BUDGET NARRATIVE guidelines.docx

BUDGET NARRATIVE

A. Personnel – This category includes the salaries and wages for all non-Federal entity personnel who will be working on the project. The budget narrative should indicate the base salary and time each person will spend on the project. The narrative should also include any method used to arrive at the requested amount.

B. Fringe Benefits – Fringe benefits are allowances and services provided by employers to their employees as compensation in addition to regular salaries and wages. Fringe benefits include, but are not limited to, the costs of leave (vacation, family-related, sick, or military), employee insurance, pensions, and unemployment benefit plans. These costs may be derived from historical costs or calculated as a percentage of salaries and wages. If the costs are calculated as a percentage of salaries and wages, this percentage will need to be justified by the entity’s written internal policy or documented on their Negotiated Indirect Cost Rate Agreement (NICRA).

C. Travel – This category includes both domestic and international travel costs. The budget narrative should indicate who will travel, where, and why, and should include estimated air fare (or other mode of transportation), accommodations, meals and incidental expenses, and other costs such as conference fees, visa expenses, and inoculations.

D. Equipment – Provide justification for any equipment purchase/rental, defined as tangible personal property having a useful life of more than one year and an acquisition cost of $5,000 or more. If equipment is on the proposed budget, it is important to determine if it is necessary to the project, if it is reasonable to purchase instead of rent the equipment, and if the entity has adequate internal property standards. The recipient must, at a minimum, provide the equivalent insurance coverage for real property and equipment acquired under a grant with Federal funds as the recipient does for its own property/equipment.

E. Supplies – This category includes all tangible personal property other than those described as equipment. A computing device is a supply if the acquisition cost is less than $5,000, regardless of the length of its useful life. It is important to confirm that the proposed supplies are necessary to the project and if the entity has adequate internal property standards.

F. Contractual - This category includes both contracts and subawards. It is necessary to determine that the contracts or subawards are necessary for the award and if the entity has adequate capability and internal policies to manage subawards. It is also important to understand the difference between a contract and a subaward. The recipient should include the budget breakdown for any proposed subawards or contracts for the GO’s review.

a) Sub-award: a sub-award is provided to a sub-recipient for the purpose of carrying out a portion of the Federal award. A beneficiary of a program is not considered a sub-recipient. A sub-award may be provided through any form of legal agreement, including an agreement that the prime recipient entity considers a contract. For each sub-award, please provide a detailed line-item budget breakdown, explaining specific services.

b) Contract: a contract is for the purpose of obtaining goods and services for the non-Federal entity’s own use and creates a procurement relationship with the subrecipient. A consulting agreement with a consultant or contractor is generally considered a contract.

G. Other Direct Costs – Other directs costs are any costs not included in the other categories. This category may include the entity’s operating expenses that are directly linked to the award but not included as an indirect cost. The inclusion of each line item should be justified in the budget narrative. All costs must be allowable, allocable, and reasonable. Line items such as “Miscellaneous,” “Contingency Fund,” and “Reserve Fund” are not permitted.

H. Indirect Charges: Indirect costs are those that have been incurred for common or joint objectives and cannot be readily identified with a particular final cost objective. Indirect costs are not allowable costs for Federal financial assistance awarded directly to individuals. All allowable costs for awards to individuals must be direct costs only. Indirect costs do not generally include the costs of personnel who work for the recipient organization and are working directly on the project.

Indirect costs, often called overhead, or facilities and administrative costs, may only be charged to a Federal award that is subject to 2 CFR §200, Subpart E when:

The applicant has a current Negotiated Indirect Cost Rate Agreement (NICRA). However, an organization may choose to voluntarily reduce the amount of NICRA charged to the award in order to be more cost-effective and competitive.

The applicant elects to charge a de minimis rate of 10% of Modified Total Direct Costs (MTDC), which is allowable if the entity has never received a NICRA, the MTDC base excludes: equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs and the portion of each sub-award in excess of $25,000. The 10% of MTDC is the maximum allowable, but anything below 10% is acceptable.

Note: if an award has been issued utilizing the 10% de minimis rate, that rate is then applicable for the entire period of performance of that award.

Cost Share/Cost-Effectiveness – Cost sharing or matching refers to a portion of project or program cost that is not borne by the federal Government. Cost sharing is not required and will not be used as a factor in proposal evaluation. For any cost share included, please provide an explanation of the contributions, whether cash or in-kind. Assign a monetary value in U.S. dollars to each in-kind contribution. If the proposed project is a component of a larger program, identify other funding sources for the proposal and indicate the specific funding amount to be provided by those sources. In addition, it is recommended that budget narratives address the overall cost-effectiveness of the proposal, including leveraging of institutional or other resources. Grantees must follow cost sharing or matching policy as stipulated in 2 CFR 200.306. Cost sharing amounts proposed will be incorporated as part of the allowable budget items. If selected for an award, your organization will have to provide the minimum amount of cost sharing as stipulated in the budget approved by the Grants Officer. If your organization does not meet its cost share amount stipulated in the approved budget by the end of the period of performance, PAS will have the option to (1) reduce its contribution in proportion to your organization’s contribution in the event that you do not provide the minimum amount of cost sharing stipulated in the budget or (2) hold your organization accountable for the amount specified in the approved budget.

Miscellaneous Costs: these costs will be no allowed for PD Small Grants Program.