When developing a budget for a proposal, PIs must be aware of five primary issues: direct costs, indirect costs, cost sharing, effort, and CASB Exceptions. The following is a primer on these topics. Further questions should be addressed to your Sponsored Projects Administration (SPA) team.
Direct costs are costs attributable to essential project activities or specific items with ease and a high degree of accuracy. These cover personnel (salaries and fringe benefits), supplies, equipment, travel, and other expenses necessary for the conduct of sponsored activities. Certain direct cost expenses are “allowable,” while others are “unallowable” and may not be charged to a sponsored project. Before defining your project budget, please review the University’s Direct Cost Policy.
Indirect (or F&A) Costs
Indirect (or F&A) Costs are reflected in budget items that are difficult to identify easily with a particular project. Examples include costs to heat and cool the project work space, building depreciation costs covering specific labs or rooms, general office supplies and office equipment (including desk-top or lap-top computers), library books and journals, and personnel expenses associated with department and central office administrative help who provide services to individuals not involved in a funded project. Read Facilities & Administrative Reimbursement at UGA for a detailed explanation of these costs and to learn what happens with reimbursed F&A at UGA (a portion of it is returned to stimulate research).
The terms “cost sharing,” “matching,” and “in-kind” refer to that portion of the total project costs not borne by the sponsor. These terms are often used interchangeably. Attention should be given to sponsor definitions of these terms.
It is essential that the use of cost sharing not overburden University and departmental resources. Cost share in awarded proposals must be independently tracked, monitored and reported to the sponsoring agency. Excessive or unnecessary cost sharing can result in the future limitation of scarce departmental resources, and it negatively impacts UGA’s facilities and administration rates.
Please review the University’s Cost Share Policy and keep in mind the following:
- Cost sharing must be approved by the Department Head and Dean via the eResearch Portal.
- A separate cost share budget is required whenever cost-sharing is included in a funded proposal.
- Cost sharing of UGA personnel is not allowed on industry-funded projects.
- All effort documented anywhere within the proposal must be posted on the Transmittal Form.
- Third-party matching commitments must be agreed to in writing prior to proposal submission.
Any time committed by UGA personnel to a project must be tracked and verified, either as a direct cost or as cost-share. Please review the University’s Committed Effort Policy and be sure you understand the policy’s requirements before committing effort within a proposal.
Occasionally, under very special circumstances, costs that are typically considered indirect costs may be treated as direct costs. Examples of these types of costs include salary for administrative assistants, desk-top computers, cell phones and office supplies etc. The regulations governing when these indirect cost items may be charged as a direct cost are very rigorous. Therefore, please review the CASB Administrative Exception Policy, the CASB Non-administrative Exception Policy, and the CASB Justification Decision Tree for examples of approvable justifications and help in determining when your budget requires one of these justifications. Sponsored Projects Administration (SPA) must approve all CASB Exceptions before your proposal is submitted. For more information contact your SPA team.