Start thinking about your budget requirements early. Funding levels of grant programs change each year. If you are developing a budget in anticipation of a solicitation being announced and do not yet know the funding amount, review the same grant solicitation (if offered in past years) to project future funding levels. You also can use past solicitations to make lists of budget items needed for the project.
Although the degree of specificity of any budget will vary depending on the nature of the project and OJP agency requirements, a complete, well-thought-out budget serves to reinforce your credibility and increase the likelihood of your proposal being funded.
Keep in mind the following—
- A well-prepared budget should be reasonable and demonstrate that the funds being asked for will be used wisely.
- The budget should be as concrete and specific as possible in its estimates. Make every effort to be realistic, to estimate costs accurately.
- The budget format should be as clear as possible. It should begin with a budget narrative, which you should write after the entire budget has been prepared.
- Each section of the budget should be in outline form, listing line items under major headings and subheadings.
- Each of the major components should be subtotaled with a grand total at the end.
Your budget should justify all expenses and be consistent with the program narrative:
- Salaries should be comparable to those within the applicant organization.
- If new staff is being hired, additional space and equipment are considered, as necessary.
- If the budget lists an equipment purchase, it is the type allowed by the agency.
- If additional space is rented, the increase in insurance is supported.
- If an indirect cost rate applies to the proposal, the division between direct and indirect costs is not in conflict, and the aggregate budget totals refer directly to the approved formula. Indirect costs are costs that are not readily assignable to a particular project, but are necessary to the operation of the organization and the performance of the project (like the cost of operating and maintaining facilities, depreciation, and administrative salaries).
- If matching funds are required, the contributions to the matching fund are taken out of the budget unless otherwise specified in the application instructions.
While budget adjustments are sometimes made after the grant award, this can be a lengthy process. It’s best to be certain that implementation, continuation, and phase-down costs can be met with the budget you submit with the proposal. Consider costs associated with leases, evaluation systems, hard/soft match requirements, audits, development, implementing and maintaining information and accounting systems, and other long-term financial commitments.
Use OJP’s Budget Detail Worksheet as a guide when preparing your budget and budget narrative. You may submit this worksheet or your own version, but it must address all of the categories in the sample budget detail worksheet. (See a sample budget summary and narrative.)
Whatever format you submit, however, must include all of the information asked for on the budget detail worksheet in the solicitation for your grant application, in addition to the budget narrative:
- Personnel—List each position by title and employee name, if available. Show the annual salary rate and the percentage of time to be devoted to the project. Compensation paid for employees engaged in grant activities must be consistent with that paid for similar work within your organization. List only the employees of the applicant organization; all other grant-funded positions should be listed under the consultants/contracts category.
- Fringe Benefits—Base fringe benefits on actual known costs or an established formula. Fringe benefits are for listed personnel and only for the percentage of time devoted to the project. Fringe benefits on overtime hours are limited to FICA, workers’ compensation, and unemployment compensation.
- Travel—Itemize travel expenses for project personnel by purpose (e.g., staff to training, field interviews, advisory group meetings). Show how you calculated these costs (e.g., six people to 3-day training at $X airfare, $X lodging, $X meals). In training projects, list travel and meals for trainees separately. Show the number of trainees and the unit costs involved. Identify the location of travel, if known. Indicate the source of any travel policies you have applied, and if applicant or federal travel regulations apply. The use of use federal grant funds to travel to non-DOJ-sponsored training events requires prior approval from the funding agency.
- Equipment—List nonexpendable items that are to be purchased. Nonexpendable equipment is tangible property having a useful life of more than 2 years and an acquisition cost of $5,000 or more per unit. (Note: An organization’s own capitalization policy may be used for items costing less than $5,000.) Include expendable items either in the "supplies" category or in the "other" category. Analyze the cost benefits of purchasing versus leasing equipment, particularly high-cost items and those subject to rapid technical advances. List rented or leased equipment costs in the "contractual" category. Explain why the equipment is needed for the project to succeed. Attach a narrative describing the method that will be used to procure the equipment.
- Supplies—List items by type (office supplies, postage, training materials, copying paper, and expendable equipment items costing less than $5,000, such as books and handheld tape recorders) and show how you calculated these costs. (Note: An organization’s own capitalization policy may be used for items costing less than $5,000.) Generally, supplies include any materials that are expendable or consumed during the course of the project.
- Construction—As a rule, construction costs are not allowable. In some cases, minor repairs or renovations may be allowable. Check the solicitation and with the program office before budgeting funds in this category.
- Consultants/Contracts—Indicate whether you will follow your organization’s formal, written procurement policy or the Federal Acquisition Regulations.
Consultant Fees: For each consultant, enter the name, if known, service to be provided, hourly or daily fee (8-hour day), and estimated time on the project. Consultant fees in excess of $450 per day require additional justification and prior approval from OJP.
Consultant Expenses: List all expenses to be paid from the grant to the individual consultants in addition to their fees (e.g., travel, meals, lodging).
Contracts: Describe the product or service to be procured by contract and provide an estimate of the cost. Promote free and open competition in awarding contracts. You must provide a separate justification for sole-source contracts of $100,000 or more.
- Other Costs—List items (e.g., rent, reproduction, telephone, janitorial or security services, investigative or confidential funds) by major type and show how you calculated the costs. For example, for rent, provide the square footage and the cost per square foot or a monthly rental cost and how many months of rent are proposed.
- Indirect Costs—Indirect costs are allowed only if you have a federally approved indirect cost rate and you attach a copy of the rate approval (a fully executed, negotiated agreement). If you don’t have an approved rate, you can request one by contacting your cognizant federal agency, which will review all documentation and approve a rate. Or, if your accounting system permits, you may allocate costs in the direct costs categories.
Remember to include computations that clearly show how the costs were derived, as well as documentation that explains the cost or line item.
Sustaining the Project
Do not anticipate that the grant income will be the sole support for your project. Consider this when developing your overall budget requirements and, in particular, when developing budget line items most subject to inflation. Exercise restraint when determining inflationary cost projections (avoid padding budget line items), but try to anticipate possible future increases. Federal funds must be used to supplement existing funds for program activities and must not replace (supplant) those funds that have been appropriated for the same purpose.
SUPPLANTING IS PROHIBITED
- Definition: To deliberately reduce state or local funds because of the existence of federal funds.
- Prohibition: Federal funds must be used to supplement existing funds for program activities and must not replace those funds that have been appropriated for the same purpose.
- Example: When state funds are appropriated for a stated purpose and federal funds are awarded for that same purpose, the state replaces its state funds with federal funds, thereby reducing the total amount available for the stated purpose.
- Monitoring: Supplanting will be the subject of application review, preaward review, postaward monitoring, and audit.
Most grant programs require applicants to include information that explains how they will fund and sustain the project once the grant funds have been expended. Describe a plan for continuing your project beyond the grant period, and outline all other fundraising efforts you are considering and any plans to apply for additional grants in the future. Please note that it is prohibited to use grant funds or grant-funded positions for your fundraising efforts. Also, provide projections for operating and maintaining facilities and equipment. Discuss maintenance and future program funding if program funds are for construction activity. Account for other needed expenditures if the program includes purchasing equipment.