Research-Developing Your Budget

Getting Started

Prior to planning your budget, be sure to read the funding opportunity (aka, call or request for proposals; solicitation; etc.) and all guidelines and instructions provided by the sponsor. It is critical to know what restrictions the sponsor has for the overall budget limit and for individual budget categories.

The budget should be developed in tandem with the project proposal so that it accurately reflects the expected project costs. Proposal reviewers carefully compare the budget request to the project plan to evaluate whether the budget is sufficient to support the proposed work. Your budget should include appropriately trained staff for the work required, and only include costs that support the project.

See Budget and Proposal Forms and Templates for sponsor-specific budget templates.

Direct & Indirect Costs

Budgets for sponsored projects include two types of costs:

• Direct Costs support project costs that are specific to the project and can be directly allocated to it. Common categories include:
  • Salaries - Lookup a UW employee salary for proposal budgeting purposes
  • Fringe benefits - Use currently approved rates
  • Materials & supplies
  • Travel
  • Equipment - Capital equipment is valued at $5,000 or more
  • Tuition remission - Required for Graduate Assistants with 0.33 FTE and higher appointment levels
  • Participant stipends
  • Subawards
  • External Services or Consulting
  • Meeting costs
  • and others

Refer to the guidance on Allowable Direct Costs on Sponsored Projects for more information on specific cost categories.

• Indirect Costs (aka Facilities & Administrative Costs; overhead) are non-specific costs that support general management of research and other sponsored program activities. Unless otherwise allowed by UW policy, indirect costs should be charged at the percentage rate listed in UW's federally-negotiated indirect cost rate agreement.

Budget Justification

A crucial component of any budget is the budget justification (aka, budget narrative), which provides details about the need for a cost and why it is necessary to the project.

See Budget and Proposal Forms and Templates for sponsor-specific budget justification templates with sample language.

Other Things to Think About

All sponsored projects at UW-Madison are subject first and foremost to UW System purchasing regulations, which are implemented through UW Purchasing Services. 

In tandem, budgets have to be compliant with applicable cost accounting standards. For federal awards made to institutions of higher education, these standards are outlined in the Uniform Guidance (particularly 2 CFR Part 200 Subpart E). In order for a cost to be charged to a sponsored project, it must be deemed an allowable cost and be consistently charged as either a Direct Cost or Indirect Cost across all grant programs.