Blog
April 29, 2025
Understanding the fundamentals of drafting and developing a strong grant budget
For those exploring a career as a Pre-Award Administrator, the process of preparing proposals and budgets may initially appear overwhelming. Over time, you will build a knowledge base through hands-on experience by working with Principal Investigators (PIs), reviewing funding opportunities, building budgets, and preparing proposals from start to finish. This blog provides valuable insights and practical tips to help you understand the fundamentals of drafting and developing a strong grant budget.
Six Important Components of a Grant Budget
Grant budgets are typically comprised of two types of costs—direct costs and Facilities and Administrative Costs (F&A), also known as indirect costs.
Direct costs can be directly tied to the project. Examples of direct costs are salaries, fringe benefits, equipment, supplies, travel, publications, participant support costs, or subcontracts. The sponsor’s guidelines will state if there are any required or unallowable direct costs.
F&A, or indirect costs, are costs that support research and sponsored program activities but are not directly identifiable to one specific project. Indirect costs support institutional infrastructure and administration by funding expenditures such as salaries of administrative personnel, general office supplies/expenses, facility costs, technology, utilities, depreciation, and accounting costs.
1. Know the Funding Agency’s Guidelines
It’s important to read the sponsor’s proposal guidelines prior to meeting with a PI. This step will help you determine if the project idea aligns with the funding opportunity. The guidelines will outline specific budget requirements or exclusions set forth by the sponsor. Moreover, understanding the funding opportunity will help you form inquisitive questions, ensuring the funding opportunity and project idea align.
What to Look For in Agency Guidelines
- Project start and end dates
- Project period length
- Total project budget limit (direct costs or total costs)
- Allowable and unallowable costs
- Effort requirements
- Mandatory cost-share commitments
2. Common Budget Line Items
The complexity of grant budgets can range from simplistic to multifaceted, depending on sponsor requirements and project needs. In both situations, there are common budget line items you will see regularly in almost every budget request. A few examples of common budget line items are salaries (i.e., PI, Co-I, Postdoc, and Students), fringe benefits, travel, supplies and materials, equipment, publications, subcontracts, tuition, and indirect costs.
Gaining a clear understanding of common budget line items and how they are calculated will provide you with a strong foundation to confidently prepare more complex budgets in the future.
3. Personnel Effort
Effort is the amount of time personnel commit to a specific project, typically expressed as either a percentage or person month. Effort is committed at the time of proposal and is reflected in both the budget and budget justification documents. In multi-year budgets, effort is committed on an annual basis. An effort commitment is a representation of time an individual needs to complete their tasks and responsibilities related to the project.
Faculty and Staff
In most instances, faculty are either on a nine-month or 12-month contract. The type of contract drives how effort is calculated and allocated. Faculty on a nine-month contract can earn additional summer salary beyond their academic year salary. Faculty or staff on a 12-month contract do not have the ability to earn summer salary as their contract spans the entire calendar year. Most institutions require prior approval if faculty or staff on a 12-month contract are written into a grant budget.
For these situations, seeking proper approvals and vetting the effort commitment through the department and college (e.g., Department Chairs and Assistant Deans or Deans) ensures they can be released from their current role to work on the project for the duration of their effort commitment.
Students
Institutions are responsible for defining how student time is divided. For some institutions, graduate student time is defined as 50% academic and 50% work eligible. This means they devote 20 hours per week to academic commitments and are eligible to work up to 20 hours per week. Other institutions may define their graduate students as 100% (40 hours per week) work eligible.
Undergraduate student effort is calculated based on the total number of hours they are projected to work during the academic year and summer term. Institutions also define the maximum number of hours undergraduates can work per week.
4. Fringe Benefits
In a grant budget, fringe benefits are expressed as a percentage of an employee’s requested salary. Fringe benefits are considered additional compensation employees receive from their institution beyond their annual salary in the form of mandatory and discretionary benefits. Mandatory benefits include social security, Medicare, unemployment insurance, workers’ compensation insurance, and disability. Discretionary benefits include health insurance, retirement, and life insurance.
Many institutions utilize federally negotiated fringe benefit rates, which are approved by an assigned cognizant agency (e.g., DHHS or DOD), and some institutions utilize a rate calculated internally, which is typically an average or fixed rate.
Example
- Dr. Smith is on a nine-month contract, and he’s requesting $10,000 for summer salary.
- The institution’s federally negotiated fringe benefit rate for the summer term is 16.50%.
- $10,000 * 16.50% = $1,650 fringe benefits associated to his summer salary request.
5. Building a Connection and a Draft Budget
Best practice is to schedule an in-person or virtual meeting with the PI at least one month prior to the application deadline. This is especially true when proposal and budget documents are complex.
Prior to a meeting, the PI should provide preliminary proposal details. This includes, but is not limited to, a project summary or abstract, sponsor name, application guidelines, anticipated project period, project title, due date or target submission date, estimated budget needs, and names of additional personnel involved or anticipated collaborators (e.g., consultants, subawards, etc.). Collecting information in advance of meeting with the PI will give you a healthy head start. At the initial meeting, it is important to discuss which party will be preparing proposal documents. If not readily available, prepare a list of required proposal documents, including special formatting for each document. Review this list with the PI and indicate the documents you will prepare, if any, outside of the budget.
Pre-Award Administrators depend on PIs to specify budget items and the associated costs. With the PI’s budget wish list, you can draft a budget in your institution’s template, which will give you and the PI a clear visual representation of the budget. As stated earlier, typical budget costs include items noted in 1. Key Components of a Grant Budget but can also include a variety of costs depending on project needs and sponsor requirements. Our role as Pre-Award Administrators is to ensure the costs seem reasonable and to adhere to sponsor requirements. It’s a bonus if you’re able to identify necessary and unrealized costs.
6. Budget Justification
The second, and equally important portion of the budget, is the budget justification or budget narrative. This document is typically written in conjunction with the PI. Once the budget is finalized, the Pre-Award Administrator will prepare a budget justification template, which should follow the order of the sponsor’s budget form. A standard budget will be in this sequence: personnel, fringe benefits, all other direct costs, and indirect costs. Institutions normally have standard language to incorporate in the budget justification for fringe benefit and indirect costs statements.
Personnel statements should include the name of each person (if known), their role in the project, their annual effort commitment, and a transparent explanation of their responsibilities while working on the project. This should be presented in an easy-to-read format. For example, each person included in the budget should have a separate statement under the personnel header. In all budget categories, include total costs for each requested budget item for reviewer transparency. The semi-final budget justification document can be sent to the PI responsible for adding technical justifications and explaining the need for each budget item and why they are necessary for the successful completion of the project.
Embracing Pre-Award Administration
The next, and most exciting step, is to immerse yourself in the Pre-Award Administration industry, absorb as much knowledge as possible, and finally embrace your new career! In addition to practical experience, you can take advantage of training opportunities such as webinars and in-person conferences held by the Society of Research Administrators International (SRAI) and the National Council of University Research Administrators (NCURA), online videos, and guidance from experienced colleagues.
At Attain Partners, we are passionate about supporting those in need, including individuals beginning their path in Research Administration. You can find our team of experts leading training sessions and workshops at both SRAI and NCURA events—visit us in the exhibit hall or attend our sessions—we’re looking forward to meeting you! Contact us today and let’s set up a time to meet at our next event.
About the Author
Angela Wilcox is a Senior Associate at Attain Partners. Since joining Attain Partners in 2022, Angela has had the opportunity to serve a diverse range of clients in both pre-award and post-award capacities. Her work has included serving in roles such as Assistant Director of Grant Administration, departmental and centralized pre-award and post-award administration, as well as roles in grant accounting and post-award financial management. Angela’s background also includes grant management software implementation and developing institutional procedures. Angela believes servant leadership is the foundation of building trust and integrity.
