Items to Consider When Developing a Budget
- Northwestern policies and procedures, which set forth the University’s cost accounting standards and provide important frameworks for budget development and the overall management of sponsored projects
- Federal policies, including the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards and the Federal Acquisition Regulation
- Sponsor policies, such as the NIH Grants Policy Statement or the NSF Grant Proposal Guide
- Funding Opportunity Announcement (FOA) or solicitation
- Project scope of work
Types of Costs
Budgets generally include two basic categories of costs:
- Direct Costs – Costs identified specifically with the sponsored project or that can be relatively easily assigned to it with a high degree of accuracy. Examples of direct costs may include salaries, fringe benefits, consultants, equipment, materials and supplies, travel and subcontracts.
- Facilities and Administrative (F&A) Costs - Costs incurred for common or joint objectives and not readily or specifically identified with a particular sponsored project, or any other institutional activity. Examples of F&A costs may include building & equipment depreciation, operations and maintenance, costs of University’s libraries, materials, supplies and services of a more general nature, such as routine administrative support, office supplies and office equipment.
For additional information regarding direct costs and facilities and administrative (F&A) costs, please refer to Charging Sponsored Projects and Use of On-campus vs. Off-campus F&A Rates. For information on what direct costs in a budget may be exempt from facilities and administrative costs, refer to the Facilities and Administrative Rates page or Northwestern’s current F&A rate agreement with the U.S. Department of Health and Human Services.
Sponsors may impose limitations on a project budget's total costs (such as a total funds-per-year ceiling), the direct costs (such as a salary cap or maximum travel costs) or the F&A costs. The FOA and sponsor guidelines as well as university policies should be reviewed with regard to those limitations.
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