Direct costs are those costs that are specific to your project, unlike F&A costs (indirect or overhead costs), which are incurred for common or joint objectives.
Guidelines for Direct Costs
Direct costs on your budget proposal must be:
- reasonable and necessary
- allocable (costs that are directly committed and allocated to the funded project)
- allowable (both by federal cost principles and award or budget restrictions)
- benefit to project
- charged to agency in a timely fashion
- consistently treated
For example: If your campus normally pays lab assistants $30,000 per year, you cannot charge a grant for $60,000 per year for lab assistants.
Categories of Direct Costs
Identify the personnel who will work on your project―including full- and part-time staff and UMKC students―and each contributor’s percentage of effort. Graduate students working on a grant as personnel shouldn't be allotted more than 50 percent effort, which is considered full-time for a graduate student.
Salaries should be based on that percentage of effort, not hourly wages. Be sure to include 2 percent annual increases in salary as you calculate your budget.
Personnel must be either current or future UMKC employees, not employees of other institutions.
Fringe benefits must be included on all proposals that involve UMKC personnel who are at least 75% FTE. Note that students and non-benefits eligible staff benefits are assessed at a lower rate.
Refer to the UMKC fringe benefit rates, revised annually, as you calculate your budget.
How you show those fringe rates depends on the application. In many agency's applications (for example, NIH, NSF, American Heart, etc.), the fringe rates are included on a separate budget line.
If an agency application does not have a separate line for fringe benefits, it will probably ask for “personnel costs.” In that case, present salary, wages, and benefit costs together.
Consultants are individuals who are independent contractors hired to give professional advice or services for a fee. Consultants are not companies or other institutions.
For the consultant fee, include the consultant’s rate (hourly or daily) and the number of hours or days the consultant will work on the project. Check to ensure your funding agency does not cap consultant costs (NSF does).
If your grant is awarded, you will need to complete a university consulting agreement.
Consultant, subcontractor, or vendor
If you are working with a professor from another university who plans to act as a consultant on your grant, you do not need a subcontract. In those cases, the contract is with the individual and not with the other institution because the other university's employee is not utilizing his/her university's facilities or administrative services.
However, if you plan to collaborate with a professor from another university, and that collaboration will include utilizing the other university's facilities and administrative facilities, you will need to complete a subcontract rather than a consulting agreement.
Itemize and justify all equipment in your budget narrative. Equipment included in your budget proposal must be exclusive to that project or be a reasonable allocation.
At UMKC, equipment is defined as an article of nonexpendable, tangible personal property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit.
Equipment is excluded from the total direct costs when figuring F&A costs
Supplies are those expendable items needed to execute or report your project. Include specific budget justification if required or provide language that reflects typical or customary costs and cost ranges. Budgeting outside of customary ranges almost always requires an explicit explanation or rationale.
Examples include :
- laboratory supplies
- smaller equipment and computer software less than $5,000
Itemize and justify the domestic and foreign travel expenses required for UMKC employees and students to execute and share your research in your budget proposal. Include the purpose, destination, and relevance to your project. Do not include participant, patient or consultant travel in this category.
If travel is sponsored by federal funding, you must use a U.S. carrier for air travel. If foreign travel is sponsored by federal funding, federal international per diem rates should be used.
Include alterations and renovations, e.g., repairs, painting, or installation, if they are allowed by the funding agency and if they are essential to your project. Provide square footage and costs, if applicable.
Note: Depending on the extent of the repairs or installations, these budget expenses may be considered “Other” costs. ORS can help you sort out the difference. These guidelines do not apply for facility grants.
Alteration & renovation costs are excluded from the total direct costs when figuring F&A costs
These expenses cover costs of transportation, per diem, publications, and other related costs for participants to attend workshops, conferences, or training opportunities. Be sure to justify your participant costs and include the number of participants you plan to accommodate.
Participant costs are sometimes excluded from the total direct costs when figuring F&A costs (indirect costs). This is currently the case for NSF.
This budget category covers costs for in-patient and out-patient care. As you prepare your budget, be sure to specify rates, and quantify patients recruited.
However, do not include travel reimbursement or incentives in this category. Instead itemized these under “Other” costs.
Patient care costs are usually excluded from the total direct costs when figuring F&A costs.
Subcontractors, an agency or an individual, contribute substantive, scholarly work to your project. Because they are institutional collaborations, a subcontract is a formal agreement.
Subcontractor expenses over $25,000 are excluded when calculating F&A costs.
This category covers various nontangible items that you need for your project, such as
- graduate student tuition and fees
- postage and mailing costs
- telephone charges
- animal per diem (although actual animals are considered supplies),
- publications and page charges
- patient incentives and travel reimbursement
- maintenance agreements for equipment
- subscriptions to databases or journals
- professional and subject matter books
- membership and dues to professional organizations
- cost of publishing your research results
- conference or meeting registration fees
- purchased services such as sample testing
Graduate student fee remission
Tuition reimbursement or remission: Payments for tuition reimbursement or tuition remission should be listed under "Other " unless the agency's forms specifically list tuition as a line item.
If you are paying for graduate student tuition and fees on a grant, talk to your departmental fiscal officer about the appropriate rates. Levels of graduate student tuition remission vary across departments.
Student tuition and fees are excluded from the total direct costs when figuring modified total direct costs (MTDC)
Budgeting for Subsequent Years
Don’t automatically pull through every cost. Make sure your budget reflects inflationary adjustments and new equipment and personnel you’ll need through the life of the grant.