importance of budget in research proposal

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On this page:

Basic components of a research budget, two models of budget development, other factors affecting your budget.

• Additional Resources

Budgets should provide the sponsor with an accurate assessment of all cost items and cost amounts that are deemed necessary and reasonable to carry out your project. They should be based upon your description or the statement of work. Budget justification provides more in-depth detail and reason for each cost and is often considered by reviewers as a good indicator of the feasibility of the research.

A research budget contains both direct costs and indirect costs (overhead), but the level of detail varies from sponsor to sponsor. The first step in developing a budget is to carefully read the guidelines of the funding opportunity being pursued.

There is no magic formula available for developing a budget but there are some basic steps to follow in order to develop an accurate budget:

• Define project tasks, timelines and milestones and determine the actual resources and costs required to complete these. Consider whether contingencies are needed (and confirm they are eligible expenses).
• Determine the eligible expense categories and maximum amount allowed by the sponsor. Adjust scope of the project to make sure proposed activities fit within the allowance.
• Categorize these costs (e.g., salaries, supplies, equipment…) per year, in some cases by quarter.
• Ensure that project scope and budget match. Include indirect costs of research as permitted by sponsor and the University policy.  

The examples below developed by the University of British Columbia demonstrate two ways to include indirect costs in your budget.

• Price model:  Indirect cost is built into each budget line item.
• Cost model:  Indirect cost of research is presented as a separate line item.

Unless the sponsor specifies in writing that they require the indirect costs of research to be presented as a separate line item (Cost Model), the indirect cost should be built into each budget line item (Price Model). Indirect costs are normally included in the price of goods and services worldwide.

For example, you are developing a budget for a funding opportunity with an indirect cost rate of 25%. Your direct costs are $201,000 broken down by expense categories shown in the  second column of the table below. The third and fourth colums present the two ways you can include the 25% overhead in your budget using the Price Model or the Cost Model, respectively:

In-kind and cash contributions, like other costs to the sponsored project, must be eligible and must be treated in a consistent and uniform manner in proposal preparation and in financial reporting.

Cash contributions

Cash contributions are actual cash transactions that can be documented in the accounting system. Examples of cash contributions include:

• allocation of compensated faculty and staff time to projects, or
• the purchasing of equipment by the university or other eligible sponsor for the benefit of the project.

In-kind contributions

In-kind contributions are both non-monetary or cash equivalent resources that can be given a cash value, such as goods and/or services in support of a research project or proposal. It is challenging to report on in-kind contribution, please make sure the numbers you use are well supported, consistent and easy to quantitate.

Examples of an in-kind contribution may include:

• Access to unique database or information
• Professional, analytical, and other donated services
• Employee salaries including benefits for time allocated to the project
• Study materials, technologies, or components
• Patents and licenses for use
• Use of facilities (e.g., lab or meeting spaces)
• Partner organization time spent participating in the project
• Eligible infrastructure items

Matching on sponsored projects

Some sponsored projects require the university and/or a third party to contribute a portion of the project costs–this contribution is known as matching.

Matching requirements may be in the form of an actual cash expenditure of funds or may be an “in-kind” match. For example:

• A 1:1 match would require $100 of a third-party matching for every $100 received from an agency.
• A 30% match would mean that of a total budget of $100, the agency would provide $70 and a third party would need to match $30.

Examples of agency programs that include some form of matching from a third party are:

• NSERC Collaborative Research and Development Grants
• NSERC Idea to Innovation Grants
• SSHRC Partnership Grants
• CIHR Industry Partnered Collaborative Research Program, and
• CIHR Proof of Principle Grants  

Additional resources

• Current  salary  and  benefit  rates for graduate students and postdocs/research associates
• SFU  Business and Travel Expense  Policy
• Animal care services

Drafting a budget

How to prepare a convincing budget

A well-constructed budget justification is an important part of a grant proposal and should be drafted with the same care and accuracy as the work programme. You should apply neither for too much nor for too little money. Instead, the funds you apply for should reflect the needs of the project.  We describe the most important rules for drafting a budget and provide examples on the following pages. 

"Grundausstattung" (core funding and basic infrastructure)

Many funding organisations do not cover expenses for what is considered "Grundausstattung" . This usually includes:

• office and lab space
• general infrastructure like furniture, telephone, tools etc.
• office supplies, postage
• maintenance costs, including electricity, water, repairs etc.
• equipment that is considered standard for a given discipline, including computers and software.

Please contact your department early to discuss what kind of infrastructure and office space will be available to you. It might be useful to declare infrastructure that is provided by the university as a co-payment which the university contributes to the project.

If a funding body does not provide a guideline for how salaries should be calculated, we suggest that you refer to the DFG's Personnel Rates . These are updated annually and provide good orientation for calculating salaries. Doctoral students who are employed according to the "Tarifvertrag der Länder" usually receive an appointment depending on their discipline and the DFG's suggestions, which can be found (in German) on this website .

In the budget, you should describe who will be working on a given task. You should also explain what level of expertise and experience a task requires, i.e. why a specific task requires a postdoctoral researchers while another task can be worked on by a doctoral student. If you already know who you want to employ in your project, it is advisable to describe why he or she is best qualified to work on your project or a specific task.

Staff costs in proposals submitted to the federal government

Budgets for proposals to the federal government will need to include a tailor-made calculation for staff costs. The Research Support team is happy to make this calculation for you. Please contact us!

Equipment and consumables

You may usually apply for equipment and consumables that are needed for a project. Try to give examples for the requested items instead of applying for unspecified "consumables for experiments", and explain the requested funds in as much detail as possible.

Travel Costs

With effect of 1 January 2022 new legislation to calculate travel costs came into force in Baden-Württemberg. HR have summarised the most important changes for you in this document (available in German only).

To calculate travel costs, we suggest that you try to make a realistic estimation of how much a trip will cost. You may furthermore refer to the following sums:

• For domestic travel : 24 Euro daily allowance + 95 Euro for accomodation per night
• For travel abroad , lump sums published in the " Allgemeinen Verwaltungsvorschrift des Bundes über die Neufestsetzung der Auslandstage- und Übernachtungsgelder " ( ARVVwV , General administrative provision on the new stipulation of foreign per diem and travel allowances) apply.
• Travel costs within Germany may be calculated on the basis of a 2nd class train ticket. For flights, use a travel website to estimate what a flight will cost approximately.
• Include other costs , like conference fees or public transport also as part of your travel costs.

Make sure that you justify the need for your travels. Ideally, each trip is included in the work plan.

Workshops, conferences or summer schools can be part of a research project or stand on their own. It is possible to apply for funding for both cases. It is usually possible to apply for funds to cover the following:

• travel costs and accomodation for participants
• staff costs, usually for student assistants, to help prepare an event
• consumables, such as costs for printing.

Honoraria, food and social events are often excluded from funding. You will need to find other sources to coves these costs. It is sometimes possible to find a sponsor; alternatively, asking for a small fee from the participants can help to cover costs.

The Event and Conference Management team can help you organise an event; the Research Support team can help you find funding for it.

Conducting an experiment

To conduct an experiment, you recruit 90 people and 15 people as substitutes. For 30 minutes, 5 eurosare paid; the substitutes receive a lump sum of 5 euros.

90 x 30 minutes interview

45 x 30 minutes control interview

Total: 750 euros 90 x € 5 + 45 x € 5 + 15 x € 5

Consumables

The costs for lab equipment and consumables for tasks in the work packages 2 and 3 are the following:

ca. 50 l liquid X (price per liter: 5 euros) = 250 euros

ca. 300 test glasses Y (price per item: 0.50 euros) = 150 euros

annual costs: 400 euros

Total for three years:

3 x 400 euros = 1,200 euros

Calculating depreciation costs

You need a specific kind of gadget for your research project. It costs 150,000 euros. The depreciation period is thirteen years. The project runs for five years. You may apply for the costs that occur during the project lifetime.

150,000 euros : 13 years x 5 years project duration: 57,692.31 euros

Sum that you apply for as part of your budget: 57,692 euros

Justification for travel costs

For each trip, you should provide:

- the purpose of the trip (conference, research, etc).

- destination

- number of people traveling

- duration of stay

- (estimated) costs for train or flight

- per diem rate and accomodation costs

- other costs

- total per trip and person 

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Suggestions.

Compliance protocols MUST be approved and linked in SeRA to a SPO project record prior to award acceptance. 

Budgets and Budget Justifications

Main navigation.

Proposal budgets and budget justifications are the financial road maps of sponsored projects.  When thoughtfully and strategically built they both help propel proposals to award and pave the way for effective post-award management.  Below are templates and resource links to help you build successful budgets and budget justifications. 

Questions?  Concerns? Contact the  Client Advocacy & Education team .  We're here to help!

• Detailed Budget Template Quick Start Guide
• Detailed Budget Template Reference Guide
• ORA-2204 Detailed Budget Recording - General Example (50 minutes)
• Detailed Budgeting Webinar recording - NSF Example (50 minutes)
• Each recording includes ORA detailed budget template capabilities, best practices for setup and use, and a test case demonstration.

Stanford Sponsored Project Budget Justification Template - Updated with FY25 Fringe Benefit Rates and FY25 and FY26 IDC Rates

• Within the budget and budget justification template an annual cost-of-living increase of 3% is assumed for salaries and a 3% escalation rate is assumed for all other categories except where noted.  These increases have been projected into all years of the budget template and are standard budgeting practice for Stanford sponsored projects.  Users may amend the pre-programmed escalation rate(s) to coincide with current Stanford University Budget Office planning assumptions and/or to reflect recent historical growth in costs.  Please note, the UBO's planning assumptions are used by the University Budget Office for planning purposes only and are subject to change. What may be appropriate at the university level may not be applicable at the school or department levels.

Links & Notes for Common Budget Categories

Personnel costs.

• OBI Financial Reporting Payroll and Labor Management (PLM) Reports
• Stanford Post doc Funding Guidelines
• ​Graduate Student Assistantship Salary Rates and Tuition Allowances *

Stanford requires a commitment of effort on the part of the PI on all sponsored projects with the following exceptions. This requirement applies even if a sponsor does not require a commitment of effort on the part of the PI and/or does not allow the direct charging of PI salary. PI effort may be expended during the academic year, summer quarter only, or both. 

Note: If a sponsor does not allow the direct charging of PI salary and the project does not meet one of the 3 below PI effort exceptions, PI effort must be cost shared. 

Stanford tracks and manages effort primarily through direct salary charges to sponsored projects, cost sharing salary charges, or a combination of direct charging and cost sharing.

The requirement of PI effort does not extend to:

• Equipment grants
• Seed grants for students/postdocs where the faculty mentor is named as PI, dissertation support, training grants, or other awards intended as "student augmentation “
• Limited-purpose awards characterized by Stanford as Other Sponsored Activities, including travel grants, conference support, etc.

See  RPH 3.1 Preparation and Submission of Proposal Budgets   for more information.

*Graduate Student Research Assistantships

Effective 9/1/23, the University contribution of tuition allowance granted to non-SoM funded Research Assistants increased to 55%, and 45% will be charged to the source funding on sponsored awards that pay Stanford's full facilities & administrative (F&A) cost rates.

• For non-SoM funded Research Assistants on sponsored awards that pay an F&A rate less than Stanford's full facilities & administrative (F&A) cost rates the University contribution of tuition allowance remains 40%, and 60% will continue to be charged to the source funding.
• For SoM funded Research Assistants the University contribution of tuition allowance remains 19%, and 81% will continue to be charged to the source funding.
• See the  Graduate Financial Support Salary & TAL Tables for more information.

Fringe Benefits

• DoResearch- Stanford Rates 
• Faculty members do NOT accrue vacation leave or sick leave. Short absences for personal business, illness, jury duty, military duty, and similarly limited absences normally are with full salary. Under conditions specified in the  Faculty Handbook , sabbatical leave may be granted by a school dean.
• Let’s look at an example:  
• Dr. Cardinal, an ASR, has an annual salary of $120,000 and was budgeted for 100% effort on a federal award in FY24.
• During FY24, Dr. Cardinal works 100% on the federal award as proposed and takes vacation for the half the month of April.  
• Review the below chart to see how Dr. Cardinal's salary, fringe benefits (28.4% for FY24), and vacation accrual (8.9% for FY24) will post to the federal award and the difference between the total incurred amount and that which was budgeted above. 

• When the ASR takes vacation, the award to which their salary is being charged will NOT be charged for the commensurate amount of their salary and benefits.  If the ASR takes all the vacation they accrue while working on a project, the vacation accrual charges and credits will net to zero.  
• IMPORTANT: In practical application, staff working on sponsored projects often take less vacation time than they accrue resulting in sponsored projects incurring the cost of vacation accruals without receiving all the offsetting credits.  When this occurs, incurred personnel costs will exceed budgeted personnel amount.  This will require investigators and award managers to either rebudget from other project budget categories, as available and allowed by the given award's terms and conditions, to cover the additional personnel costs or identify another funding source to support the project costs in excess of those awarded from the sponsor.  If you are constructing or managing a project budget with a significant amount of personnel that accrue vacation, it is highly recommended that you discuss with your investigator the financial implications of vacation accrual costs and devise a proactive management plan.
• For more information on which employees at Stanford accrue vacation and sick leave, review the Stanford Administrative Guide 2.1.6 .
• Know what qualifies as Capital Equipment and can be counted toward the acquisition cost vs. must be budgeted separately.
• Oracle Financials -> Stanford iProcurement  - For equipment quotes
• California affords partial exemption from sales and use taxes for research and development equipment purchases.  Qualifying purchases must pay the remaining state tax and local and district taxes.
• Fabricated Equipment , “a unique individual piece of equipment or scientific instrument built by Stanford personnel,” may be budgeted on sponsored projects (in Section C. Equipment) if it meets federal regulations and university policies. Fabricated Equipment is exempt from the MTDC Indirect Cost (F&A) Rate and subject to Stanford’s 2.6 Fabrication Property Management policy.
• Oracle Financials -> Stanford iProcurement  - For supply quotes
• OBI Financial Reporting  - For historical supply spending data
• Egencia - Stanford Travel's Online Booking Tool 
• gsa.gov - Per Diem Rates
• When budgeting lodging costs for conference attendance, we recommended, if you can identify from the conference website or other available information what the conference room rate has historically been or will be and if this rate is higher than the gsa.gov lodging rate for the conference location, to budget the conference room rate as opposed to the gsa.gov lodging rate and explain this in the associated budget justification.  
• Conversely, when budgeting lodging costs when it is known the lodging costs will be substantially less than the gsa.gov lodging rate for the given location(s), we recommend budgeting the known lower lodging costs and, again, explain this in the associated budget justification.  This is a common occurrence when individuals travel and stay at another institution's or research facility's guesthouse/onsite accommodations.
• Field Work allowability and budgeting instructions will be explicitly outlined in the FOA/PA. Read the FOA/PA carefully and follow the specific guidance provided.
• “Meals may be allowable for subjects and patients under study, or where specifically approved as part of the project activity, provided that such charges are not duplicated in participants' per diem or subsistence allowances” – per NIH Grants Policy Statement. These costs should be budgeted with Patient Costs, when appropriate.
• NOTE: Unless otherwise allowable and included on the sponsor-approved budget, Stanford travelers must use the per diem option for travel meals when the funding source is a sponsored award – per Stanford Fingate Travel Meals Policy.
• Food costs for an activity that are not integral to the success of the Project Goals (SOW) are generally not allowable (i.e. lab meetings, coffee breaks, etc.). 

Other Direct Costs

Animal care.

• Animal purchases are considered technical supplies and full F&A costs will apply.
• For federal sponsors and CIRM ET 58720 - INTERDEPT FED CIRM VSC SVC CHG  is used.  This ET does not include VSC F&A costs. The associated VSC F&A costs are automatically calculated by the Oracle Financials system and charged separately to ET 56920 VSC FED ANIMAL CARE CHARGE.  Thus, for a federal project for which you are budgeting animal care costs, always use the federal VSC rates.  Moreover, at minimum you will have two IDC rates on the sponsor budget forms and the ORA budget template: 1) the project's default IDC rate e.g. Organized Research - On Campus and 2) Animal Care IDC.
• For non-federal (and other non-sponsored) awards ET 58710 - INTERDEPT  NONFED VSC SVC CHG is used.  For this ET the associated VSC F&A costs are automatically calculated by the VSC billing system and included in ET 58710 .  Thus, for a non-federal project for which you are budgeting animal care costs always use the non-federal VSC rates.  Moreover, be aware during post award when your non-federal project incurs animal care expenses the animal care total costs (direct and indirect) will be charged each month as a single direct cost line only and there will be NO animal care IDC expense lines on your non-federal/non-CIRM award's expense/general ledger reports.  

Consultants

• Name and title
• Daily salary rate
• Number of days engaged
• Other expenses (e.g., travel)
• Note: The NIH allows individuals to be listed in the role of Other Significant Contributor  who will “contribute to the scientific development or execution of the project, but are not committing any specified measurable effort (i.e., person months) to the project. These individuals are typically presented at "effort of zero person months" or "as needed." Individuals with measurable effort may not be listed as Other Significant Contributors (OSCs). Consultants should be included if they meet this definition.  OSCs are not considered senior/key personnel , but you must include biosketches for OSCs. 

Data Management & Sharing Plan

• Most federal funding agencies now require a Data Management & Sharing Plan. This plan requests applicants planning to generate scientific data to document how the scientific data will be managed and shared.
• NIH Data Management & Sharing guidance - RMG

Participant Support Costs

• Participant support costs (PSC) are defined in the Uniform Guidance as direct costs for items such as stipends or subsistence allowances, travel allowances, and registration fees paid to or on behalf of participants or trainees (but not employees) in connection with conferences or training projects. PSC is excluded from the MTDC base.
• Federal Awards: refer to the specific program announcement to which you are applying, and as needed, contact the sponsor, to determine if you are allowed to budget for PSC.
• Non-federal Awards: do NOT propose PSC on non-federal sponsored projects unless required by the sponsor. Categorize such costs using the expenditure types for travel, stipend, etc.
• Additional PSC Budgeting and Charging Considerations

Patient Care

• If Patient Care is to be included in your budget, ensure you seek clarification from your PI on if these are "research" patient care costs or "usual/standard" patient care costs. The costs of routine or ancillary services provided by hospitals to individuals participating in a research program can be categorized as "research patient care" costs and are appropriate to include in your proposal budget. Expenses for routine services or items that would have normally occurred without the existence of this research or study are considered "usual patient care" and are not appropriate to include in your proposal budget.
• RMG has constructed a Budgeting Patient Care worksheet to aid you in this determination and calculation for proposal budgets. Contact your  RMG representative  for further information.
• If you are budgeting Patient Care costs, where will the activities take place? If services are at CTRU, utilize the budgeting workbook. CTRU services are always off-campus, and the budget template will calculate this. A second rate schedule should be used in the PDRF.

Miscellaneous Examples of “Other Direct Costs” 

• Honoraria for non-employees 
• Hospital employee salaries
• Maintenance contracts, warranties, training costs, etc. for equipment. (Review Accounting Manual 2.2 for a breakdown of costs that can be subsumed with cost of the equipment and costs that should be categorized separately as “Other Direct Costs.”
• Postage (typical F&A-type costs but appropriate as a direct cost when it specifically benefits the aims of the project)
• Publication costs

Facilities & Administrative Cost Rates

• DoResearch- Stanford Rates
• Dean of Research Pre-Approved indirect cost  (IDC) exception list
• Project-specific IDC waiver