Guidelines for Preparing an NIH Budget

1. Lindy-Ann Wright, M.A Financial Manager, MU-JHU Johns Hopkins University Nov. 3, 2010 Guidelines for Preparing anNIH Budget

2. Disclaimer ! • The following are general guidelines for most NIH proposals. • Some NIH programs and funding opportunity announcements may have different requirements and conditions that supersede the information presented here. • Be sure to check that you are following the correct procedures for the competition to which you are applying. • Different non-NIH sponsors may likely have specific templates and guidelines different to those presented.

3. Carefully read the Request for Application (RFA) or Program Announcement (PA) for important budget limits and guidelines. • The SF 424 and PHS 398 grant application kit gives you guidelines on ° Budget for initial budget period ° Budget for entire proposed period ° Budget Justification

4. BUDGET TIPS ! • Complete the budget section after you have written your research plan and have a good idea of costs. • Request only enough money to do the work. • Significant over or underestimating suggests that you may not understand the scope of the proposed work.

5. Which Budget Format Should I Use? NIH competing applications generally use two types of budget formats, • Modular Budgetor • Detailed Budgetformat.

6. Budget Format • A Modular Budget is used for applications requesting a maximum of $250,000 per year in Total Direct Costs. Budgets are simplified, and do not require submission of detailed budget information to NIH. • A Detailed Budget format is required for all applications requesting more than $250,000 per project year

7. Detailed Budgets Over $500K • Applications for more than $500,000 Direct Costs per project year must obtain prior approval from the NIH supporting institute or center. • NIH recommends the approval process is initiated by calling or e-mailing one of the program officers at least six weeks prior to the submission deadline.

8. Budget for Foreign Applications • Foreign applicants must provide, Detailed Budget Forms with the proposal even if $250,000 or less is requested Modular Budgets are not accepted from foreign applicants

9. Can requests for funding be made in foreign currency? • All requests for funds, including the budget contained in the application, must be stated in U.S. Dollars ($). • Once an award is made, NIH will not compensate foreign grantees for currency exchange fluctuations through the issuance of supplemental awards.

10. DETAILED BUDGET FORMS, PHS 398 • For applications submitted manually, use the NIH PHS 398 Budget Pages • Download the most current PHS 398 forms and instructions from the NIH website: http://grants.nih.gov/grants/forms.htm

13. EXPENSE CATEGORIES, PHS 398 • Personnel •Consultants • Equipment • Travel • Supplies •Patient Care Costs •Alteration and Renovations • Other Expenses • Consortium/Subcontract (Direct Costs) • Total Direct Costs Initial & Proposed Budget Periods • Consortium /Subcontract Facilities & Administrative Costs •Total Costs Initial & Proposed Budget Periods •Budget Justification

14. DETAILED BUDGET FORMS, SF 424 • Proposals submitted electronically must use the SF 424 (Research and Related) Budget Pages • Forms can be located at the NIH site http://grants.nih.gov/grants/forms.htm

19. EXPENSE CATEGORIES, SF 424 • Senior / Key Personnel • Other Personnel • Equipment • Travel • Participant /Trainee Support Costs • Other Direct Costs • Total Direct Costs • Indirects ( F &A) • Total Costs • Fee • Budget Justification (pdf versions only)

20. Personnel – Salaries & Wages • Personnel effort on NIH proposals must be reported in person months • For frequently asked questions/ answers on person months visit the NIH website: http://grants.nih.gov/grants/policy/person_months_faqs.htm

21. What is the definition of person months? “Person months” is the metric for expressing the effort (amount of time) for PI(s) and other personnel devote to a specific project. The effort is based on the type of appointment of the individual with the organization: Calendar year (CY) 12 months Academic year (AY) and/or Summer term (SM) 3 months Some institutions may define the AY appointment differently.

22. How do I calculate person months? • Multiply the % of effort associated with the project by the number of months of the appointment. • For example: 25% of a 9 month academic year appointment = 2.25 (AY) person months (9 x .25= 2.25) 10% of a 12 month calendar appointment = 1.2 (CY) person months (12 x .10 = 1.2) 35% of a 3 month summer term appointment equals 1.05 (SM) person months (3 x .35= 1.05)

23. How do I calculate person months? Salary Requested is then: Number of paid "Person Months" by 1/12 of the Institutional Base Salary - which is $36,000 for this example: 1.2 (CY) x $36,000 (1/12) = $3,600 $3,600 is included in the Salary Requested column of the budget form

24. Key Personnel • The PI and other individuals who contribute to the scientific development or execution of a project in a substantive, measurable way, whether or not they receive salaries or compensation under the grant. Typically these individuals have doctoral or other professional degrees. • Consultants also may be considered key personnel if they meet this definition.

25. Key Personnel • Key Personnel listed under the Personnel category of the budget form can only be your institution’s employees. • DO NOT listnon-institution collaborators in this budget category • Non –institution collaborators are either Consultants or are funded under Sub-recipient Agreements, also known as Subcontracts. They have separate budget categories and forms

26. Personnel • Calculate the salary of the Principal Investigator (PI) and other Key Personnel taking into account the NIH salary cap. • Salary is capped annually at the level set for a federal employee in the Executive Level I salary range • Effective January 1, 2010, this cap is $199,700 /yr

27. Other Personnel • All other non- Key Personnel Example: • Research Technicians • Health Visitors • Nurses • Graduates Students • Undergraduate Students

28. BUDGET TIP - salaries • For multi-year projects, the budget should take into consideration any possible salary increases. • NIH allows for cost of living increases to 3% annually

29. Fringe Benefits • Fringe Benefits costs are the expense to an institution to provide medical, dental, tuition reimbursement and other staff benefits • NIH follows your institution’s policy with regard to fringe benefits, and does not have a pre-set limit for these costs

30. Fringe Benefits The rate your institution uses to calculate Fringe Benefits cost may change annually It is important to get the best estimated rate from the Research or Finance Department for the proposed start date of your project Apply the projected rate (s) to Salaries Requested on the budget to calculate Fringe Benefit costs

31. Calculating Fringe Benefits • To calculate the fringe benefits costs multiply the Salary Requested (SR) by the fringe rate $20,500 (SR) x 35% fringe rate = $7,175 • Add fringe benefit cost to (SR) for the Total Salary (TS) column of the budget page • $20,500 (SR) + $7,175 (fringe) = $27, 675 (TS)

32. CONSULTANTS • Consultant services, when required to carry out the proposed work, are allowable on NIH budgets. • Consultants are not subject to the salary cap restriction, but consultant costs must be reasonable and allowable by NIH standards • Identify in the budget the proposed consultant by name, type of service, indicate the number of days of work, pay rate • Normally, consultants are paid a consulting fee plus travel expenses.

33. BUDGET TIP - Consultants If your institution allows employees to be consultants on the proposal list the expenses under Personnel, including fringe benefits costs. An employee with the role of consultant cannot be listed in the consultant category of the budget

34. Equipment • As defined by NIH, "equipment" means "an item of property that has an acquisition cost of $5,000 or more , and an expected useful service life of more than 1 year. • Equipment to be purchased should be itemized on the budget page • Examples are, vehicles, lab machinery

35. Equipment • Capital items costing less than $5,000 should be budgeted under Material and Supplies • This category includes items such as televisions, dvd players, computers and other small electronics costing less than $5,000.

36. BUDGET TIP -Equipment • Avoid requesting expensive equipment unless you absolutely need it, and justify it well • Don't request funds for equipment already listed in the resources section, unless you can provide an adequate explanation • Reviewers look for any "discrepancies" and will delete funds for equipment that should be available to you.

37. SUPPLIES • Normally, a research project will consume supplies such as laboratory items, teaching aids, computer software, and other research supplies. • Itemize by category all expenses over $1,000 on the budget page.

38. TRAVEL • Travel is expected for attending pertinent meetings in your field, to meet with collaborators, and to present data. • Local travel is expected to collect data; transport and follow up of participants ; other project related transportation.

39. TRAVEL • If travel is anticipated, the detailed budget for the trip(s) should be provided in the budget page and justified. • For foreign travel, Principal Investigators should review their federal awards for requirements related to the Fly America Act • Fly America Act, federal regulation that requires the use of U.S. carriers for travel that will be reimbursed from federal grants and contracts.

40. TRAVEL • Travel expenses can be requested for lodging, meals, ground transport and incidentals. • Maximum Foreign Per Diem Rates are available at, http://aoprals.state.gov/web920/per_diem.asp • Costs for trips must include a detailed justification • Charges for staying with friends or relatives are not reimbursable expenses!

41. Alterations and Renovations • Major Alterations &Renovations (>$500,000). Unallowable under foreign grants and domestic grants with foreign components. • Minor Alterations & Renovations (<$500,000). Generally allowable on grants made to foreign organizations or to the foreign component of a domestic grant, unless prohibited by program regulations. • Minor A&R Costs may be included and justified in any detailed budget of a competing application.

42. OTHER EXPENSES • Contracted Services • Animals • Animal Care Expenses • Lab Costs and Fees • Tuition Remission for Graduate Students • Participants Stipend • Equipment Maintenance • Long distance telephone calls • Postage • Publications • Copying • Reference Books • Miscellaneous Expenses

43. Consortium /Subcontract • A sub-recipient relationship is appropriate when the Principal Investigator contemplates a funded collaboration with a colleague at another institution. • The collaborating institution should provide a statement of work, detailed budget and budget justification, signed by the collaborator's Authorized Institutional Representative

44. SUBCONTRACT ON THE BUDGET • All subcontracts must include a separate PHS 398 or SF 424 (R&R) budget pages Include the Direct and F&A subcontract costs into the prime/main budget category

45. BASE COST / Modified Total Direct Cost • Base cost is what the Facilities and Administrative rate is applied to for calculating the F&A costs on the budget. • Most NIH institutions allow for specific direct costs categories to be excluded to be excluded from the Base Cost • For Foreign Applicants only equipment is excluded from the Base Cost

46. Calculating Base Cost • A budget has the following expenses: Total Direct Costs = $350,000 Equipment Costs = $32,000 (exempt) Base Cost = $350,000 - $32,000 = $318,000 The F&A Rate is applied only to $318,000

47. Facilities and Administrative (F&A) Facilities and Administrative (F&A)costs, are costs which are necessary to support research and other sponsored projects, but which cannot be readily assigned to individual projects. F&A costs must be included in proposal budget unless the sponsor has a written policy on F&A rates for the competing grant.

48. F&A Rate for International Applicants • NIH provides limited F&A costs to foreign institutions and international organizations to support the costs of compliance with NIH requirements • F&A rate is maximum 8 % of Total Direct Costs less Equipment Costs • Foreign or International applicants do not need to negotiate an F&A rate to receive the 8% from NIH

49. Calculating F&A Costs (1) Sum all direct costs = Total Direct Costs (TDC) TDC = salaries + benefits + supplies + equipment etc (2) Calculate the allowable Base Costs: For foreign applications: TDC – Equipment costs = Base Cost

50. Calculating F&A Costs (3) Multiply the correct F&A rate against the Base Cost to calculate the F&A costs for the project Base Cost x F&A rate (8%) = F&A Cost (4) Add TDC to F&A Cost to calculate the Total Project Costs. TDC + F&A Costs = Total Project Costs (TC)