (why do you need the equipment).

For example, if you are conducting a study that requires a pick up truck capable of hauling 3/4 tons of bio materials several times per day from a farm to a field lab and such a vehicle is not already available for use on your project, then instead of just writing "Need a truck for field work - $30,000" you might consider incorporating a reasonable explanation and generalized parameters so the reviewer can better understand the construct of your budget. A better presentation would be:

Equipment:
3/4 Ton, 4 wheel drive Full Sized Pick up Truck - $30,000

Justification:
A 3/4 ton, 4 wheel drive, full-sized pick up truck is needed for use on the farm to haul horse manure to the field lab for analysis. As outlined in the statement of work, 10 - 15 loads of horse manure are required for sampling each business day. [then, always a good idea, but not necessarily required at this stage is to explain why the purchase of the equipment is cost effective and needed rather than using existing equipment or renting/leasing...]

Note that the NCState DS-2 CAS Disclosure Statement which sets forth the capitalization threshold and treatment of capitalized costs supercedes sponsor guidance to the contrary. As such, it may be necessary to reconcile through the budget narrative the budgeting process with how the funds will actually be managed in the financial accounting system.

For example, Personal Computers, which are allowable costs to include in sponsored project budgets, rarely cost more than $5,000. As such, they will not be treated as an equipment item at NC State. In RARE circumstances, however, a sponsor may still promulgate inclusion of certain items in the equipment category those costs over a value less than the NC State $5,000 threshold, University accounting recommends to include the item in the Materials and Supplies category and include in your budget justification the reason you have presented the budget in this manner. A good example is as follows:

"[FIRST DESCRIBE THE CHARACTERISTICS OF THEPC, THEN...]A Personal Computer is necessary to carry out X, Y, and Z efforts under this project. Because the personal computer may also be used for A, B, and C efforts over the course of the project and these efforts may or may not be directly attributable to this program, we request that XX% of the total cost be covered by [SPONSOR]. Als o note that because NC State, under our federal cost accounting disclosure statement must treat as equipment only those items that meet certain other capitalization qualifications AND meet or exceed $5,000 in cost, the [pro rata] cost of this Personal Computer is included in the Supply category of the budget."

For specific guidance on this matter contact Matt Ronning, Associate Vice Chancellor and Director - Research Administration/SPARCS matt_ronning@ncsu.edu

4.a. FABRICATED EQUIPMENT


Fabricated equipment is defined as an item of equipment that is built or assembled in its original form from individual parts by a PI and/or other sponsored project personnel, an internal shop, or an external shop. When a completed item of fabricated equipment has an aggregate cost of $5,000 or more and when that item will be recorded as capital equipment in the University's capital asset management system, the individual component costs associated with the fabrication (regardless of the individual amounts) will not be assessed the Facilities & Administrative (F&A) rate. Fabricated equipment costs do not include routine maintenance and repair costs associated with a piece of fabricated equipment. Furthermore, equipment that is fabricated as a deliverable to the sponsor where title to the finished product will be transferred to the sponsor should not be treated as exempt from F&A charges. An instance where components are simply connected together in a system, such as when individual computers and servers are joined to create a network, does not constitute a fabrication.

Fabricated equipment must be identified prior to acquisition of component parts. Specific budget justifications concerning fabricated equipment should include not only specific relationship the activity will have with the performance of the overall project scope, but also how the component costs will be accounted for, the anticipated functionality and value of the finished fabrication, and the expected ownership vesting of the equipment.

Costs that should be budgeted and charged to a sponsored account include materials and supplies necessary for the fabrication, as well as any internal or external shop service fees. Although project personnel may participate in the fabrication, their salaries will not be exempt from the F&A rate assessment. Only labor costs that are implicit in the internal or external shop rates will be F&A exempt. Labor, travel and other costs associated with the services of an outside party in a fabrication should be incorporated in the external shop service fees.

If a fabricated equipment item will have an aggregate cost of less than $5,000, the individual costs for all acquisitions are subject to the relevant F&A rate. If you initially anticipate that the total fabrication will cost more than $5,000 and as such exempt the individual components from F&A but the final product ends up aggregating to less than $5,000 then all component costs will then be subject to F&A.

Once your project is funded and you begin procuring fabricated equipment components, you will charge those individual costs to the equipment account code series (5000 series) but you will need to make a special notation on invoices prior to sending them to accounts payable. You must consult with your college business office prior to incurring fabricated equipment component costs so as to avoid administrative concerns.

Remember, if ownership of the final product is to transfer to the sponsor, the F&A rate exemption does not apply to the individual fabrication costs.

5. TRAVEL

1. Check with the a Travel Agency for transportation costs.
   
   
2. NCSU Subsistence Allowance Rates, mileage rates ($.505/mile for personal vehicles as of January 1, 2008), and other travel related costs guidance for which is located on the NCSU Travel Policies and Procedures website Finance , Budget and Auxiliary Services Section of the Policies, Regulations and Rules main web page.
   
   
3. Inflation suggested at 5% per year but not mandatory.
   
   
4. Designate two subcategories, one for NCSU employee travel and another for Consultant, Participant or Honorarium Travel.
   
   
5. Always provide justification of travel expenses. Sponsors often ask for detail when they perform proposal cost analysis. Keep in mind that a lump sum figure with no destinations and/or detail may hold up the award process.
   
   
6. In accordance with A-21, Section J, 48, "Travel costs for transportation, lodging, subsistence, and related items incurred by employees who are in travel status on official business of the institution"..... can be charged to sponsored awards "in accordance with the institution's travel policy and practices consistently applied to all institutional travel activities." However, in rare cases, a specific sponsor may require adherence to different travel policies, such as those promulgated by the federal government. Although every effort will be made to remove such requirements prior to accepting a sponsored agreement, at times there is no recourse other than to accept the sponsor's requirements. Policies pertaining to reimbursement of travel other than those promulgated by the North Carolina State Office of Management and Budget and adopted by NCSU will apply if and only if they are specifically addressed in a sponsored agreement accepted by the institution.

5.1. CONFERENCES AND WORKSHOPS

Conferences and workshops should be budgeted using extraordinary care. Certain State of North Carolina Budget rules apply. Read the State Budget Manual for a detailed description of applicable rules by clicking [here].

Some specific guidance includes:

1. Break service may not exceed 4.50 per participant (OSBM 5.8.3).
2. Meal costs should be reasonable and defensible. A good rule of thumb is to apply state per-diem rates although this is NOT a requirement.
   

6. MATERIALS AND SUPPLIES

1. Principal Investigator's best estimate based on past experience purchasing similar items, written or oral quotes from a vendor, or catalog price; include shipping costs for each item.
   
   
2. Inflation suggested at 5% per year but not mandatory.
   
   
3. Individual components to be used for equipment fabrication should be identified as such and should be included under the Equipment Category if the final capitalized cost of the fabricated equipment is anticipated to exceed $5,000.
   
   
 
4. Non-capitalized equipment, such as sufficiently justified Personal Computers costing less than $5,000 should be listed here. Below is a special note on Personal Computers that extends to other multi-use costs:

   Personal Computers are allowable costs and can be charged direct to a contract or grant. If a PI needs a personal computer beyond current computing resources to accomplish technical goals on a project, the cost of the personal computer can be charged directly to the project based on the pro-rata benefits thereto. That is, if the PI plans to use the new personal computer 75% of the time for the project and 25% for general purpose, 75% of the cost should be charged directly to the project. Likewise for other hardware, software licenses and maintenance. Personal Computers rarely cost more than $5,000. As such, contrary to popular belief and in compliance with OMB Circular A-21 they are not treated as an equipment item at NC State. Even though, in RARE circumstances a sponsor may still promulgate inclusion of certain items in the equipment category those costs over a value less than the NC State $5,000 threshold, University accounting recommends to include the item in the Materials and Supplies category and include in your budget justification the reason you have presented the budget in this manner. Also, substantive justification is necessary for personal computers and a good example is as follows:

   "[FIRST DESCRIBE THE CHARACTERISTICS OF THE PC, THEN...]A Personal Computer is necessary to carry out X, Y, and Z efforts under this project. Because the personal computer may also be used for A, B, and C efforts over the course of the project and these efforts may or may not be directly attributable to this program, we request that XX% of the total cost be covered by [SPONSOR]. Als o note that because NC State, under our federal cost accounting disclosure statement must treat as equipment only those items that meet certain other capitalization qualifications AND meet or exceed $5,000 in cost, the [pro rata] cost of this Personal Computer is included in the Supply category of the budget."

7. PUBLICATIONS

1. Principal Investigator's best estimate of page charges, etc.
   
   
2. Contact a vendor such as NCSU University Graphics for quotes/rates on duplication or other related costs(515-2131).
   
   
   
3. Inflation suggested at 5% per year but not mandatory.

8. CONSULTANT SERVICES

1. Most federal agencies limit the maximum daily compensation rate to federal executive level iv rate. NSF has eliminated their long standing cap as evidenced by their memorandum accessible by clicking [HERE]. Be certain you consult your specific sponsor guidelines on possible consultant service rate caps and allowability.
   
   
2. Inflation suggested at 5% per year but not mandatory.

9. COMPUTER SERVICES

1. Contact the Information Technology Division of the Office of the Provost for rates on special services or access by web at http://www.ncsu.edu/itd/ or by phone at (515-4357).
   
   
2. Inflation suggested at 5% per year but not mandatory.

10. SUB-AGREEMENTS (aka Subcontracts, Subgrants, Subawards)

1. What is a Subagreement and how is it different from a purchase order or other procurement of goods or services? Find out by clicking [HERE].
   
   
2. Have each subcontractor prepare and submit a detailed budget. They will want to obtain their standard institutional/agency approvals first.
   
   
3. Each subcontract should be listed separately. Arithmetic on budgets submitted by subcontractors should be checked.
   
   
4. If the subcontractor is requesting facilities and administrative costs, include it as a direct cost to NCSU showing only one cost item per subcontract within the body of the NCSU budget.
   
   
5. Submit a copy (for internal purposes) of the subcontractor's most current negotiated facilities and administrative cost Agreement for audit purposes.
   
   
6. Inflation rates used by subcontractors should be in accordance with subcontractor's normal practices.
   
   
7. Provided there is no sponsor-capped facilities and administrate rate and base, facilities and administrative cost on subcontractor costs are calculated using the appropriate, federally negotiated rate for the first $25,000 of each subcontractor total costs only. If there is a sponsor-capped rate, then the $25,000 cap is not applicable.

11. OTHER DIRECT COSTS

1. NCSU service centers (recharge centers) used should be shown here. Service centers should be contacted by the Principal Investigator for estimates on services requested. Only use rates approved by the Office of Contracts and Grants are allowable charges to sponsored projects. Please contact Shelia Fisher, Office of Contracts and Grants, at 515-8808 regarding information on current approved facility use rates. Procedures and instructions for development of service center use rates can be found at: http://www7.acs.ncsu.edu/CNG/service_center/
   
   
2. Telephone tolls, photocopy charges, equipment maintenance, conference registration fees, etc. also belong in this category. If telephone equipment/line rental is to be charged to the grant, it should be separately identified here as such and not included as tolls.
   
   
3. Graduate Assistantship tuition and Graduate Student Support Plan supplement should be included here. Estimated future rates of in-state tuition are available from the Cashier's Office by clicking [HERE] (Tuition, including fees and the Graduate Student Support Plan supplement should be a separate cost that can easily be identified as a deduction from the MTDC base to the extent the NCSU Federally Negotiated Indirect Cost Rates are used. Although required of all graduate students, fees are not a required budget item like tuition. However, you can include fees in your requests for external funding and if you do they should be included in the other direct cost category also. Fees should also be deducted from the MTDC base when applying the NCSU Federally Negotiated Indirect Cost Rate agreement. Note further that the tuition figure is based on a per semester basis and should be applied for both academic semesters if the student is expected to enroll for an entire academic period.) Summer enrollment and related tuition charge is not required to retain Graduate Assistantship status and FICA/OASDI is optional at the discretion of the student. Estimated future summer tuition rates are available from the Cashier's Office web site by clicking [HERE] (Tuition should be a separate cost that can easily be identified as a deduction from the MTDC base to the extent the NCSU Federally Negotiated Indirect Cost Rates are used. Although not required, if you do include the fees in your proposal budget, they should be included in the other direct cost category also, and they should also be deducted from the MTDC base when applying the NCSU Federally Negotiated Indirect Cost Rate agreement)
   
   
   In addition to the in-state tuition cost (and fees if opted) the NC State University Graduate Student Support Plan supplement SHOULD be included in all proposals planning to hire a graduate assistantship. This policy and the purpose behind it can be reviewed in more detail on the Graduate School website by clicking [HERE]. Two sample budget justification for this supplement is:

   Abbreviated version

   Graduate Student Tuition support in a Sponsored Project budget:  Graduate Student Tuition is calculated using the current In-State tuition rate for 9 Semester hours (full time) plus a supplement (approximately $1,500 per student per semester).  This supplement is called the Graduate Student Support Plan (GSSP).  GSSP is the Sponsor’s contribution to the difference between in-state and the out-of-state tuition rates.  If an Out-of-state Graduate Student is hired to work on the project, the University pays the remainder, approximately 56% of the Out-of-state tuition rate.  The Sponsor pays only the amount budgeted.

   Federal Contracting Version

   Graduate Student Support Plan (GSSP):  When preparing a proposal budget for an externally sponsored project, the University uses the most conservative method of estimating graduate student tuition that still provides adequate support for the research project. (Note: The estimated costs shown are subject to change)  In preparing a budget that includes support for a Graduate Research Assistant (GRA) but the residency of the student to be recruited is unknown, the University will budget the in-state student tuition rate, plus $1,500 per GRA per semester under the "Graduate Student Support Plan (GSSP).  The GSSP is a method whereby the University and the sponsor share the additional cost of tuition if a non-resident GRA is hired.  Without the GSSP, the College would have to estimate tuition costs at the out-of-state rate (approximately $8,043 per semester at the 2007 tuition rates) Under the GSSP, if an out-of-state student is hired, the Sponsor only pays the in-state tuition approximately $2,020 plus $1,500 GSSP contribution and the University pays the remainder of the Out-of-state tuition rate (approximately $4,523).

   [1] The figures quoted are subject to change based on future tuition rates. Consult the Graduate School and Cashier's office websites for up to date information and inform SPARCS if you uncover inaccuracies in this information so that we can make necessary updates.
   
   
   
4. Note that Other Direct Costs is a category commonly used by sponsors for budget purposes. However, to remain compliant with NCSU's Cost Accounting Disclosure Statement it is important and will be necessary post-award to distinguish between the following cost objectives when budgeting: Contracted Services, Current Services, Fixed Charges and Student Aid.
   
   
5. Inflation factor for all above items -- except tuition and fees -- is recommended at 5% but remains at the Principal Investigator's discretion. Tuition and fees should be inflated at 6.5% per year as is authorized and capped by the Board of Governors.

12. FACILITIES AND ADMINISTRATIVE COSTS

1. Normal facilities and administrative cost rates will generally be applied on all proposals unless the funding agency prohibits facilities and administrative costs or maintains a special rate. Obtain prior approval from your college administrator and the Vice Chancellor for Research for exceptions.
   
   
   

   Post 07/01/07 Start Date
   Location	Research	Instruction	Public Service
   on-campus rate	48.5%	47.0%	35.0%
   off-campus rate	27.3%	26.0%	20.0%

   Above Rates are Applied to the MTDC Base

   Note: If you propose other than a new or renewal, such as a continuation or supplement where the original award began before July 1, 2007, you must use the former rates. This is because OMB Circular A-21, section G.7 advises that rates should be fixed for the life of an agreement. An agreement life includes all actions that do not require a new agreement.

   
   

   Pre 07/01/07 Start Date
   Location	Research	Instruction	Public Service
   on-campus rate	46.0%	47.0%	26.0%
   off-campus rate	27.3%	26.0%	20.0%

   
   Above Rates are Applied to the MTDC Base

   
   
   For guidance on determining the type of project you are proposing (i.e. research, instruction or public service), click here
   
   
   

   MTDC = Modified Total Direct Costs whereby direct charges such as Tuition, Scholarship and Fellowship costs, Equipment greater than $5,000, and subcontract costs beyond $25,000 are excluded from the basis of computing facilities and administrative costs.
   
   Pre-Approved Sponsor-Capped Overhead/Indirect/F&A Rates click here
   
   USDA Competitive Grants Programs Special Rate Application Procedure Click Here
   
   
   Proper classification of your project is essential to the selection and application of the appropriate rate. Generally, the following definitions apply (source: OMB A-21; American Heritage Dictionary):
   

   Activity	Definition
   Research:	Separately budgeted scholarly or scientific investigation or inquiry; To study thoroughly.
   Instruction:	Training or teaching activities (other than research training) including the development and distribution of curriculum in a matriculated setting such as at the University or for K-12 education. It does not include the development of training materials for a project otherwise in the Public Service or Extension domain - that would fall under Other Sponsored Activities.
   Other Sponsored Activities:	Programs and projects that involve the performance of work other than instruction and research. Examples of such programs and projects are health service projects, and community service programs.

   
   

   Sponsored agreements will not be subject to more than one facilities and administrative cost rate. If more than 50% of a project is performed off-campus, the off-campus rate will apply to the entire project. Similarly, if your project contains components from more than one classification (i.e. Research and Instruction) then only the rate of the most significant component will apply.
   
   

2. Standard facilities and administrative costs are charged on all costs with the exception of:
   
   
   1. Equipment items costing $5,000 or more each
   2. Costs over $25,000 of each subcontract. Facilities and administrative costs are charged on the first $25,000 of each subcontract only.
   3. Tuition, Scholarship and Fellowship costs.
   4. Some agencies such as the NSF do not allow facilities and administrative costs charged to participant support costs for activities such as symposium, seminars or workshops. If in doubt check with the cognizant College/Unit Research Administrator or contact SPARCS.
   
   
   
3. NCSU Federally Negotiated Rate Agreement*
4. Under no circumstance can more F&A be requested than what would be allowed using the federally negotiated rates identified above. For example, if you are using the 20% on Total Federal Funds as required by the USDA-NRICGP, it is not uncommon for the total F&A request to be in excess of what the full, federally negotiated rate and base would produce if applied. This can happen because under the federally negotiated rate, cost elements such as equipment, tuition and subcontractor costs in excess of $25K are excluded from the base prior to applying the rate. In the USDA example, nothing is excluded which often results in a substantially higher base. If you have any questions please direct them to Matt Ronning, Associate Vice Chancellor for Research Administration by e-mail at matt_ronning@ncsu.edu.

* --- You will need the Adobe Acrobat Reader to view these files.

13. COST SHARING


Definition of Cost Sharing and Matching
First some definitions. Cost sharing is a phrase used to indicate that more than one sponsor will share in the costs associated with a project. The most common relationship is for an external sponsor to provide most of the funds and for the University to provide the remainder of the funds necessary to carry out a project successfully. Matching is a form of cost sharing that generally defines a specific ratio of sponsor and University dollars. This type of cost share is usually an eligibility requirement stated in the RFP (request for proposals) and is usually but not always provided from institutional resources. Cost sharing and matching are nearly synonymous and are often used interchangeably.

In-Kind Contribution - a type of cost share
You should be familiar with two primary types of cost sharing/matching: In-kind contributions; and, cash contributions. In-kind contributions are those wherein a value of the contribution can be readily determined, verified and justified but where no actual cash is transacted in securing the good or service comprising the contribution. Two examples of in-kind contributions are: (1) The donation of volunteer time valued at a rate that would be reasonable for the time devoted had the volunteer been compensated for the time. For example, if you solicit volunteers from the local high school to help run surveys on a research project without compensating the volunteers, it would be appropriate to value the volunteer's time at, say, minimum wage for the number of hours volunteered; (2) The donation of non-institution space where such space would normally carry a fee for purposes other than supporting this particular project (i.e. some negotiation between the PI and the donator, or a benefit will accrue to the donator of the space other than immediate monetary reimbursement for the use of the space). This might be utilization of the local Bank Conference Center without having to pay the pre-defined and published rate.

Cash Contribution - a type of cost share
Cash contributions differ from in-kind contributions in that an actual cash transaction occurs and can be documented in the accounting system. This includes allocation of compensated faculty and staff time to projects. Although it is easy to mistake the allocation of compensated faculty/staff time as a donation or as in-kind because the faculty or staff member would be compensated regardless of the advent of the sponsored project, the value is the result of a cash transaction and should be treated as a cash contribution. Other examples of cash contribution include the purchasing of equipment by the institution or other eligible sponsor for the benefit of the project requiring cost sharing.

Committed versus uncommitted cost share
Cost sharing included in a proposal or a proposal budget must be documented in the official accounting records upon acceptance and management of an award. In-kind contributions must be documented with official correspondence from the organization providing the in-kind cost sharing to include appropriate substantive documentation such as published rate schedules, time cards for volunteers, etc. Any cost sharing outlined in a proposal document considered by a sponsor for funding is known as committed cost share. Cost share that occurs due to internal accounting or project management issues but which is not outlined in a proposal or award document is considered uncommitted cost share. Both committed and uncommitted cost share may require documentation and substantiation prior to project completion (e.g. during the project period). However, if the cost share is uncommitted and voluntary (e.g. not required by the sponsor or the institution), beyond a prudent and sufficient effort on the part of key personnel identified in the proposal (e.g. documentation of effort necessary to conduct the project) does not require documentation.

If Cost Sharing is in the proposal it is deemed committed cost share and an obligation will be set up at the time the award is set up. The cost share obligation must be met within the project period. Projects where cost sharing obligations have not been met may be subject to reduction by the sponsor.

Voluntary versus mandatory commitments
Some agencies require Cost Sharing on project such as EPA at 5% total project costs, some are dollar for dollar, etc. This is known as an mandatry requirement because the proposal will not be considered without the commitment. If Cost Sharing obligations are not required, they should not be listed on the budget page and should not have a dollar value assigned in the narrative. If cost sharing is listed in a proposal where there is no requirement from the sponsor, a voluntary commitment of cost share is established. This results in additional administrative burden for the PI, departmental, collegiate and institutional staff to document, track, audit, and report on transactions where a requirement did not exist prior to establishing it in the proposal. Additionally, a natural effect of cost sharing is to lower our federally negotiated indirect cost rate which in turn reduces the amount of funds available to the institution for program and infrastructure enhancement.

Some Specific WARNINGS

• Lab (or any NCSU) space should not be shown as an NCSU contribution.
• Be sure you are not over-committing a person's time beyond 100% effort -- if a person is being paid 100% on other projects and that situation will not be changing, do not commit him/her to this project.
• As a general rule, cost share the minimum amount required.
• Using federal dollars as matching or Cost Sharing toward another federally sponsored project is not allowed unless you have written authorization from both federal agencies.

Calculating Cost Sharing - Some Guidance (not rules)

Armed with the theory above, following is a discussion on calculating cost sharing or matching requirements:

1. Determine the minimum amount of cost sharing/matching REQUIRED by the sponsor.
2. Determine what kinds of cost sharing/matching the sponsor wants to see. For example, it is often requested that equipment be matched 1:1 (that means for every dollar provided by the sponsor, a dollar must be provided by the institution). Other programs have requirements like 20% of the total request or 50% of the total project costs. Note the different grammar used to describe these various requirements. It is very important.
   1. When the sponsor requires a 1:1 cash match or a 100% commitment, cost match or cost share obligation they mean you need to determine the total cost of your project, divide it in half and request one half from the sponsor and one half from the institution.
   2. Similarly, if the sponsor requires 50% of the total project costs to be provided as cost sharing or matching then you need to come up with an equal share of funding from the institution as you are requesting from the sponsor
   3. If, however, the sponsor requires, let's say, a 20% match of the total grant amount, they usually mean they want to see a commitment from the institution equal to 20% of the total amount funded by the sponsor. This is similar to the 100% commitment, cash match or cost share obligation as stated in 1 above but differs from the second example in that the arithmetic for that scenario is to first determine the entire amount of funds you will need to conduct the project and slice it by the match requirement.
3. In practice, the reality is you want to know how much money you can get from the sponsor. Here are some examples of how to calculate this figure
   1. Sponsor requires a 20% match. You need $75,000 in direct costs (assume $5,000 of that is equipment) and the sponsor pays full overhead. Your cost sharing calculations look like the following:
      1. First calculate the total direct plus indirect cost you need from sponsor
         
      2. You can and should use as part of this required cost share/match is the overhead associated with the applicable direct cost share items. For example, if you decide you want to meet the cost share/match requirement using faculty time you should include the associated fringe benefits and overhead, at the same rate you used on the requested funds from the sponsor. Other opportunities for meeting cost share/match requirements when the sponsor prohibits all or a portion of our full overhead rate is to use the difference between the allowed overhead and our full overhead. That calculation is located further down under the heading Under-recovery of Indirect Costs. Following are the steps to walk you through calculating backwards from your total cost share/match obligation to determine the amount of time a faculty member must commit on the budget to achieve the required cost share/match:
         
         
         • First, back out the overhead (we're using 46% here). Do this by dividing the total cost share obligation by 1.46.
         • Second, from the quotient above back out the fringe benefits (for faculty that's 23%) by dividing by 1.23%
         • Third, from that quotient you know how much money you need in salary. Divide that amount by the faculty members annualized salary and that is the percentage effort you need to commit in cost share/match.
         • Fourth, put it all together in a budget. Here's how it looks if you assume the faculty member's annualized salary in this example is $65,000.
         
         
         

Under-recovery of Indirect Costs (F&A) as Cost Share
Foregone or under-recovery of facilities and administrative costs on the sponsored portion of a project as well as facilities and administrative costs associated with the University contribution can generally be claimed as cost sharing. If facilities and administrative costs are defined as unallowable by the sponsor, then such costs are also unallowable as cost share. Under-recovery of facilities and administrative costs may only be used as cost sharing if facilities and administrative costs are considered un-reimbursed rather than unallowable costs. The calculation of under-recovered facilities and administrative costs is described in the following algorithm:

Step 1: Calculate (or re-calculate) the F&A cost on the sponsored share using the appropriate, federally negotiated rate and base (i.e. for on-campus research use 46% on MTDC.
Step 2: Subtract the F&A costs allowable by the sponsor from the amount derived in Step 1 above.

This figure is your under-recovery of F&A costs (sometimes referred to as a "waiver" of overhead.