Budget Building

The Office of Research and Sponsored Programs (RSP) provides several spreadsheets on the Budget Tools page to assist in budget calculations. These spreadsheets are not required, but may be helpful.

Direct Costs

Direct Costs are costs that are associated specifically with a particular sponsored project, instructional activity, or other institutional activity.

Costs incurred for the same purpose in like circumstances must be treated consistently as either direct or F&A costs.

Examples of direct costs include salary, fringe benefits, supplies/materials, publications, equipment, travel, and tuition remission.

Note: Costs above are examples only – allowability of these or other costs depends upon federal, state and sponsor regulations related to a specific project.

Facilities and Administration (F & A) Costs

Facilities and Administration (F & A) Costs (or indirect costs) are costs incurred by the University for common or shared objectives. F & A costs cannot be identified specifically with a particular sponsored project, instructional activity, or other institutional activity.

Examples of F & A costs include library services, utilities, department and sponsored project administrative expenses, office supplies, postage, local telephone service, memberships and depreciation of buildings/equipment.

F&A Cost Rate

The University’s F&A rate is negotiated between UW-Madison and the U.S. Department of Health and Human Services (DHHS), and is updated periodically.

Current F&A rates: https://www.rsp.wisc.edu/rates

  • In general, use the, highest allowable rate.
  • Some sponsors specify F&A rates lower than the Federally negotiated rate; in these cases, documentation of a sponsor’s rate is needed in order to grant an exception.
  • For more information on F&A rate application and exceptions, see RSP’s F&A Policy Guidance page and FAQs.

*Contact the CALS Research Division immediately with any questions related to the appropriate indirect cost rate to include in your proposal.

Budget Narrative

In addition to the budget itself, you will also need to create a budget narrative, sometimes referred to as a budget justification. Within the budget narrative, you must:

  • Explain how costs were estimated
  • Justify the need for each cost

The CALS Research Division can assist with the development and writing of a budget narrative.