What is a budget and why budgets are so important?
A budget is a project “blueprint” and it helps your sponsor determine if the proposed project.
- It justifies your request and shows how you calculated costs.
- It provides a financial "blueprint" for your project if you are funded.
- It shows that you—and the university—will manage the sponsor's funds, which are usually public money, responsibly.
Three key words to keep in mind when preparing your budget: Allowable, Allocable & Reasonable
What does allowable, allocable, and reasonable mean?
- “Allowable Costs” refers to items of cost can be funded with federal grant dollars as long as the cost fits within a framework of responsible stewardship of public funds. To be an allowable cost, the cost must not be expressly prohibited by the sponsored program regulations, the sponsored agreement, the university's own policies, or the Federal Cost Principles (found in the Uniform Guidance). Costs must be treated consistently by applying the generally accepted accounting principles appropriate to the circumstances (such as the Federal Cost Principles).
- Allocable: Costs are incurred solely to support or advance the work of a specific sponsored research award (and only during the sponsor-approved project period).
- Reasonable: Costs must be able to withstand public scrutiny, i.e., objective individuals not affiliated with the institution would agree that a cost is reasonable and appropriate.