5 Costs PIs Most Loathe Putting in Their Budgets…and why they matter

Part of my job as a research administrator is to shine sunlight on the shadowy areas of budgeting that my PIs do not fully comprehend. June is always a fun month for this – my institution has just come out with their updated fringe benefit rates, which lead to a higher amount of costs being moved “away from research” to budget lines that don’t always seem connected to PI’s cutting-edge projects. Think about it this way – a piece of scientific equipment for a project is clearly going to contribute to a PI’s research. But “facilities” costs? What does that even mean? It’s enough to make most PIs terribly cranky. And I get that feeling, I really do! But oftentimes, when I explain the reasons behind these 5 costs PIs most loathe putting in their budgets, we can usually come to a mutual understanding that these costs are a necessary part of research.


  1. Indirect costs. F&A costs. Overhead. “Research Tax.” Dum dum dum…”Indirect Costs” have to be the two most hated words in the world of university research. The general consensus seems to be that greedy research goblins in the sponsored programs office concocted indirect costs to enrich themselves. That’s not the case – trust me on this one! (If it were, I would not be driving a ’97 Toyota!) F&A costs go toward the personnel that help you manage your
    What my PIs think I drive...
    What my PIs think I drive, based on current F&A rates…

    grant, and the clerical staff in your office. They pay for the lights to be on in your lab. Books in the library. Sometimes, F&A recovery pays for entire buildings, focused on research! And want to hear something incredible? At most institutions, F&A recovery goes right back to the dean’s office or the department – NOT the sponsored programs office! Whoa! 😀

  2. Fringe Benefits. If you have salary on your project, odds are, you will need to also request fringe benefits for your personnel. These costs can really add up – and at most institutions, the percentages climb higher every year! But before you get in high dudgeon over fringe benefits, ask yourself: Do you really want your lab assistants, post-docs, graduate students, and fellow faculty to be without health insurance?Retirement benefits? Disability coverage? Unfortunately, these costs go up every year, but they are very necessary!
  3. Overhead charged by your subawardees. I often hear this called the “double tax.” As one particularly annoyed PI once told me: “I think this is a devious collusion among universities.” Your institution takes a piece of F&A costs from 3887095398_aef8697ea0_zyour original grant, and then your subawardee turns around and takes a slice as well! Yikes! I understand the frustration, I really do. But if I convinced you with Point 1, consider that your subawardee’s institution also needs to keep the water running in their labs! And never, ever try and negotiate indirects out of your subawardee’s budget with your counterpart PI. If the sponsor allows them to collect indirects, they are within their rights to do so – even if you waive indirects on your own.
  4. Travel to Sponsor Meetings. When your budget is capped at a certain number, it can be frustrating to see in the RFP that the sponsor requires you to budget for travel to a national meeting every year. (NIFA does this the most frequently, but many federal and non-profit sponsors include such requirements) These meetings, however, are the sponsor’s way of seeing your work first-hand. The contacts you make at sponsor conferences can help guide you toward your next pot of funding, and getting to show your work to representatives from that agency can help you determine what other programs might be suitable for your work.
  5. Tuition. Oftentimes, if your department is not willing to pay the tuition costs for the graduate student working on your
    Tuition is a small price to pay for training up the next generation of scholars
    Tuition is a small price to pay for training up the next generation of scholars

    project, you will need to cover those costs. Sometimes, PIs feel this is an undue burden that keeps them from hiring as many graduate assistants as they would wish. But think about it this way – is not one of the key goals of research to train up the next generations of scholars? Tuition remission might be steep, but it’s a small price to pay for giving a graduate student real-world research experience!…And if that does not convince you, their fringe benefits rates are extremely low and no overhead is taken on tuition at most institutions. Hooray!

The Five Biggest Mistakes PIs Make on Their Proposal Budgets

Ugh…budget crunching and adding countless cells in Microsoft Excel – and you have better things to do! As a university professor, community organization leader, or president of a non-profit, you are always pulled in a thousand different directions. You may be tempted to rush your proposal budget.

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But take it from me – this is not a great way to cut corners! Mistakes on that spreadsheet or web form might lead to wrangling with sponsors at a later date – emails and phone calls back and forth, countless hours spent trying to sort things out. And your proposal may be docked in review – or even thrown out entirely – if you crunched your numbers incorrectly.

So take your time, and make sure to run your budget by your organization’s fiscal officer, a representative from a sponsored programs office, and/or someone who understands the grant world. Before you get started, here are five major mistakes I see PIs make on their budgets. Avoiding these will save you headaches in the long run!

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  • The fringe benefits rates are missing or incorrect. In all likelihood – particularly if you work for a university – your institution has a fringe benefit rate. If you have personnel on a project, or are including some of your own salary, confirm that you add the correct percentage to the salary rate. If you skip this important step, you will most likely have to reduce the requested salary. Think about it this way – your institution will take out funds for fringe benefits, whether you like it or not. And if your department does not agree to cover these unexpected costs, they will come from a slice of your award.
  • The “Materials and Supplies” numbers do not add up. Few budget categories seem to disorient PIs like this broad category. Though this seems like a simple addition problem, at least 25% of proposals I see do not add these correctly. Think about it: You are probably adding and detracting supplies as you write the narrative, and before you know it, the numbers do not add up. Make sure you double-check these figures before sending them along to the sponsor.

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  • The salary being requested is excessive. Though I see this happen rarely, salary inflating is a serious problem. Regardless of how much the sponsor awards for personnel salary, your organizations will not – and should not – give you or your graduate student a huge raise. If you honestly want to start paying one of the people working on the project a bit more, create a new position with a new salary, and suggest them for it (leave it “TBD” on the proposal). Applying to the NIH? Don’t forget the salary cap!
  • There are unallowable costs on the projects. These unallowable costs vary from sponsor to sponsor, but there are a few standard “no-nos” as far as federal funding goes. (FYI – the new Uniform Guidance may change some of these slightly – a post on UGG coming soon!) The top offenders: Administrative costs and personnel outside of federally-negotiated indirects, food and drink, receptions, and common-use supplies.
  • The Facilities and Administrative base is Incorrect. If you work at a university or large organization, you probably have to include a standard F&A rate. In all likelihood, your “Total Direct Costs” (everything you are asking for outside of F&A) is not the number you work from to calculate that percentage. You most likely have to subtract specific costs like tuition, subcontracts, patient costs, and equipment. Check with your research foundation to make sure you are asking for the correct amount of F&A. Like fringes, it will probably be taken from your award whether you like it or not, so better to get it right at proposal time, instead of having to go back to the sponsor to ask for rebudgeting authority.

5 Myths About Voluntary Cost-Sharing

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So picture this: you’re reading through your “Request for Proposals” from a sponsor and you find this sentence:

“Cost sharing not required”

Sounds great, right? Cost sharing, or, matching a percentage of sponsor funds, can be incredibly difficult to come up with. Especially in this era of tight budgets! You breathe a sigh of relief and move on.

But then you start thinking: “But what does ‘not required’ really mean? Will cost sharing make my proposal more competitive? Will it make me look like I have departmental support?”

But not so fast! Before committing yourself, do yourself a favor and review these 5 myths about voluntary cost sharing that are becoming increasingly prevalent in university culture.

Have additions to this list? Questions or comments? Leave them below!

Myth #1: “Voluntary cost share will make my proposal stronger!”

For federal grants? Nope. Local and foundation grants? Not necessarily. Some agencies, like NSF, straight-up prohibit cost share (because of how burdensome it is to track). The moral of the story – if the sponsor says cost sharing is not part of the scored review, piling it on will not help. If anything, gathering the third party pledges and convincing your chair to commit a percentage of the department’s budget will distract you from the required parts of your proposal. When a sponsor – like the NEH – says cost share is “recommended” talk to your department’s research administrator or grants manager to see what that has really meant for past proposals.

Myth #2: “I can just use the project expenses that weren’t allowed in the budget as easy cost share.”

This is a great way to get your proposal rejected without even getting read. Unless the sponsor says differently, costs that are unallowable for the proposed budget are unallowable for formally proposed cost share – even if it’s voluntary. The biggest exception sponsors make are unrecovered Facilities and Administrative (indirect) costs. So if the sponsor is only allowing a small percentage of your institution’s rate to be charged, you might be able to use that as match. But be sure to get that from the sponsor in writing.

Myth #3: “If the cost share is voluntary, I won’t have to report it back to the sponsor.”

If cost sharing appears in the agreement’s approved budget, you have to track it, regardless of whether your match was required or not. That means you must report it on fiscal communications, post it to the project, and make sure you meet the match. If, at the end of your project, you still have cost share to report, you could endanger future funding for yourself and your university, just as you would with a required match.

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Myth #4: “Voluntary cost share is the best way for me to show that I have support for this project.”

Even if PIs don’t say this out loud, most of them believe it wholeheartedly. Thankfully, there are many effective ways to show that your proposed project enjoys widespread support. Most federal applications have sections in the narrative where you can list equipment, laboratories, community resources and departmental assets that will be available to you (for NIH, there are a few sections specifically designated for this information). Some smaller sponsors allow for letters of support to be attached, even if no cash amount is specified. But be sure not to include specific dollar amounts or effort percentages – these could appear in the agreement and you will then be required to track them. The NIH is particularly picky about this.

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Myth #5: “Voluntary cost share is not ‘real money’.”

If my points above have not convinced you, let me reiterate – There is a real, tangible administrative cost to voluntary matching. These funds must be tracked and reported. They also commit you to fulfilling requirements that could become onerous and distract you from your research – the reason you asked for funding in the first place! 🙂